ITO 4(2)(3), MUMBAI V. R.R. CHOKANI STOCK BROKERS P. LTD, MUMBAI

ITA 2420/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9248 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 16-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P DEVADARAN
• Keywords: Depreciation; TDS; Capital Gains

Judgement Text

INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NO.2420 & 2421(MUM)/2009 (ASSESSMENT YEARS: 2004-05 & 2005-06) INCOME-TAX OFFICER 4(2)(3), MUMBAI. APPELLANT VS. M/S. R.R.CHOKANI STOCK BROKERS P. LTD. 9/16, D, FORT MANSION BRITISH HOTEL LANE, OFF. B S MARG FORT, MUMBAI-400 023. PAN AAACR 7391 E RESPONDENT APPELLANT BY : SHRI P.DEVADARAN. RESPONDENT BY : NONE. PER V.DURGA RAO, JM: THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST T HE ORDERS OF THE CIT(APPEALS) IV, MUMBAI, DATED 15-1- 2009 AND 30-1-2009 FOR THE ASSESSMENT YEARS 2004-05 AND 2005 -06 RESPECTIVELY. 2. THE ONLY ISSUE IN THE APPEAL FOR ASSESSMENT YEAR 2004- 05 AND ONE OF THE ISSUES IN APPEAL FOR ASSESSMENT Y EAR 2005-06 IS WHETHER THE CIT(APPEALS) IS JUSTIFIED IN ALLOWIN G DEPRECIATION ON BSE MEMBERSHIP CARD RELYING ON THE ITATS DECISI ON IN THE CASE OF M/S.TECHNO SHARES & STOCKS LTD. ITA 2420 & 2421/MUM/2009 PAGE 2 OF 5 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-CO MPANY IS A MEMBER OF BOMBAY STOCK EXCHANGE DEALING IN SHA RES AND SECURITIES AND STATED TO HAVING DIRECT CLIENTS DEAL ING WITH FINANCIAL INSTITUTIONS AND ALSO INVESTMENTS. THE A SSESSEE HAD DECLARED INCOMES FROM BROKERAGE, SHARES AND SECURIT IES, LONG TERM CAPITAL GAINS ON SALE OF SHARES AND ALSO INCOM E FROM OTHER SOURCES. THE ASSESSEE HAD ALSO CLAIMED DEPRECIATIO N ON MEMBERSHIP CARD IN ITS RETURN OF INCOME. THE AO DE CLINED TO GRANT DEPRECIATION ON THE MEMBERSHIP CARD. ON APPE AL, THE CIT(APPEALS) FOLLOWING THE ORDER OF THE ITAT, MUMBA I BENCH E IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 19 99-2000 TO 2001-02 AND 2003-04 DIRECTED FOR GRANT OF DEPRECIAT ION ON THE MEMBERSHIP CARD. BEING AGGRIEVED, REVENUE IS IN APP EAL BEFORE THIS TRIBUNAL. 4. NOBODY APPEARED ON BEHALF OF THE RESPONDENT ASSESSEE. WE HAVE HEARD LEARNED DR AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE JURISDICTIONAL HIGH C OURT HAS HELD IN THE CASE OF CIT V. TECHNO SHARES & SHARES LIMITED AND VARIOUS OTHER STOCK BROKING HOUSES (ITA NO. 971 OF 2006 AND 218 OF 2007) THAT DEPRECIATION CANNOT BE GRANTED ON BOMBAY STOCK EXCHANGE MEMBERSHIP CARD (BSE CARD) ACQUIRED ON OR AFTER 1 APRIL 1998 EITHER BY NOMINATION OR DIRECTLY THROUGH THE STOCK EXCHANGE. RESPECTFULLY FOLLOWING THE AFOREMENTIONE D DECISION OF THE JURISDICTIONAL HIGH COURT, WE REVERSE THE ORDER S OF THE ITA 2420 & 2421/MUM/2009 PAGE 3 OF 5 CIT(APPEALS) ON THIS ISSUE AND RESTORE THAT OF THE AO. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 5. THE ONLY OTHER ISSUE IN APPEAL FOR ASSESSMENT YE R 2005-06 RELATES TO DISALLOWANCE OF RS.44,130/- ON A CCOUNT OF NON DEDUCTION OF TDS ON TRANSACTION CHARGES AND VSA T/LEASE- LINE CHARGES. THE AO NOTED THAT THE ASSESSEE HAD D EBITED CLEARING HOUSE EXPENSES, TRANSACTION CHARGES, CUSTO DIAN CHARGES AND LEASE LINE CHARGES OF RS.44,130/-. THE AO WAS OF THE OPINION THAT ALL THESE CHARGES ARE TECHNICAL SERVIC ES FALLING WITHIN THE PURVIEW OF SECD.194J AND ARE THEREFORE L IABLE FOR DEDUCTION OF TAX. ACCORDINGLY, THE AO DISALLOWED T HE SUM OF RS.44,130/- AND ADDED BACK TO THE TOTAL INCOME OF T HE ASSESSEE. ON APPEAL, THE CIT(APPEALS) GRANTED RELIEF TO THE A SSESSEE. BEING AGGRIEVED, REVENUE IS IN APPEAL BEFORE THIS T RIBUNAL. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LEASE-LINE CHARGES AND TRANSACTION CHARGES ARE COMP OSITE CHARGES ALONG WITH TRANSACTION CHARGES FOR PROFESSI ONAL AND TECHNICAL SERVICES RENDERED BY THE EXCHANGE TO ITS MEMBERS AND THE CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE D ISALLOWANCE. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AND CONSIDERED THE MATERIAL ON RECORD. THE CIT(APP EALS) CONCLUDED THE ISSUE OBSERVING AS UNDER: ITA 2420 & 2421/MUM/2009 PAGE 4 OF 5 VSAT AND LEASE-LINE CHARGES ARE REIMBURSEMENT CHARGES PAID BY THE MEMBERS OF THE STOCK EXCHANGE IN LIEU OF INFRASTRUCTURE AND TRADIN G FACILITIES PROVIDED BY THE STOCK EXCHANGE. THE DOT HAS GRANTED LICENSE TO ITS STOCK EXCHANGE FOR INSTALLATION AND SETTING UP OF A CLOSE USER GROUP TELECOMMUNICATIONS NETWORK BASED ON VSATS AND LEASED LINES AND STOCK EXCHANGE COLLECTS THE VSAT A ND LEASE-LINE CHARGES FROM THE MEMBERS AND PASS THE SAME TO THE SERVICE PROVIDER. THE VSAT AND LEASE- LINE CHARGES ARE NOT PAYMENTS WHICH COME WITHIN THE DOMAIN OF FEE FOR TECHNICAL SERVICES AND THEY ARE ALSO NOT FOR ANY WORK DONE BY NSE FOR THE MEMBER BROKE R. THE TDS, THEREFORE IS NOT DEDUCTIBLE ON THE SAME LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT BEEN AB LE TO BRING ANY CONVINCING AND COGENT MATERIAL TO DISLODG E THE FINDING REACHED BY THE CIT(APPEALS). WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE CIT(APPEALS). THEREFORE, WE UPHOL D THE ORDER OF THE CIT(APPEALS) ON THIS ISSUE. 5. IN THE RESULT, THE APPEAL FOR ASSESSMENT YEAR 20 04-05 IS ALLOWED AND THE APPEAL FOR ASSESSMENT YEAR 2005- 06 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH JANU ARY, 2010. SD/- SD/- (P.M. JAGTAP) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATED : 28TH JANUARY, 2010. EKS* TRUE COPY ITA 2420 & 2421/MUM/2009 PAGE 5 OF 5 COPY TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. CIT- CONCERNED 4. CIT(A)- CONCERNED 5. DEPARTMENTAL REPRESENTATIVE D BENCH BY ORDER ASST REGISTRAR, ITAT, MUMBAI