SUBHKAM SECURITIES P.LTD, MUMBAI V. ACIT CIR 4(2), MUMBAI

ITA 3328/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59862 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABANIKANT NAYAK
• Assessee Lawyers: R C JAIN
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , J.M. ITA NO. 3328/MUM/2011 ASSESSMENT YEAR: 2007-08 SUBHKAM SECURITIES PVT. LTD., APPELLANT THE INTERNATIONAL HOUSE 4 TH FLOOR, NEW MARINE LINE, CROSS ROAD NO. 1, NEAR AMERICAN CENTRE, 16, M.K. ROAD, CHURCHGATE, MUMBAI 400 020. (PAN AADCS4498N) VS. ASSTT. COMMISSIONER OF INCOME-TAX-4(2), RESPONDENT 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. APPELLANT BY : MR. R.C. JAIN RESPONDENT BY : MR. ABANI KANT NAYAK DATE OF HEARING : 21/02/2012 DATE OF PRONOUNCEMENT: 29/02/2012 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF CIT(A)-8, MUMBAI, PASSED ON 19/11/2010 FOR THE A SSESSMENT YEAR 2007-08. 2. GROUND NO. 1 IS DIRECTED AGAINST THE ACTION OF T HE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS. 9,78,203/- IN RE SPECT OF CLAIM OF DEPRECIATION ON MEMBERSHIP FEE OF BOMBAY STOCK EXCH ANGE. ITA NO. 3328/MUM/11 M/S SUBHKAM SECURITIES PVT. LTD.. 2 3. THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS. 9,7 8,203/- ON MEMBERSHIP CARD OF NATIONAL STOCK EXCHANGE. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY CLAIM OF DEPRECIATION ON MEMBERSHIP CARD OF THE STOCK EXCHANGE SHOULD NOT BE DISALLOWED IN VIEW OF THE FACT THAT MEMBERSHIP CARD WAS NOT A DEPRECIABLE ASSET, T HE ASSESSEE HAD EXPLAINED THAT SINCE DEPRECIATION HAD BEEN ALLOWED IN ASSESSEES OWN CASE, IT SHOULD BE ALLOWED. AFTER DISCUSSING THE IS SUE ELABORATELY WITH CASE LAWS, THE AO DISALLOWED THE DEPRECIATION CLAIM OF THE ASSESSEE. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE A O ON THE GROUND THAT NO SUBMISSION WAS MADE BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS. AGGRIEVED, THE ASSESSEE IS I N APPEAL BEFORE THE TRIBUNAL. 4. AFTER HEARING THE PARTIES, AND PERUSING THE RECO RD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW WE FIND THAT THIS I SSUE IS COVERED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CA SE OF TECHNO SHARES AND STOCKS LTD. V. CIT, 327 ITR 323 (SC) WHE REIN IT WAS HELD THAT DEPRECIATION ON NSE/BSE CARD IS ALLOWABLE AS IT IS TREATED AS AN INTANGIBLE ASSET. RESPECTFULLY FOLLOWING THE SAID D ECISION, WE SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW DEPRECIATION CLAI M OF RS. 9,78,203/- ON MEMBERSHIP FEE OF BOMBAY STOCK EXCHANGE. THUS, T HIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. GROUND NO. 2 IS DIRECTED AGAINST THE ACTION OF T HE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS. 1,44,854/- ON AC COUNT OF TRANSACTION CHARGES. 6. THE ASSESSEE HAD DEBITED TRANSACTION CHARGES OF RS. 1,44,854/- AS THESE CHARGES ARE PAYABLE TO STOCK EXCHANGE AND LEASE LINE OPERATOR ON ACCOUNT OF SERVICES PROVIDED BY IT WITH REGARD TO TRANSACTIONS IN SECURITIES THROUGH THE EXCHANGE. TH E AO HELD THAT THE ITA NO. 3328/MUM/11 M/S SUBHKAM SECURITIES PVT. LTD.. 3 PAYMENTS MADE ON ACCOUNT OF TRANSACTION CHARGES BY WHATEVER NAME CALLED ARE TECHNICAL SERVICES FALLING WITHIN THE PU RVIEW OF SECTION 194J AND ARE THEREFORE LIABLE FOR DEDUCTION OF TAX I.E. A SUM OF RS. 1,44,854/- IS ADDED TO THE INCOME OF THE ASSESSEE F OR NON-DEDUCTION OF TDS. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT NON SUBMISSION IN THIS REGARD HAD BEEN MADE BY THE ASSESSEE DURING THE APPELLANT PROCEEDINGS. AGGRIEVE D BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 7. AFTER HEARING THE PARTIES AND PERUSING THE RECOR D AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S KOTAK SECURIT IES LTD. VIDE ITA NO. 3111 OF 2009, ORDER DATED 21 ST OCTOBER, 2011 WHEREIN THE HONBLE COURT HELD THAT THE TRANSACTION CHARGES PAID BY THE ASSESSEE TO THE STO CK EXCHANGE CONSTITUTE 'FEES FOR TECHNICAL SERVICES' C OVERED UNDER SECTION 194J OF THE ACT AND, THEREFORE, THE ASSESSEE WAS LIABLE TO DEDU CT TAX AT SOURCE WHILE CREDITING THE TRANSACTION CHARGES TO THE ACCOUNT OF THE STOCK EXCHANGE. RESPECTFULLY FOLLOW THE AFORESAID DECISION OF HONBLE JURISDICTI ONAL HIGH COURT, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS COUNT AND DI SMISS THE GROUND OF APPEAL OF THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF FEBRUARY, 2012. SD/- SD/- (P.M. JAGTAP) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 29 TH FEBRUARY, 2012 KV ITA NO. 3328/MUM/11 M/S SUBHKAM SECURITIES PVT. LTD.. 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, J BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.