ACIT 4(3), MUMBAI V. SETU SECURITIES LTD, MUMBAI

ITA 3224/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2327 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 15-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MOHAPATRA
• Assessee Lawyers: MEENA H SHAH
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, E BENCH, MUMBAI. BEFORE SHRI S.V.MEHROTRA, AM & SMT ASHA VIJAYRAGHA VAN,JM I.T.A. NO.3224/MUM/2009 ASSESSMENT YEAR: 2005-06 THE ACIT 4(3), V. SETU SECURITIES LTD., AAYAKAR BHAVAN, M.K. ROAD, 502, SHREYAS APA RTMENT, 51, T.P.S. MUMBAI. ` ROAD, BORIVALI (W), MUMBAI. PA NO.AAGCS 9319 K (APPELLANT) (RESPONDENT) ASSESSEE BY: MEENA H.SHAH REVENUE BY : SHRI S.K.MOHAPATRA O R D E R PER S.V.MEHROTRA, AM THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 3 RD MARCH, 2009 OF LD CIT (A)-XV, MUMBAI DELETING THE DISALL OWANCE MADE IN RESPECT OF VSAT/LEASELINE AND TRANSACTION CHARGES FOR THE ASS ESSMENT YEAR 2005-06. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY, IN THE RELEVANT ASSESSMENT YEAR, WAS ENGAGED IN THE BUSINESS OF SUB-BROKING IN SHARE S & SECURITIES. THE AO DISALLOWED THE TRANSACTION CHARGES AMOUNTING TO RS.4,56,306.02 PAID TO STOCK EXCHANGES (BSE/NSE), VSAT AND LEASELINE CHARGES OF RS.1,42,62 8/- ON THE GROUND THAT TAX HAD NOT BEEN DEDUCTED TREATING THE SAME AS TECHNICAL SERVIC ES. ON APPEAL, LD CIT (A), FOLLOWING THE DECISION OF THE ITAT MUMBAI IN THE CASE OF KOTA K SECURITIES V ACIT, IN ITA NO,.1955/M/07, DELETED THE ADDITION. BEING AGGRIEV ED, THE REVENUE IS IN APPEAL BEFORE US. 3. HAVING HEARD BOTH THE SIDES, WE FIND THAT THIS I SSUE IS COVERED BY THE DECISION OF THE ITAT MUMBAI IN THE CASE OF KOTAK SECURITIES LTD V. ACIT, 24 DTR 214(MUM), WHEREIN, IT WAS HELD AS UNDER:- ITA NO.3224/M/2009 M/S. SETU SECURITIES LTD 2 THE TRANSACTION FEE IS NOT PAID IN CONSIDERATION OF ANY SERVICE PROVIDED BY THE STOCK EXCHANGE. IT IS A PAYMENT FOR USE OF FACILITIES PROVIDED BY THE STOCK EXCHANGE AND SUCH FACILITIES ARE AVAILABLE FO R USE BY ANY MEMBER. THE PROVISIONS OF S.194J WHICH CASTS A BURDEN ON A PERSON TO DEDUCT AT SOURCE AND TREAT HIM A DEFAULTER ON FAILURE TO DEDU CT TAX AT SOURCE, NEEDS TO BE INTERPRETED STRICTLY AND IN THE ABSENCE OF A CLEAR OBLIGATION ON THE PART OF A PERSON SPELT OUT IN UNAMBIGUOUS TERMS BY THE PROVISIONS OF S.194J R/W EXPLN. 2 TO S.9(1)(VII) OF THE ACT, SUCH OBLIGATION CANNOT BE IMPLIED OR LEFT TO THE IPSI DIXIT OF THE REVENUE AU THORITIES. WE, THEREFORE, HOLD THAT TRANSACTION FEE PAID CANNOT BE SAID TO BE A FEE PAID IN CONSIDERATION OF THE STOCK EXCHANGE RENDERING ANY T ECHNICAL SERVICES TO THE ASSESSEE. THE PROVISIONS OF S.194J ARE, THEREF ORE, NOT ATTRACTED. THEREFORE, THERE WAS NO OBLIGATION ON THE PART OF T HE ASSESSEE TO DEDUCT TAX AT SOURCE. CONSEQUENTLY, THE PROVISIONS OF SEC TION 30(A)(IA) WERE ALSO NOT ATTRACTED AND, THEREFORE, THE DISALLOWANCE MADE IS DIRECTED TO BE DELETED. RESPECTFULLY, FOLLOWING THE DECISION OF A CO-ORDINA TE BENCH OF THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES LTD (SUPRA), WE REJECT THE GROUND TAKEN BY THE REVENUE. 4. IN THE RESULT, APPEAL FILED BY THE REVENUE STAND S DISMISSED. PRONOUNCED ON 13 TH APRIL, 2010 SD/- (ASHA VIJAYRAGHAVAN) (JUDICIAL MEMBER) SD/- (S.V. MEHROTRA) (ACCOUNTANTMEMBER) MUMBAI, DATED 13 TH APRIL, 2010 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-, MUMBAI 4. COMMISSIONER OF INCOME TAX, CITY-, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO.3224/M/2009 M/S. SETU SECURITIES LTD 3 DATE INITIALS 1. DRAFT DICTATED ON 12.4.2010 PS 2. DRAFT PLACED BEFORE AUTHOR 12.4.2010 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER ITA NO.3224/M/2009 M/S. SETU SECURITIES LTD 4