EDELWEIRS SECURITIES LTD.,MUMBAI V. ADDL. CIT RANGE - 4(1), MUMBAI

MA 190/MUM/2016

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M/s. Edelweiss Securities Ltd. filed an application under Section 254(2) of the Income Tax Act, 1961, seeking rectification of an earlier Tribunal order which had disallowed certain transaction charges claimed as deductions. The original disallowance was based on the interpretation that these charges were 'fees for technical services' under Section 194J, requiring TDS deductions. The Tribunal's earlier decision, which reversed the CIT(A)'s deletion of the disallowance, was contested by the assessee based on a subsequent Supreme Court decision that set aside a similar Bombay High Court ruling. The Tribunal dismissed the rectification application on procedural grounds of limitation and substantive grounds that the earlier decision had attained finality and could not be revisited based on later judicial interpretations.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32121 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2006-2007
• Other Referred Cases: CIT vs Kotak Securities Ltd., CIT vs Kotak Securities Ltd., 383 ITR 1 (SC), DCIT vs ANI Integrated Services Ltd., Beghar Foundation vs Justice K.S. Puttaswamy, [2021] 123 taxmann.com 344 (SC), CIT vs Reliance Telecom Ltd., 440 ITR 1 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Keywords: Condonation of delay; Set aside; Period of limitation; TDS; Rectification of order
• Section: 254(2); 22; 40(a)(ia); 194J

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “I”, MUMBAI BEFORE JUSTICE (RETD.) C.V. BHADANG, PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER MA NO. 190/MUM/2016 (Arising out of ITA NO.2453/MUM/2009) : A.Y. : 2006-07 M/s. Edelweiss Securities Limited 14th Floor, Express Towers Nariman Point, Mumbai – 400 021 PAN : AAACK3792N (Applicant) Vs. The Addl. Commissioner of Income Tax, Range 4(1) Mumbai (Respondent) Applicant by : Shri Madhur Agrawal & Shri Fenil Bhat Respondent by : Shri Ram Krishn Kedia, Sr.DR Date of Hearing : 31/01/2025 Date of Pronouncement : 10/02/2025 O R D E R PER JUSTICE (RETD.) C.V. BHADANG, PRESIDENT : This is an application by the assessee, Edelwiess Securities Ltd. under Section 254(2) of the Income Tax Act, 1961 (‘Act’ for short) seeking rectification of order dated 28.03.2012 (stated to be received by the assessee on 24.04.2012) in ITA Nos. 2453/Mum/2009 for assessment year 2006-07. 2. The brief facts are that the applicant is a company engaged in the business of share trading and broking. The applicant filed its Return of Income (RoI) for the subject year on 30.11.2006 declaring an income of Rs.50,96,39,737/-. The applicant had claimed deduction for various expenses, which, inter alia, included an amount of Rs.4,97,11,409/-, being ‘transaction charges’ paid by the applicant to the stock exchange for the purpose of trading in securities. 2 MA No. 190/Mum/2016 M/s. Edelweiss Securities Ltd. 3. The Assessing Officer vide his order dated 28.03.2008 passed under Section 143(3) of the Act, disallowed the said expenses towards transaction charges invoking Section 40(a)(ia) of the Act on the ground that the applicant ought to have deducted TDS on the said amount under Section 194J of the Act. In the opinion of the Assessing Officer, the transaction charges are in the nature of ‘fees for technical services’ which attracted the TDS provisions under Section 194J of the Act. 4. In appeal by the assessee, the learned CIT(A) by his order dated 05.01.2009 deleted the said disallowance, against which the Department came up in appeal in ITA No. 2453/Mum/2009. 5. The record discloses that two appeals each were filed by the assessee as well as the Revenue for assessment years 2005-06 and 2006-07 (a group of four appeals) which came to be disposed of by the Tribunal by a common order dated 28.03.2012. So far as ITA No. 2453/Mum/2009 with which we are presently concerned, the Tribunal has observed that the assessee had virtually conceded/accepted the disallowance made by the Assessing Officer and, in that view of the matter, had allowed Department’s appeal thereby reversing the order of learned CIT(A) (see para 34 of the order). 6. The present application is now filed on the ground that there was no such concession made. It is pointed out that the assessee was required to abide by the decision of jurisdictional Bombay High Court in CIT vs Kotak Securities Ltd., 340 ITR 333 (Bom) which held that such transaction charges are in the nature of ‘fees for technical services’ requiring TDS to be deducted under Section 194J of the Act. It is pointed out that the said decision was subject matter of challenge before the Supreme Court. The Supreme Court by order dated 29.03.2016 (reported in CIT vs Kotak Securities Ltd., 383 ITR 1 (SC)) set aside the decision of Bombay High Court. It is pointed out that the Supreme Court has also dismissed Civil Appeal No. 3155 of 2016 which was filed by the 3 MA No. 190/Mum/2016 M/s. Edelweiss Securities Ltd. Department against the judgment of Bombay High Court in applicant’s own case for assessment year 2005-06. 7. It is submitted by the learned counsel for applicant that the copy of order was received by the assessee on 24.04.2012 and, therefore, the present application which is filed on 18.04.2016, is within the limitation as it is filed within the period of four years. It is submitted that the limitation in this case would be governed by the pre- amended provisions where the period of limitation was four years. 8. Insofar as merits are concerned, it is submitted that the Supreme Court decision came on 29.03.2016, which is the ground for seeking rectification. 9. The learned DR has submitted that the application is not filed within the period of four years from the date of order, which was the provision prior to amendment in 2016. Thus, the application is barred by limitation. 10. Insofar as the merits are concerned, reliance is placed on the order of co- ordinate Bench of this Tribunal at Mumbai in MA No. 167/Mum/2023 dated 29.05.2024 (arising out of ITA No. 1634/Mum/2021 in DCIT vs ANI Integrated Services Ltd.). It is submitted that the co-ordinate Bench of this Tribunal has held that the application for rectification cannot lie on the basis of any subsequent decision overruling the earlier decision, which is the basis of the order sought to be rectified. He, therefore, submitted that the application be dismissed. 11. We have considered the rival circumstances and submissions made. 12. First, we propose to deal with the issue of limitation. At the relevant time when the order under reference was passed, the provisions of Sub-section (2) of Section 254 of the Act provided for limitation of four years for filing an application for rectification from the date of order. Thus, notwithstanding the fact that limitation post 2016 has been now amended to be six months from the end of the month in which the order is 4 MA No. 190/Mum/2016 M/s. Edelweiss Securities Ltd. passed, as the order under reference in this case was passed prior to 2016, the period of limitation of four years would be applicable. However, even then, the application which is filed on 18.04.2016 is filed beyond the period of four years and there is no provision for condonation of delay made under Section 254(2) of the Act. Considering the overall circumstances, we find that the application as framed and filed is barred by limitation. 13. Even so far as merits are concerned, we find that no case for rectification is made out. It is trite that when the order was passed, the decision of jurisdictional Bombay High Court in Kotak Securities Ltd. (supra) was holding the field. The order dated 28.03.2024, which is subject matter of present rectification, had attained finality as the same was not carried any further. Thus, the order had attained finality inter-parties. A co-ordinate Bench of this Tribunal in the case of ANI Integrated Services Ltd. (supra) has held that the order of Tribunal cannot be recalled/rectified based on subsequent judgment of a superior court when the order of Tribunal had attained finality inter- parties (see para 22 of the order). The co-ordinate Bench while holding so has placed reliance on a Constitution Bench decision of Hon’ble Supreme Court in Beghar Foundation vs Justice K.S. Puttaswamy, [2021] 123 taxmann.com 344 (SC) and a decision in CIT vs Reliance Telecom Ltd., 440 ITR 1 (SC). Thus, we find that the application, as framed and filed, cannot be entertained on either count, i.e. both on limitation and on merits. The application is accordingly dismissed. Order pronounced in the open court on 10/02/2025. Sd/- Sd/- (AMARJIT SINGH) (JUSTICE (RETD.) C.V. BHADANG) ACCOUNTANT MEMBER PRESIDENT Mumbai; Dated : 10/02/2025 SSL 5 MA No. 190/Mum/2016 M/s. Edelweiss Securities Ltd. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(Judicial) 4. PCIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai "