PARAG PARIKH FINANCIAL ADVISORY SERVICES LTD, MUMBAI V. ITO 4(2)(1), MUMBAI

CO 62/MUM/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7695 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 29-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: APPLICATION DT
• Keywords: Business expenditure; Reason to believe
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI P.M.JAGTAP, ACCOUNTANT MEMBER ITA NO.8190/MUM/2010(A.Y. 2006-07) THE ITO 4(2)(1), ROOM NO.642, 6 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI - 20. (APPELLANT) VS. M/S.PARAG PARIKH FINANCIAL ADVISORY SERVICES LTD., 103/108, VEENA CHAMBER, 21, DALAL STREET, FORT, MUMBAI - 400 023. PAN:AABCP 9117F (RESPONDENT) C.O. NO.62/MUM/2012 (ARISING OUT OF ITA NO.8190/M/2010,A.Y.06-07) M/S.PARAG PARIKH FINANCIAL ADVISORY SERVICES LTD., 103/108, VEENA CHAMBER, 21, DALAL STREET, FORT, MUMBAI - 400 023. PAN:AABCP 9117F (CROSS OBJECTOR) VS. THE ITO 4(2)(1), ROOM NO.642, 6 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI - 20. (APPELLANT IN APPEAL) REVENUE BY : SHRI RAJARSHI DWIVEDY ASSESSEE BY : APPLICATION DT.27/8/12 DATE OF HEARING : 29/08/2012 DATE OF PRONOUNCEMENT : 05 /09/2012 ORDER PER I.P.BANSAL, J.M THIS APPEAL IS FILED BY THE REVENUE AND CROS S OBJECTION IS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-8, MUMBAI DATED 27/09/2010 FOR ASSESSMENT YEAR 2006-07. THE GROUN DS RAISED BY THE REVENUE IN ITS APPEAL AND GROUNDS RAISED BY THE ASS ESSEE IN ITS CROSS OBJECTION ARE AS UNDER: ITA NO.8190/MUM/2010(A.Y. 2006-07) C.O. NO.62/MUM/2012 2 GROUNDS RAISED IN REVENUES APPEAL: I ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 1, 56,850 TOWARDS VSAT & RS.8,03,564/.- IN RESPECT OF TRANSACTION CHARGES MA DE U/S. 40(A)(IA) PAID TO STOCK EXCHANGE, WITHOUT APPRECIATING THE FACTS THAT THESE WERE COMPOSITE CHARGES FOR PROFESSIONAL AND TECHNICAL SERVICES REN DERED BY THE STOCK EXCHANGE TO ITS MEMBERS AND THE ASSESSEE HAS FAILED TO DEDUCT TDS THEREON.. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THESE SERVIC ES ARE ESSENTIAL IN NATURE AS THEY CAN ONLY BE AVAILED BY MEMBERS OF STOCK EXCHAN GE. III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN IGNORING THE FACTS THAT USE OF TECH NOLOGY AND ALGORITHMIC BASED PROGRAMS HAVE CONVERTED AN ERSTWHILE PHYSICAL MARKET INTO A DIGITALLY OPERATED MARKET. IV. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE SERVICES RENDERED BY THE BROKERS ARE NOT STANDARD SERVICES BUT SERVICES THAT HAS BEEN DE VELOPED TO CATER TO THE NEEDS OF THE BROKER COMMUNITY TO FACILITATE TRADING . V. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS OVERLOOKED THE FACT THAT THE BROKERS HAV E IN SUBSEQUENT YEARS THEMSELVES STARTED DEDUCTING THE TDS ON SUCH PAYMEN TS AND THAT THERE IS NO REASON TO GIVE A DIFFERENT TREATMENT IN THIS YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.90,020/ - MADE U/S. 14A R.W.RULE 8D OF THE I. T. ACT BY ASSESSING OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE IMPUGNED ORDER OF THE LD.CIT(A) IS CONTRARY TO LAW TO BE SET ASIDE AN D THAT OF THE ASSESSING OFFICER BE RESTORED. GROUNDS RAISED IN ASSESSEES CROSS OBJECTION: 1. THE CIT (APPEALS) CORRECTLY ALLOWED RS. 1,56,85 0/- ON ACCOUNT OF VSAT CHARGES THUS, REJECTING THE DISALLOWANCE MADE BY TH E DEPARTMENT, U/S 40 (A) (IA) FOR NON DEDUCTION OF TAX AT SOURCE. 2. THE CIT (APPEALS) CORRECTLY ALLOWED RS.8,03,564/ - ON ACCOUNT OF TRANSACTION CHARGES THUS, REJECTING THE DISALLOWANC E MADE BY THE DEPARTMENT U/S 40(A) (IA) FOR NON DEDUCTION OF TAX AT SOURCE. ITA NO.8190/MUM/2010(A.Y. 2006-07) C.O. NO.62/MUM/2012 3 3. THE CIT (APPEALS) CORRECTLY DELETED THE DISALLOW ANCE RS.90,020/- U/S 14A THUS, REJECTING THE ADDITION MADE BY THE DEPARTMENT . 5. THE CLAIM OF THE ASSESSEE REGARDING ALLOWANCE OF EXPENSES STANDS FURTHER SUBSTANTIATED IN VIEW OF THE CHANGES MADE IN THE SE CTION 40(A) (I) READ WITH SECTION 201 OF THE INCOME TAX ACT, 1961 BY THE FINA NCE ACT 2012. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF STOC K BROKING, INVESTMENT AND FINANCIAL CONSULTANCY. DURING THE COURSE OF AS SESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAD DEBITED VSAT CHARGES O F RS. 1,56,850/- AND TRANSACTION CHARGES OF RS.8,03,564/-. ACCORDING TO AO THESE WERE IN THE NATURE OF TECHNICAL SERVICES AND ASSESSEE WAS REQUI RED TO DEDUCT TAX AT SOURCE ON THESE PAYMENTS. AS TAX WAS NOT DEDUCTED AT SOURCE, DISALLOWANCE WAS MADE UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT,1961(THE ACT). LD. CIT(A) DELETED BOTH THESE ADDITIONS FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WHICH IS DATED 12/2/2010 IN ITA NO.2388/M/2009, WHICH WAS AN APPEAL FILED BY THE REVENUE AGAINST TH E DELETION MADE BY LD. CIT(A) IN RESPECT OF VSAT AND TRANSACTION CHARGES. THE TRIBUNAL IN THE SAID ORDER FOLLOWING THE DECISION OF ITAT IN THE CASE OF M/S. KOTAK SECURITIES LTD. VS. ACIT, 25 SOT 440(MUM) HAS HELD THAT THESE PAYME NTS WERE NOT IN THE NATURE OF RENDERING TECHNICAL SERVICES, HENCE, TAX DEDUCTION AT SOURCE WAS NOT REQUIRED. THE DEPARTMENT IS AGGRIEVED WITH SUC H DECISION OF CIT(A) AND HAS RAISED GROUND NO.1. 3. IN GROUND NO.2, THE REVENUE IS AGITATING THE DEL ETION OF AN ADDITION OF RS. 90,020/- U/S. 14A R.W.S RULE 8D OF THE INCOME T AX RULES. 4. IN THE CROSS OBJECTION IN GROUND NO.1,2 &5(INCO RRECTLY NUMBERED) THE ASSESSEE IS SUPPORTING THE ORDER OF LD. CIT(A) VIDE WHICH ADDITION REGARDING VSAT CHARGES AND TRANSACTION CHARGES IS DELETED AN D IN GROUND NO.3 ASSESSEE IS SUPPORTING THE ORDER OF LD. CIT(A) ON DELETION MADE BY HIM IN RESPECT OF SECTION 14A. ITA NO.8190/MUM/2010(A.Y. 2006-07) C.O. NO.62/MUM/2012 4 5. NOTICE OF HEARING WAS SENT TO THE ASSESSEE WHICH HAS DULY BEEN SERVED. IN RESPONSE TO THE SAID NOTICE A LETTER DA TED 27/08/2012 HAS BEEN FILED BY THE ASSESSEE BEFORE THE TRIBUNAL CONTENDIN G THEREIN THAT THE ISSUES RAISED IN GROUND NO.1 BY REVENUE ARE COVERED IN FAV OUR OF ASSESSEE AND SO AS IT RELATES TO ISSUE RAISED IN GROUND NO.2 RELATI NG TO DELETION OF ADDITION UNDER SECTION 14A THE ASSESSEE HAS STATED THAT IT I S NOT INTERESTED IN PRESSING THE SAID ISSUE AND IT IS MENTIONED THAT TH E APPEAL MAY BE DISPOSED OF. ACCORDINGLY THE PRESENT APPEAL AND CROSS OBJE CTION WERE HEARD. 6. LD. D.R SUBMITTED THAT THOUGH THE ISSUE IS COVER ED IN FAVOUR OF THE ASSESSEE BY THE EARLIER DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE BUT SUBSEQUENTLY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KOTAK SECURITIES LTD., 340 ITR 333 (BOM) HAS HELD THAT T RANSACTION CHARGES PAID BY THE ASSESSEE CONSTITUTE FEE FOR TECHNICAL SERVI CES AND ARE COVERED UNDER SECTION 194J OF THE ACT. THEREFORE, HE SUBMITTED T HAT THE VIEW TAKEN BY THE TRIBUNAL IN KOTAK SECURITIES LTD. (SUPRA) HAS BEEN REVERSED BY HONBLE BOMBAY HIGH COURT. 7. IN THIS VIEW OF THE SITUATION AFTER CONSIDERING THE APPLICATION FILED BY THE ASSESSEE AND AFTER CONSIDERING THE ARGUMENTS O F LD. D.R WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF CO-ORDIN ATE BENCH IN THE CASE OF M/S. J.G. SHAH FINANCIAL CONSULTANTS P. LTD. DATED 10/02/2012 IN ITA NO.5315 & 5316/MUM/2010, COPY OF WHICH IS PLACED ON RECORD. IN THE SAID CASE SAME ISSUE WAS CONSIDERED BY THE TRIBUNAL. A PLEA IN THE SAID CASE TAKEN BY LD. A.R WAS THAT EVEN AFTER CONSIDERING T HE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. KOTAK SECURIT IES LTD. (SUPRA) DISALLOWANCE MADE ON ACCOUNT OF TRANSACTION CHARGES UNDER SECTION 40(A)(IA) CANNOT BE SUSTAINED AS THE SAME WILL BE GOVERNED BY PARA 31 OF THE SAID JUDGEMENT, WHEREIN IT WAS HELD THAT ASSESSEE HAD B ONAFIDE REASON TO BELIEVE THAT THE TAX WAS NOT DEDUCTIBLE DUE TO THE UNDISPUT ED DECADE OLD PRACTICE AND ON THIS ARGUMENT OF THE ASSESSEE THE MATTER WA S RESTORED BACK TO THE ITA NO.8190/MUM/2010(A.Y. 2006-07) C.O. NO.62/MUM/2012 5 FILE OF AO FOR VERIFYING THE STAND OF THE ASSESSEE FROM THE RELEVANT RECORD AND TO PASS ORDERS IN THE LIGHT OF GUIDELINES LAID DOWN BY HONBLE BOMBAY HIGH COURT IN PARA 31 OF THE SAID JUDGMENT. 8. SO FAR AS IT RELATES TO VSAT AND LEASE LINE CHA RGES THE TRIBUNAL FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ANGEL CAPITAL & DEBIT MARKET LTD.(INCOME TAX APPEAL (L) NO.475 OF 2011) HAS HELD THAT VSAT AND LEASE LINE CHARGES PAID BY T HE ASSESSEE TO STOCK EXCHANGE IS MERELY REIMBURSEMENT OF CHARGES PAID / PAYABLE BY THE STOCK EXCHANGE TO THE DEPARTMENT OF TELECOMMUNICATION, T HE SAME DO NOT HAVE ANY ELEMENT OF INCOME AND THERE IS NO QUESTION OF D EDUCTING ANY TAX FROM THE PAYMENTS TOWARDS THE SAID CHARGES. IN THIS MA NNER THE DELETION WITH REGARD TO VSAT CHARGES WAS UPHELD. 9. IN VIEW OF THE AFOREMENTIONED DECISION OF ITAT, SO FAR AS IT RELATES TO VSAT AND LEASE LINE CHARGES WE DECLINE TO INTERFER E IN THE RELIEF GIVEN BY LD. CIT(A). SO FAR AS IT RELATES TO TRANSACTION CHARGE S, FOLLOWING THE AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF KOTAK SECURITIES LTD.(SUPRA) WE HOLD THAT TAX WAS DEDUCTI BLE THEREON. HOWEVER, KEEPING IN VIEW THE AFOREMENTIONED DECISION OF THE TRIBUNAL, IN THE CASE OF ACIT VS. M/S. J.G. SHAH FINANCIAL CONSULTANTS PVT. LTD.,( IN WHICH ONE OF US, A.M IS A PARTY), WE PASS SIMILAR ORDER AS HAS BEEN PASSED IN THAT CASE. THE RELEVANT PORTION OF THE SAID ORDER REGULATING ISSU E OF TRANSACTION CHARGES IS REPRODUCED BELOW: 5. IN SO FAR AS THE DISALLOWANCE MADE ON ACCOUNT O F TRANSACTION CHARGES IS CONCERNED, IT IS OBSERVED THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES LTD. (SUPRA) RELIED UPON BY THE LEARNED CIT(APPEALS) IN HIS IMPUGNED ORDERS WHILE GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE HAS BEEN SUBSEQUENTLY OVERRULED BY HONBLE BOMBAY HIGH COURT VIDE ITS JUD GMENT DATED OCTOBER 21, 2011 PASSED IN ITA NO. 3111 OF 2009 WHEREIN IT IS H ELD THAT WITH A VIEW TO REGULATE THE TRADING IN SECURITIES, THE STOCK EXCHA NGE PROVIDES RISK ITA NO.8190/MUM/2010(A.Y. 2006-07) C.O. NO.62/MUM/2012 6 MANAGEMENT AND SURVEILLANCE TO THE STOCK BROKERS TO ENSURE THE SAFETY OF THE MARKET. IT IS HELD THAT THE SURVEILLANCE FUNCTION I NVOLVES PRICE MONITORING, EXPOSURE OF THE MEMBERS, RUMOUR VERIFICATION ON A D AILY BASIS AND REMEDIAL ACTIONS LIKE REDUCTION OF FILTERS, IMPOSITION OF SP ECIAL MARGIN, SUSPENSION OF SCRIPS / MEMBERS. IT IS HELD THAT THESE ARE SOME OF THE IDENTIFIED MANAGERIAL SERVICES RENDERED BY THE STOCK EXCHANGE FOR WHICH T RANSACTION CHARGES ARE LEVIED AND THE ASSESSEE WHO IS A STOCK BROKER IS LI ABLE TO DEDUCT TAX AT SOURCE BEFORE CREDITING THE TRANSACTION CHARGES TO THE ACC OUNT OF THE STOCK EXCHANGE AS PER THE PROVISIONS OF SECTION 1 94J. THIS ISSUE THUS NOW STANDS COVERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE BY T HE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KOTAK SECURITIES L TD. (SUPRA) AND THIS POSITION HAS BEEN ACCEPTED EVEN BY THE LEARNED COUN SEL FOR THE ASSESSEE IN SO FAR AS THIS ASPECT OF THE ISSUE IS CONCERNED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, HOWEVER, H AS CONTENDED THAT THE DECISION OF THE TRIBUNAL HOLDING THAT DISALLOWANCE MADE BY THE AO ON ACCOUNT OF TRANSACTION CHARGES U/S 40(A)(IA) WAS NOT SUSTAI NABLE, HAS BEEN FINALLY UPHELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KOTAK SECURITIES LTD. (SUPRA) ON THE GROUND THAT THE ASSESSEE HAD BONAFID E REASON TO BELIEVE THAT THE TAX WAS NOT DEDUCTIBLE AT SOURCE FROM THE PAYME NT OF TRANSACTION CHARGES U/S 194J AND THE AO, THEREFORE, WAS NOT JUSTIFIED I N DISALLOWING THE TRANSACTION CHARGES BY INVOKING SECTION 40(A)(IA) I N THIS CONTEXT, HE HAS INVITED OUR ATTENTION TO THE RELEVANT OBSERVATIONS RECORDED BY THE HONBLE HIGH COURT IN PARAGRAPH NO. 31 OF THE JUDGMENT WHICH IS EXTRAC TED BELOW: THE OBJECT OF INTRODUCING SECTION 40(A)(IA) AS EXP LAINED IN THE CBDT CIRCULAR NO. 5 DATED 15/7/2005 IS TO AUGMENT COMPLI ANCE OF TDS PROVISIONS IN THE CASE OF RESIDENTS AND CURB BOGUS PAYMENTS. MOREOVER, THOUGH SECTION 194J WAS INSERTED WITH EFFECT FROM 1 /7/1995, TILL THE ASSESSMENT YEAR IN QUESTION THAT IS AY 2005-06 BOTH THE REVENUE AND THE ASSESSEE PROCEEDED ON THE FOOTING THAT SECTION 1943 WAS NOT APPLICABLE TO THE PAYMENT OF TRANSACTION CHARGES AN D ACCORDINGLY, DURING THE PERIOD FROM 1995 TO 2005 NEITHER THE ASS ESSEE HAS DEDUCTED TAX AT SOURCE WHILE CREDITING THE TRANSACTION CHARG ES TO THE ACCOUNT OF THE STOCK EXCHANGE NOR THE REVENUE HAS RAISED ANY O BJECTION OR INITIATED ANY PROCEEDINGS FOR NOT DEDUCING THE TAX AT SOURCE. IN THESE CIRCUMSTANCES, IF BOTH THE PARTIES FOR NEARLY A DEC ADE PROCEEDED ON THE FOOTING THAT SECTION 194J IS NOT ATTRACTED, THEN IN THE ASSESSMENT YEAR IN QUESTION, NO FAULT CAN BE FOUND WITH THE ASSESSE E IN NOT DEDUCTING THE TAX AT SOURCE UNDER SECTION 194J OF THE ACT AND CONSEQUENTLY, NO ACTION COULD BE TAKEN UNDER SECTION 40(A)(IA) OF TH E ACT. IT IS RELEVANT TO NOTE THAT FROM AY 2006-07 THE ASSESSEE HAS BEEN DED UCTING TAX AT SOURCE WHILE CREDITING THE TRANSACTION CHARGES TO T HE ACCOUNT OF THE STOCK EXCHANGE THOUGH NOT AS FEES FOR TECHNICAL SER VICES BUT AS ROYALTY. IT IS FURTHER RELEVANT TO NOTE THAT IT IS NOT THE C ASE OF THE REVENUE THAT ON ACCOUNT OF THE FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE, THE REVENUE HAS SUFFERED PRESUMABLY BECAUSE , THE STOCK EXCHANGE HAS DISCHARGED ITS TAX LIABILITY FOR THE A SSESSMENT YEAR IN QUESTION. IN ANY EVENT, IN THE FACTS OF THE PRESENT CASE, IN VIEW OF THE ITA NO.8190/MUM/2010(A.Y. 2006-07) C.O. NO.62/MUM/2012 7 UNDISPUTED DECADE OLD PRACTICE, THE ASSESSEE HAD BO NAFIDE REASON TO BELIEVE THAT THE TAX WAS NOT DEDUCTIBLE AT SOURCE U NDER SECTION 194J OF THE ACT AND, THEREFORE, THE ASSESSING OFFICER WAS N OT JUSTIFIED IN INVOKING SECTION 40(A)(IA) OF THE ACT AND, THEREFORE, THE AS SESSING OFFICER WAS NOT JUSTIFIED IN INVOKING SECTION 40(A)(IA) OF THE ACT AND DISALLOWING THE BUSINESS EXPENDITURE BY WAY OF TRANSACTION CHARGES INCURRED BY THE ASSESSEE. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THE RELEVANT FACT SITUATION INVOLVED IN THE PRESENT CASE IS SIMILAR T O THE ONE INVOLVED IN THE CASE OF KOTAK SECURITIES LTD. (SUPRA) ON THE BASIS OF WH ICH THE ASSESSEE IN THAT CASE WAS HELD TO HAVE BONAFIDE REASON TO BELIEVE THAT TA X WAS NOT DEDUCTIBLE AT SOURCE FROM THE PAYMENT OF TRANSACTION CHARGES U/S 194J. HE HAS CONTENDED THAT THIS PART OF THE JUDGMENT OF THE HONBLE BOMBA Y HIGH COURT IN THE CASE OF KOTAK SECURITIES LTD. (SUPRA) THUS IS IN FAVOUR OF THE ASSESSEE IN THE PRESENT CASE AND THE IMPUGNED ORDER OF THE LEARNED CIT(APPE ALS) GIVING RELIEF TO THE ASSESSEE BY DELETING THE DISALLOWANCE MADE BY THE A O U/S 40(A)(IA) DESERVES TO BE UPHELD BY FOLLOWING THE SAME. HE HAS ALSO MAD E AN ATTEMPT TO DEMONSTRATE THAT THE FACTS INVOLVED IN THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE CASE OF KOTAK SECURITIES LTD. (SUPR A) WHICH FORMED THE BASIS OF THE RELIEF GIVEN BY THE HONBLE BOMBAY HIGH COURT. WE HAVE ALSO HEARD THE LEARNED DR ON THIS ISSUE. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND MERIT IN THE CONTENTION OF THE L EARNED COUNSEL FOR THE ASSESSEE THAT THE DISALLOWANCE MADE BY THE AO ON AC COUNT OF TRANSACTION CHARGES BY INVOKING SECTION 40(A)(IA) HAS BEEN FINA LLY HELD TO BE UNSUSTAINABLE BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KOT AK SECURITIES LTD. (SUPRA) ON THE GROUND THAT THE ASSESSEE, IN THE FACTS AND C IRCUMSTANCES INVOLVED IN THAT CASE, HAD BONAFIDE REASON TO BELIEVE THAT THE TAX WAS NOT DEDUCTIBLE AT SOURCE FROM THE PAYMENT OF TRANSACTION CHARGES U/S 194J. ALTHOUGH THE LEARNED COUNSEL FOR THE ASSESSEE HAS TRIED TO DEMON STRATE BEFORE US THAT THE RELEVANT FACTS INVOLVED IN THE PRESENT CASE ARE SIM ILAR TO THE CASE OF KOTAK SECURITIES LTD. (SUPRA), WE ARE OF THE VIEW THAT TH IS STAND OF THE ASSESSEE REQUIRES VERIFICATION SINCE THIS ASPECT OF THE MATT ER HAS COME UP FOR CONSIDERATION FOR THE FIRST TIME BEFORE THE TRIBUNA L. WE, THEREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO R ESTORE THIS ISSUE TO THE FILE OF THE AO FOR VERIFYING THE STAND OF THE ASSESSEE FROM THE RELEVANT RECORD AND DECIDE THE SAME AFRESH ON SUCH VERIFICATION IN THE LIGHT OF GUIDELINES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN PARAGRAPH NO. 3 1 OF THE JUDGMENT AS EXTRACTED ABOVE. THEREFORE, GROUND NO.1 OF THE REVENUES APPEAL IS PARTLY ALLOWED IN THE MANNER AFORESAID. CONSEQUENTLY, GROUND NO.1 OF CRO SS OBJECTION IS ALLOWED ITA NO.8190/MUM/2010(A.Y. 2006-07) C.O. NO.62/MUM/2012 8 AND GROUND NO.2 & 5 (INCORRECTLY NUMBERED) ARE ALLO WED FOR STATICAL PURPOSES IN THE MANNER AFORESAID. 10. APROPOS GROUND NO.2 OF THE REVENUES APPEAL IT HAS ALREADY BEEN MENTIONED THAT ASSESSEE DID NOT PRESS THIS GROUND O F THE REVENUE, THEREFORE, THIS GROUND OF THE REVENUE REGARDING DELETING OF RS . 90,020/- UNDER SECTION 14A IS ALLOWED AND GROUND NO.3 OF ASSESSEES CROSS OBJECTION IS DISMISSED. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE AS W ELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE PARTLY ALLOWED IN THE MA NNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON THE 5 TH DAY OF SEPTEMBER, 2012 SD/- SD/- (P.M.JAGTAP ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 5 TH SEPT., 2012. COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R C BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.