ACIT 4(1), MUMBAI V. M/S VIOLET ARCH SECURITIES P. LTD. (Earlier M/s Alchemy Share & Stock Brokers P. Ltd), MUMBAI

ITA 298/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3844 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-05-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S C TIWARI
• Keywords: Question of law

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . , ! ' ' ' ' # $%&' , ( )* ! BEFORE SHRI D. MANMOHAN, VP AND SHRI N.K. BILLAIYA , AM ./I.T.A. NO. 298/MUM/2011 ( + + + + / ASSESSMENT YEAR : 2007-08 THE DCIT-4(1), AAYAKAR BHAVAN, MUMBAI / VS. M/S. VIOLET ARCH SECURITIES PVT. LTD., 102, KEDIA APARTMENTS, 29 FLOOR, DONGRI ROAD, MALABAR HILL, MUMBAI *, ( ./ -. ./PAN/GIR NO. : AADCA 0343C ( ,/ /APPELLANT ) .. ( 01,/ / RESPONDENT ) ,/ 2 / APPELLANT BY: SHRI MANOJ KUMAR 01,/ 3 2 / RESPONDENT BY : SHRI S.C. TIWARI 3 4( / DATE OF HEARING : 16.5.2013 56+ 3 4( / DATE OF PRONOUNCEMENT : 16.5.2013 )7 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A)-9, MUMBAI DT. 19.10.2010 PE RTAINING TO ASSESSMENT YEAR 2007-08. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE RE VENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF R S. 54,12,157/- MADE U/S. 40A(IA) IN RESPECT OF CHARGES PAID TO STOCK EX CHANGE. ITA NO. 298/M/11 2 3. A PERUSAL OF THE ASSESSMENT ORDER SHOW THAT THE AMOUNT OF RS. 54,12,157/- COMPRISES OF THREE ITEMS: 1) NSE VSAT CHARGES - RS. 1,10,000/- 2) LEASELINE CHARGES - RS. 1,71,970/- 3) TRANSACTION CHARGES - RS.50,30,187/- 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER WAS OF THE FIRM BELIEF THAT THESE CHARGES COME UNDER THE CATEGORY OF FEES FOR TECHNICAL SERVICES THEREBY SUBJECT TO TDS U/S. 194J OF THE ACT. ACCORDINGLY THE AO DISALLOWED RS. 54,12,157/- U/S. 40A(IA) OF THE ACT ON FAILURE OF THE ASSESSEE FOR N OT DEDUCTING TAX AT SOURCE. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). THE LD. CIT(A) ALLOWED THE APPEAL FOLLOWING THE ORDER OF HI S PREDECESSOR. 6. AGGRIEVED BY THE FINDING OF THE LD. CIT(A), REV ENUE IS BEFORE US. 7. SO FAR AS CHARGES ON ACCOUNT OF VSAT CHARGES AND LEASELINE CHARGES, THE ISSUE IS NOW WELL SETTLED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF ITO VS ANGEL CAPITAL & DEBIT MARKET LTD. IN ITA (L) 475 OF 2011 DECIDED ON 28 TH JULY, 2011. THIS LEAVES THE ISSUE OF DEDUCTABILITY OF TRANSACTION CHARGES OF RS. 50,30,187/-, THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THIS ISSUE HAS BEEN DECIDED AGAINST T HE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS M/S. KOTAK SECURITIES LTD IN ITA NO. 3111 OF 2009 D ECIDED ON 21 ST OCTOBER 21.10.2011. HOWEVER, AT THE SAME TIME THE LD. COUNSEL FOR THE ITA NO. 298/M/11 3 ASSESSEE DREW OUR ATTENTION TO THE ORDER OF THE HON BLE SUPREME COURT BY WHICH THE HONBLE SUPREME COURT HAS ACCEPTED A SPEC IAL LEAVE PETITION OF THE ASSESSEE ON IDENTICAL POINT OF LAW FOR PRECE DING ASSESSMENT YEAR. INVOKING THE PROVISIONS OF SEC. 158A OF THE ACT, TH E ASSESSEE WAS ASKED TO FILE A DECLARATION THAT IF THE AO AGREES TO APPL Y IN THE RELEVANT CASE THE FINAL DECISION ON THE QUESTION OF LAW IN THE OTHER CASE, HE SHALL NOT RAISE SUCH QUESTION OF LAW IN THE RELEVANT CASE IN APPEAL BEFORE ANY APPELLATE AUTHORITY. THE ASSESSEE FILED THE NECESSARY DECLARA TION IN FORM NO. 8. 8. THE LD. DEPARTMENTAL REPRESENTATIVE STATED THAT REVENUE HAS NO OBJECTION FOR ADMITTING THE DECLARATION FILED BY TH E ASSESSEE. 9. CONSIDERING THE ABOVE FACTS IN THE LIGHT OF THE PROVISIONS OF SEC. 158A AND FOLLOWING THE DECISION OF THE JURISDICTION AL HIGH COURT (SUPRA), WE DIRECT THE AO TO ALLOW THE EXPENDITURE ON ACCOUN T OF VSAT CHARGES AND LEASELINE CHARGES. EXPENDITURE ON ACCOUNT OF T RANSACTION CHARGE IS ACCORDINGLY TO BE DISALLOWED SUBJECT TO THE OUTCOME OF THE SLP FILED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.5.2013 . )7 3 6+ ( 8 9): 16.5.2013 6 3 ; SD/- SD/- (D. MANMOHAN ) (N. K. BILLAIYA ) ! /VICE PRESIDENT ( )* / ACCOUNTANT MEMBER MUMBAI; 9) DATED 16/05 /2013 . . ./ RJ , SR. PS ITA NO. 298/M/11 4 )7 )7 )7 )7 3 33 3 04$ 04$ 04$ 04$ <$+4 <$+4 <$+4 <$+4 / COPY OF THE ORDER FORWARDED TO : 1. ,/ / THE APPELLANT 2. 01,/ / THE RESPONDENT. 3. = ( ) / THE CIT(A)- 4. = / CIT 5. $>; 04 , , / DR, ITAT, MUMBAI 6. ; ? / GUARD FILE. )7 )7 )7 )7 / BY ORDER, 1$4 04 //TRUE COPY// / - - - - (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI