ACIT, CHENNAI V. Sugal & Damani Share Brokers (P) Ltd., CHENNAI

ITA 155/CHNY/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51952 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-10-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 11-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: I VIJAYAKUMARC I T
• Assessee Lawyers: R KUMAR
• Keywords: Question of law
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENN AI BEFORE DR.O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER .. ITA NO.155/MDS./2009 ASSESSMENT YE AR:2003-04 ASSISTANT COMMISSIONER OF INCOME TAX , COMPANY CIRCLE VI(4), AAYAKAR BHAVAN, NEW BLOCK, 7 TH FLOOR, 121, M.G.ROAD, CHENNAI 600 034. VS. SUGAL & DAMAN SHARE BROKERS (P) LTD., 3,ANNA SALAI, CITY CENTRE PLAZA, I FLOOR, CHENNAI 600 002. PAN AACS 4658 M (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI I. VIJAYAKUMAR,C.I.T. DR ASSESSEE BY : SHRI R. KUMAR, ADVOCATE DATE OF HEARING : 13.10.11 DATE OF PRONOUNCEMENT : 13.10. 11 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2 003- 2004 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIO NER OF INCOME TAX (A) DATED 18.08.08. 2. THE FACTS OF THIS CASE LEADING TO THIS SECOND A PPEAL ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DE BITED TURNOVER FEE OF RS.22,21,129/- AGAINST SEBI. IT W AS ALSO NOTICED THAT THE ASSESSEE HAD PAID RS.10,58,739/- A ND PAGE OF 5 ITA. 155/MDS/09 SUGAL & DAMANI SHARE BROKERS P LTD. 2 BALANCE AMOUNT OF RS.11,62,390/- HAS BEEN SHOWN, IN THE BALANCE SHEET, AS PAYABLE. ACCORDING TO HIM THE AM OUNT OF RS.11,62,390/-, WHICH HAS BEEN DEBITED BUT NOT ACTU ALLY PAID, WILL ATTRACT SECTION 43B OF THE ACT AND HAS TO BE D ISALLOWED. ACCORDING TO ASSESSING OFFICER, ANY FEE CHARGED BY SEBI WOULD CONSTITUTE A FEE , WHICH IS CONTEMPLATED UNDER THE PROVISIONS OF SEC.43B OF THE ACT. ACCORDINGLY, HE HAS DISALLOWED THE ENTIRE AMOUNT U/S.43B OF THE ACT. B UT THE LD. COMMISSIONER OF INCOME TAX(A) HAS REVERSED HIS FIND ING, BY OBSERVING IN PARA-5 OF HIS ORDER, AS UNDER:- 5. I HAVE CONSIDERED THE ASSESSMENT ORDER, HONBL E SUPREME COURT ORDER AND VARIOUS DETAILS FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. FROM THESE DETAILS, I FIND THAT AMOUNT WAS PAID AS A REGISTRATION FEES. THE CALCULATION OF FEES WAS BAS ED ON THE TURNOVER. HONBLE SUPREME COURT HAS FRAMED THE QUESTION WHETHER THIS AMOUNT IS TAX OR DUTY OR NOT, BUT HONBLE COURT HAS NOT DECIDED THIS ISSUE. THEY HAVE DECIDED THAT IT IS LAWFUL. FROM THE DETAILS, I FIND THAT SEBI HAS NOT LEVIED ANY FEES WHICH CAN RESEMBLE AS TAX. IT IS A FEES PAID BY TH E BROKERS TO REGISTER WITH THE SEBI. HENCE I FIND TH AT THE AMOUNT WHICH WAS NOT ACTUALLY PAID BUT DEBITED IN THE P&L A/C AS PER DIRECTIONS OF THE HONBLE SUPREME COURT, WILL NOT ATTRACT THE PROVISIONS OF SEC.43B(A) OF THE I.T.ACT. IN VIEW OF THIS, THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER IS HEREBY DELETED. PAGE OF 5 ITA. 155/MDS/09 SUGAL & DAMANI SHARE BROKERS P LTD. 3 3. THE REVENUE HAS DISPUTED THIS DELETION ON THE F ORCE OF THE DECISION OF HONBLE MUMBAI BENCH OF THE TRIBUNA L RENDERED IN THE CASE OF ITO VS. SURESHCHAND JAIN R EPORTED IN 100 ITD 435. PER CONTRA, THE LD. AR HAS HEAVILY RE LIED ON THE APPELLATE ORDER AND HAS DRAWN SUPPORT IN HIS FAVOUR FROM THE DECISION OF THE HONBLE MADRAS HIGH COURT DATED 14. 12.10, RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. M/S.NAVIA MARKETS LTD.,A COPY OF WHICH HAS BEEN PRO DUCED ON RECORD. THE HONBLE MADRAS HIGH COURT HAS HELD AS U NDER:- 10. IN EFFECT THE HONOURABLE SUPREME COURT ITSELF HAS HELD THAT THE FEE PAYABLE UNDER THE PROVISIONS OF T HE SEBI ACT, RULES AND REGULATIONS FRAMED THEREUNDER CANNOT BE CONSTRUED AS A TAX OR FEE AND THAT THE PAYMENT OF SUCH CHARGES FOR THE PURPOSE OF REGISTRA TION OF STOCK BROKER AND FOR REGULATING ITS AFFAIRS IS O NLY FOR REGULATING THE ACTIVITIES OF THE SECURITIES MARKET AND FOR THE REGISTRATION OF THE BROKERS AND OTHER INTERMEDI ARIES IN THE SAID MARKET. THEREFORE, APPLYING THE ABOVE RATIO LAID DOWN BY THE HONOURABLE SUPREME COURT IN THE DECISION REPORTED IN [2009] 314 ITR 167 COMMISSIONE R OF INCOME TAX VS. MC DOWELL AND COMPANY LIMITED; AS WELL AS 2001 (104) COMPANY CASES 506 (B.S.E. BROKER S FORUM AND OTHERS VS. SECURITIES AND EXCHANGE BOARD OF INDIA AND OTHERS), WE HAVE NO HESITATION TO HOLD TH AT THE PAYMENT OF FEE PAID OR PAYABLE TO SEBI CANNOT BE BROUGHT WITHIN THE PROVISIONS OF SECTION 43-B OF TH E ACT AND CONSEQUENTLY THE CONCLUSION OF THE TRIBUNAL THEREFORE DOES NOT CALL FOR ANY INTERFERENCE. THE PAGE OF 5 ITA. 155/MDS/09 SUGAL & DAMANI SHARE BROKERS P LTD. 4 QUESTION OF LAW IS THEREFORE ANSWERED AGAINST THE APPELLANT. THE MERE PERUSAL OF THE ABOVE DECISION, WE FIND THA T THE IMPUGNED ISSUE STANDS COVERED BY THE JURISDICTIONAL HIGH COURT; IN THE FAVOUR OF THE ASSESSEE. AFTER CONSIDERING THE ABOVE LEGAL POSITION AND BINDING PRECEDENT OF THE JURISDICTIONAL HIGH COURT, WE UPHO LD THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (A) T HAT THE FEE PAID TO SEBI CANNOT BE BROUGHT WITHIN THE AMBIT OF SECTION 43-B OF THE ACT. IN THIS CASE, THE ASSE SSING OFFICER HAS BROUGHT TO TAX THE FEE PAID TO SEBI O N THE PREMISE THAT FEE FALLS WITHIN THE PURVIEW OF SECT ION 43B. ACCORDINGLY, THE DECISION OF THE HONBLE MUMBAI BEN CH WILL NOT APPLY IN THE FACE OF THE DECISION OF THE JURISDICTIONAL HIGH COURTS BINDING PRECEDENT. 4. IN RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED ON 13 TH OCTOBER, 2011. SD/- SD/- (DR.O.K.NARAYANAN ) ( HARI OM MARATHA ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 13 TH OCTOBER, 2011. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE PAGE OF 5 ITA. 155/MDS/09 SUGAL & DAMANI SHARE BROKERS P LTD. 5 DATE INITIALS 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHORITY 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S. 6. KEEP FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER