S.S.J FINANCE & SECURITIES P.LTD, MUMBAI V. ITO (TDS) WD 3(2), MUMBAI

ITA 3559/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9012 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 19-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: RISHABH S HAH
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 2

Judgement Text

, B BB B INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , IOU IOUIOU IOU , BEFORE S/SH. RAJENDRA, ACCOUNTANT MEMBER & P AWAN SINGH, JUDICIAL MEMBER /.ITA NO.3559/MUM/2014, /ASSESSMENT YEAR-2008-09 M/S SSJ FINANCE & SECURITIES PVT. LTD. 1 ST FLOOR, SURYA MAHAL, B B MARG, FORT, MUMBAI-400023. PAN: AABCS4245H VS. ITO (TDS),WARD-3(2), MUMBAI. ( / APPELLANT) ( / RESPONDENT) /.ITA NO.3560/MUM/2014, /ASSESSMENT YEAR-2009-10 M/S SSJ FINANCE & SECURITIES PVT. LTD.(SSJ HOLDING PVT. LTD. MERGED WITH SSJ FINANCE & SECURITIES PVT. LTD., 1 ST FLOOR, SURYA MAHAL, B B MARG, FORT, MUMBAI-400023. PAN: AABCS4245H VS. ITO (TDS),WARD-3(3), MUMBAI. ( / APPELLANT) ( / RESPONDENT) ! / ASSESSEE BY : SHRI RISHABH SHAH (AR) / REVENUE BY : SHRI VISHWAS MUNDHE (DR) ' / DATE OF HEARING : 03 -01-2017 ! '( / DATE OF PRONOUNCEMENT : 05 -01-2017 , 1961 ' 254(1) #$ ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER PAWAN SINGH, J.M. IOU IOUIOU IOU : 1. THESE TWO APPEALS ARE FILED BY ASSESSEE U/S. 253 OF THE INCOME-TAX ACT AGAINST THE TWO SEPARATE ORDER OF LD. COMMISSIONER OF INCOME-TAX (A PPEALS)-14, MUMBAI (FOR SHORT THE CIT(A) DATED 18.03.2014 FOR ASSESSMENT YEAR (AY) 20 08-09 & 2009-10. IN BOTH THE APPEALS, COMMON GROUNDS OF APPEAL ARE RAISED, THUS, BOTH THE APPEAL(S) WERE CLUBBED, HEARD TOGETHER AND ARE BEING DECIDED BY COMMON ORDER. 2. IN ITA NO. 3559//MUM/2014, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN PASSING THE EX-PARTE ORDER WITHOUT PROVIDI NG THE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN PASSING THE ORDER U/S.201 (1)/201(1A) OF THE INCOME TAX ACT, 1961 BY RAISING A DEMAND OF RS. 35,917/- ON ACCOUNT OF ALLEGED NON DEDUCTION OF TDS ON THE TRAI NING EXPENSE OF RS.2,42,000/-, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT CONFIRMING THE ACTION OF LEARNED ASSES SING OFFICER IN TREATING THE APPELLANT IN DEFAULT FOR NON DEDUCTION OF TDS ON TRAINING CHA RGES OF RS.2,42,000/ - WITHOUT 2 ITA NOS. 3559 & 3560/M/2014 M/S SSJ FINANCE & SECU RITIES PVT. LTD. APPRECIATING THE FACT THAT HON'BLE CIT(A) HAD ALREA DY VIDE ORDER DATED 20.05.2011 GRANTED THE RELIEF TO THE ASSESSEE THAT NO TDS IS R EQUIRED TO DEDUCTED ON THE TRAINING CHARGES OF RS.2,42,000/-. 3. IN ITA NO. 3560//MUM/2014, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN PASSING THE EX-PARTE ORDER WITHOUT PROVIDI NG THE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN PASSING THE ORDER U/S.201(1) /201(1A) OF THE INCOME TAX ACT,1961 BY R AISING A DEMAND OF RS.5,86,882/- ON ACCOUNT OF ALLEGED SHORT TERM PAYMENT OF TDS WIT HOUT APPRECIATING THE FACT THAT THE TAN NO MUMS45801A IS NOT BELONGED TO THE APPELLANT, (THE APPELLANTS FILED THE TDS RETURN UNDER THE TAN NO MUMS27792C) WHICH IS BAD IN LAW AND REQUIRED TO BE QUASHED IMMEDIATELY. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN TREATING THE APPELLANT IN DEFAULT FOR SHORT PAYMENT OF TDS ON TRANSACTION CHA RGES PAID TO NSE WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD ALREAD Y DEDUCTED THE TDS @10.3% I.E RS.4,46,525/- ON THE PAYMENT OF TRANSACTION CHARGES OF RS.43,35,196/-. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN TREATING THAT THE ASSESSEE IS LIABLE TO DEDUCT THE TDS OF RS.16,69,196/- ON PA YMENT ON ACCOUNT OF TRANSACTION CHARGES, WITHOUT CONSIDERING THE FACTS AND CIRCUMST ANCES OF THE CASE. 4. FIRST WE SHALL TAKE UP ITA NO. 3559/MUM/2014, LD. A UTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE HAS ARGUED THAT THE CIT(A) PASSED THE ORDE R EX-PARTE AND NO FAIR AND PROPER OPPORTUNITY WAS GIVEN AND ARGUED THAT SIMILAR ORDER WAS PASSED IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE LD. AR OF ASSESSEE FURTHER AR GUED THAT THE CASE WAS FIXED ON 11.03.2014 BEFORE THE LD. CIT(A) AND THE ASSESSEE F ILED AN APPLICATION FOR SEEKING ADJOURNMENT. THE ASSESSEE WAS INFORMED IN WRITING O N THE APPLICATION THAT A FRESH NOTICE WOULD BE GIVEN TO THE ASSESSEE. HOWEVER, NO NOTICE FOR FRESH HEARING WAS ISSUED AND THE ORDER WAS PASSED WITHOUT GIVING ANY FURTHER NOTICE. THE LD. AR OF THE ASSESSEE FILED COPY OF THE APPLICATION, WHICH FILED BEFORE THE LD. CIT( A) WITH A WRITING FRESH NOTICE WOULD BE GIVEN. COPY OF WHICH WAS SHOWN TO THE LD DR. THE L D AR PRAYED THAT THE CASE MAY BE RESTORED TO THE FILE OF CIT(A) FOR FRESH FINDING ON MERIT. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE SUPPOR TED THE ORDER OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND SEEN THE ORDER OF LD. CIT(A) AND NOTICED THAT LD. CIT(A) HAS RECORDED THAT NON-APPEA RED ON BEHALF OF ASSESSEE. CONSIDERING THE CONTENTION OF LD. AR OF THE ASSESSEE THAT NO FA IR AND PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE. THE ASSESSEE WAS NOT GIVEN FURTHER NOT ICE AFTER 11.03.2014. CONSIDERING THE PRINCIPLE OF NATURAL JUSTICE, WE DEEM IT APPROP RIATE TO RESTORE ALL THE GROUNDS OF APPEAL TO THE FILE OF LD. CIT(A) TO DECIDE THE CASE AFRESH. N EEDLESS TO SAY THAT LD. CIT(A) SHALL GRANT 3 ITA NOS. 3559 & 3560/M/2014 M/S SSJ FINANCE & SECU RITIES PVT. LTD. ADEQUATE AND SUFFICIENT OPPORTUNITY BEFORE PASSING THE ORDER AND FURTHER ALLOWED TO FILE FURTHER INFORMATION OR DOCUMENT, IF REQUIRED BY ASS ESSEE. 6. WITH THESE OBSERVATIONS, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 3560/MUM/2014 7. THE LD. AR OF THE ASSESSEE DURING THE ARGUMENT MADE THE STATEMENT THAT HE IS NOT PRESSING GROUND NO.2 & 3 RAISED IN THE PRESENT APPEAL. FURTH ER THE LD. AR OF THE ASSESSEE NOT ARGUED ANYTHING AGAINST GROUND NO.1. THUS, THE GROUND NO.1 IS TREATED AS NOT PRESSED AND GROUND NO.2 AND 3 ARE ALSO DISMISSED AS NOT PRESSED. 8. GROUND NO.4 RELATES TO NON-DEDUCTION OF TDS ON ACCO UNT OF PAYMENT OF TRANSACTION CHARGES. THE LD. AR OF THE ASSESSEE ARGUED THAT THI S GROUND OF APPEAL IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE APEX COURT CIT VS. KOTAK SECURITIES [(383 ITR 01 (SC)]. THE LD. DR FOR THE REVENUE HAS NOT DISPUTED THE FACTUAL MATRIX OF THE CASE. 9. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND SEEN THAT THE HONBLE APEX COURT WHILE CONSIDERING THE SCOPE OF SECTION 194J, MADE T HE FOLLOWING ORDER: 8. A READING OF THE VERY ELABORATE ORDER OF THE AS SESSING OFFICER CONTAINING A LENGTHY DISCOURSE ON THE SERVICES MADE AVAILABLE BY THE STO CK EXCHANGE WOULD GO TO SHOW THAT APART FROM FACILITIES OF A FACELESS SCREEN BASED TR ANSACTION, A CONSTANT UPGRADATION OF THE SERVICES MADE AVAILABLE AND SURVEILLANCE OF THE ESS ENTIAL PARAMETERS CONNECTED WITH THE TRADE INCLUDING THOSE OF A PARTICULAR/ SINGLE TRANS ACTION THAT WOULD LEAD CREDENCE TO ITS AUTHENTICITY IS PROVIDED FOR BY THE STOCK EXCHANGE. ALL SUCH SERVICES, FULLY AUTOMATED, ARE AVAILABLE TO ALL MEMBERS OF THE STOCK EXCHANGE IN RESPECT OF EVERY TRANSACTION THAT IS ENTERED INTO. THERE IS NOTHING SPECIAL, EXCLUSIVE O R CUSTOMISED SERVICE THAT IS RENDERED BY THE STOCK EXCHANGE. 'TECHNICAL SERVICES' LIKE 'M ANAGERIAL AND CONSULTANCY SERVICE' WOULD DENOTE SEEKING OF SERVICES TO CATER TO THE SP ECIAL NEEDS OF THE CONSUMER/USER AS MAY BE FELT NECESSARY AND THE MAKING OF THE SAME AV AILABLE BY THE SERVICE PROVIDER. IT IS THE ABOVE FEATURE THAT WOULD DISTINGUISH/IDENTIFY A SERVICE PROVIDED FROM A FACILITY OFFERED. WHILE THE FORMER IS SPECIAL AND EXCLUSIVE TO THE SEEKER OF THE SERVICE, THE LATTER, EVEN IF TERMED AS A SERVICE, IS AVAILABLE TO ALL AN D WOULD THEREFORE STAND OUT IN DISTINCTION TO THE FORMER. THE SERVICE PROVIDED BY THE STOCK EXCHANGE FOR WHICH TRANSACTION CHARGES ARE PAID FAILS TO SATISFY THE A FORESAID TEST OF SPECIALIZED, EXCLUSIVE AND INDIVIDUAL REQUIREMENT OF THE USER OR CONSUMER WHO MAY APPROACH THE SERVICE PROVIDER FOR SUCH ASSISTANCE/SERVICE, IT IS ONLY SE RVICE OF THE ABOVE KIND THAT, ACCORDING TO US, SHOULD COME WITHIN THE AMBIT OF THE EXPRESSI ON 'TECHNICAL SERVICES' APPEARING IN EXPLANATION 2 OF SECTION 9(1)(VII) OF THE ACT IN TH E ABSENCE OF THE ABOVE DISTINGUISHING FEATURE, SERVICE, THOUGH RENDERED, WOULD BE MERE IN THE NATURE OF A FACILITY OFFERED OR AVAILABLE WHICH WOULD NOT BE COVERED BY THE AFORESA ID PROVISION OF THE ACT. 9. THERE IS YET ANOTHER ASPECT OF THE MATTER WHICH, IN OUR CONSIDERED VIEW, WOULD REQUIRE A SPECIFIC NOTICE. THE SERVICE MADE AVAILAB LE BY THE BOMBAY STOCK EXCHANGE [BSE ONLINE TRADING (BOLT) SYSTEM] FOR WHICH THE CH ARGES IN QUESTION HAD BEEN PAID BY THE APPELLANT - ASSESSEE ARE COMMON SERVICES THA T EVERY MEMBER OF THE STOCK EXCHANGE IS NECESSARILY REQUIRED TO AVAIL OF TO CAR RY OUT TRADING IN SECURITIES IN THE STOCK EXCHANGE. THE VIEW TAKEN BY THE HIGH COURT TH AT A MEMBER OF THE EXCHANGE HAS AN OPTION OF TRADING THROUGH AN ALTERNATIVE MODE IS NOT CORRECT. A MEMBER WHO WANTS TO CONDUCT HIS DAILY BUSINESS IN THE STOCK EXCHANGE HA S NO OPTION BUT TO AVAIL OF SUCH SERVICES. EACH AND EVERY TRANSACTION BY A MEMBER IN VOLVES THE USE OF THE SERVICES PROVIDED BY THE STOCK EXCHANGE FOR WHICH A MEMBER I S COMPULSORILY REQUIRED TO PAY AN 4 ITA NOS. 3559 & 3560/M/2014 M/S SSJ FINANCE & SECU RITIES PVT. LTD. ADDITIONAL CHARGE (BASED ON THE TRANSACTION VALUE) OVER AND ABOVE THE CHARGES FOR THE MEMBERSHIP IN THE STOCK EXCHANGE. THE ABOVE FEATURE S OF THE SERVICES PROVIDED BY THE STOCK EXCHANGE WOULD MAKE THE SAME A KIND OF A FACI LITY PROVIDED BY THE STOCK EXCHANGE FOR TRANSACTING BUSINESS RATHER THAN A TEC HNICAL SERVICE PROVIDED TO ONE OR A SECTION OF THE MEMBERS OF THE STOCK EXCHANGE TO DEA L WITH SPECIAL SITUATIONS FACED BY SUCH A MEMBER(S) OR .THE SPECIAL NEEDS OF SUCH MEMB ER(S) IN THE CONDUCT OF BUSINESS IN THE STOCK EXCHANGE. IN OTHER WORDS, THERE IS NO EXC LUSIVITY TO THE SERVICES RENDERED BY THE STOCK EXCHANGE AND EACH AND EVERY MEMBER HAS TO NECESSARILY AVAIL OF SUCH SERVICES IN THE NORMAL COURSE OF TRADING IN SECURIT IES IN THE STOCK EXCHANGE. SUCH SERVICES, THEREFORE, WOULD UNDOUBTEDLY BE APPROPRIA TE TO BE TERMED AS FACILITIES PROVIDED BY THE STOCK EXCHANGE ON PAYMENT AND DOES NOT AMOUN T TO 'TECHNICAL SERVICES' PROVIDED BY THE STOCK EXCHANGE, NOT BEING SERVICES SPECIFICALLY SOUGHT FOR BY THE USER OR THE CONSUMER. IT IS THE AFORESAID LATTER FEATURE OF A SERVICE RENDERED WHICH IS THE ESSENTIAL HALLMARK OF THE EXPRESSION 'TECHNICAL SER VICES' AS APPEARING IN EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT. 10. FOR THE AFORESAID REASONS, WE HOLD THAT THE VIE W TAKEN BY THE BOMBAY HIGH COURT THAT THE TRANSACTION CHARGES PAID TO THE BOMBAY STO CK EXCHANGE BY ITS MEMBERS ARE FOR 'TECHNICAL SERVICES' RENDERED IS NOT AN APPROPRIATE VIEW. SUCH CHARGES, REALLY, ARE IN THE NATURE OF PAYMENTS MADE FOR FACILITIES PROVIDED BY THE STOCK EXCHANGE. NO TDS ON SUCH PAYMENTS WOULD, THEREFORE, BE DEDUCTIBLE UNDER SECTION 194J OF THE ACT. 10. CONSIDERING THE CONTENTION OF LD. AR OF THE ASSESSE E, WE DEEM IT APPROPRIATE TO RESTORE ALL THE GROUNDS OF APPEAL TO THE FILE OF LD. CIT(A) TO DECIDE THE CASE AFRESH. NEEDLESS TO SAY THAT LD. CIT(A) SHALL GRANT ADEQUATE AND SUFFICIENT OPPO RTUNITY BEFORE PASSING THE ORDER AND FURTHER ALLOWED TO FILE FURTHER INFORMATION OR DOCU MENT, IF REQUIRED BY ASSESSEE. 11. WITH THESE OBSERVATIONS, APPEAL OF THE ASSESSEE IS ALLOWED. AS A RESULT, BOTH THE APPEAL ITA NO.3559 /M/2014 IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL ITA NO.3560/M/2014 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JANUARY 2017. + ! , - ( , 201 7 ! 12 3 SD/- SD/- ( / RAJENDRA ( IOU IOUIOU IOU / PAWAN SINGH)) ( / ACCOUNTANT MEMBER # ( / JUDICIAL MEMBER 2 /MUMBAI, - /DATE: 05.01.2017 SK ' )*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 45 ( 6' , 4. THE CONCERNED CIT / 45 6' 5. DR E BENCH, ITAT, MUMBAI / 781 '95 B BB B , . . . 2 6. GUARD FILE/ 1 2 7' /TRUE COPY// + / BY ORDER, / DY./ASST. REGISTRAR ( 95 , 2 /ITAT, MUMBAI