ITO 4(2)(4), MUMBAI V. S.P. JAIN SECURITIES P. LTD, MUMBAI

ITA 247/MUM/2011

• Counselvise Citation: 24719914 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 16-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA SINGH , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER . / ITA NO. 247 / MUM ./ 2011 ( / ASSESSMENT YEAR : 200 7 08 ) INCOME TAX OFFICER WARD 4 ( 2 ) 4 , AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. / APPELLANT V/S M/S. S.P. JAIN SECURITIES PVT . LTD. 14, AMBALAL DOSHI MARG FOR, MUMBAI 400 020 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AADCS2423F / REVENUE BY : MR. ASHUTOSH RAJHANS / ASSESSEE BY : M S . AARTI VIS S ANJI / DATE OF HEARING 16 .09.2013 / DATE OF ORDER 27.09.2013 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE, C HALLENGING THE IMPUGNED ORDER DATED 10 TH NOVEMBER 2010, PASSED BY THE LEARNED M/S. S.P. JAIN SECURITIES PVT. LTD. 2 COMMISSIONER (APPEALS) VIII, MUMBAI, FOR THE QUANTUM OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 2007 08. 2. THE RE VENUE HAS MAINLY CHALLENGED THE DISALLOWANCE OF ` 5,80,358 AND ` 7,04,913 UNDER SECTION 40(A)(IA) IN RESPECT OF NSE / BS E TRANSACTION CHARGES AND V SAT CHARGES PAID TO STOCK EXCHANGE ON THE GROUND THAT THESE ARE COMPOSITE CHARGES FO R PROFESSIONAL AND TECHN ICAL SERVICES RENDERED BY THE STOCK EXCHANGE TO ITS MEMBERS ON WHICH THE ASSESSEE HAS FAILED TO DEDUCT TDS THEREON. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE, MS. AARATI VIS S ANJI , SUBMITTED THAT THE FIGURES TAKEN BY THE REVENUE IN ITS APPEAL AND ALSO IN THE ASSESSMENT ORDER ARE NOT CORRECT. SHE SUBMITTED THAT THE TOTAL V SAT CHARGES DEBITED IN THE PROFIT & LOSS ACCOUNT WAS ` 57,835 ONLY AND NOT ` 7,04,913 AS STATED BY THE ASSESSING OFFICER . IN SUPPORT OF HER CONTENTION, SHE DREW OUR ATTENTION TO PAGE 38 OF THE PAPER BOOK WHICH IS PART OF GROUPING OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 ST MARCH 2007. SHE ALSO DREW OUR ATTENTION TO PAGE 40 WHICH IS THE COPY OF LEDGER ACCOUNT OF V SAT CHARGES AND SUBMITTED THAT MOST OF THE EXPENDITUR E S HAVE BEEN RECOVERED AND CREDIT BALANCE WAS ONLY ` 57,835 WHICH WAS ULTIMATELY CLAIMED IN THE PROFIT & LOSS ACCOUNT. SIMILARLY, IN RESPECT OF NSE / BSE TRANSACTIONS, SHE SUBMITTED THAT ALMOST ALL THE AMOUNTS WERE RECOVERED FROM THE PARTY AND THIS AMOUNT HAS NOT BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT AT ALL. IN SUPPORT OF THIS, SHE DREW OUR ATTENTION TO PAGE 41 TO 45 OF THE PAPER BOOK WHICH IS A COPY OF THE LEDGER ACCOUNT AND ALSO PAGE 31 AND 37 WHICH ARE THE COPY OF PROFIT & LOSS ACCOUNT AND GROUPING O F INCOME AND EXPENDITURE. ONCE THE AMOUNT HAS NOT BEEN CLAIMED, THEN THE RE IS NO QUESTION OF DISALLOWANCE UNDER SECTION 40(A)(IA). WITHOUT PREJUDICE, SHE SUBMITTED THAT TH E ENTIRE ISSUE IS NOW M/S. S.P. JAIN SECURITIES PVT. LTD. 3 SQUARELY COVERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S KOTAK SECURITIES LTD. [ 2012 ] 340 ITR 333 (BOM.), WHERE IN THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE THAT THERE IS NO REQUIREMENT OF DEDUCTING OF TDS ON SUCH CHARGES RELATING TO NSE / BSE, TRANSACTION AND V SAT CHARGES , PA ID TO STOCK EXCHANGE. THIS DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT HAS BEEN FOLLOWED BY THE TRIBUNAL, MUMBAI BENCH, IN A CATENA OF CASES. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND ADMITTED THAT THE MISTAKE OF THE FIGURES AS POINTED OUT BY THE LEARNED COUNSEL APPEARS TO BE CORRECT. 5. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE PARTIES AND ALSO THE ISSUES INVOLVED, FIRST OF ALL, WE FIND THAT THE QUANTUM OF DISALLOWANCE MADE BY TH E ASSESSING OFFICER APPEARS TO BE ERRONEOUS FROM THE FACE OF THE RECORD. INSOFAR AS THE V SAT CHARGES ARE CONCERNED, THE ASSESSEE HAS CLAIMED ONLY A SUM OF ` 57,835 IN THE PROFIT & LOSS ACCOUNT AND, THEREFORE, DISALLOWANCE CANNOT EXCEED THIS AMOUNT . ON NSE / BSE TRANSACTIONS, T HE ASSESSEE HAS IN FACT SHOWN THE INCOME OF ` 2,815 , AS THERE WAS A NET SURPLUS IN COLLECTION OF TRANSACTION CHARGES RELATING TO NSE / BSE . O N A PERUSAL OF THE LEDGER ACCOUNT, IT IS SEEN THAT THE ASSESSEE HAS RECOVERED THE ENTIRE AMOU NT AND IN FACT THERE IS A NET SURPLUS IN THIS ACCOUNT. THUS, THERE IS NO QUESTION OF DISALLOWING ANY EXPENDITURE UNDER SECTION 40(A)(IA) ON THESE TRANSACTIONS . OTHERWISE ALSO, WE AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL THAT DISALLOWANCE, PER SE, O N PAYMENT OF V SAT CHARGES AND NSE / BSE CHARGES CANNOT BE MADE UNDER SECTION 40(A)(IA), AS THERE IS NO LIABILITY TO DEDUCT TDS BECAUSE IT IS BEYOND THE AMBIT OF PROFESSI ONAL AND TECHNICAL SERVICES . THUS, IN VIEW OF THE DECISION OF HON'BLE JURISDICTIONAL H IGH COURT IN KOTAK SECURITIES LTD. (SUPRA), THIS ISSUE IS DECIDED IN FAVOUR OF THE M/S. S.P. JAIN SECURITIES PVT. LTD. 4 ASSESSEE. CONSEQUENTLY, THE GROUND RAISED BY THE REVENUE IS TREATED AS DISMISSED. 6. 6 . IN THE RESULT, REVENUES APPEAL IS TREATED DISMISSED. 27TH SEPTEMBER 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER 2013 SD / - RAJENDRA SINGH ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 27 TH SEPTEMBER 2013 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / B Y ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI