ITO 4(2)(2), MUMBAI V. SSJ FINANCE & SECURITIES P.LTD, MUMBAI

ITA 3653/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49201 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: MRS VINITA SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI PRAMOD KUMAR, A.M. AND SHRI V. DURGA R AO, J.M. ITA NO. 3653/MUM/2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER-4(2)(2), APPELLANT ROOM NO. 644M 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. SSJ FINANCE & SECURITIES PVT. LTD., RESPONDENT SURYA MAHAL, 1 ST FLOOR, NEAR STOCK EXCHAGE TOWER, MUMBAI 400 023. (PAN AACCS6145B) APPELLANT BY : MR. S.K. SINGH RESPONDENT BY : MRS. VINITA SHAH . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 8, MUMBAI, PASSED ON 25/0/2010 FOR THE ASSE SSMENT YEAR 2006-07. 2. THE GROUND RAISED IN THIS APPEAL IS AGAINST THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF RS. 8,79,759/- AND RS. 7,87,450/- MADE U/S 40(A)(IA) IN RESPECT OF VSAT CH ARGES AND TRANSPORTATION CHARGES RESPECTIVELY PAID TO STOCK E XCHANGE. 3. BRIEFLY, STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD DEBITED RS. 8,79,759/- ON ACCOUNT OF VSAT CHARGES & RS. 7,87,450/- ON ACCOUNT TRANSACTION CHARGES RESPECTIVELY AS THES E CHARGES WERE ITA NO. 3653/M/2010 M/S SSJ FINANCE & SECURITIES PVT. LTD. 2 PAYABLE TO STOCK EXCHANGE ON ACCOUNT OF SERVICES PR OVIDED BY IT WITH REGARD TO TRANSACTIONS IN SECURITIES THROUGH THE EX CHANGE. IN VIEW OF THE PROVISIONS OF SECTION 40(IA), THE AO ASKED THE ASSESSEE AS TO WHY THE VSAT & TRANSACTIONS CHARGES SHOULD NOT BE TREAT ED AS FEE FOR TECHNICAL SERVICES WHICH WAS LIABLE FOR TAX DEDUCTI ON AT SOURCE AND SINCE THE SAME HAD NOT BEEN DONE, WHY IT SHOULD NOT BE DISALLOWED U/S 40(IA) OF THE ACT. IN REPLY, THE ASSESSEE FILE D ITS SUBMISSIONS VIDE LETTER DATED 21/11/2008, WHICH WERE EXTRACTED BY TH E AO IN HIS ORDER AT PAGES 2,3, 4 & 5. AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, THE AO DISCUSSED THE ISSUE AT LENGTH AND DISALLOWED THE VSAT CHARGES OF RS. 8,79,759/- AND TRANSACTION CHAR GES OF RS. 7,87,450/- ON THE GROUND OF NON-DEDUCTION OF TDS. O N APPEAL, THE CIT(A) DELETED THE DISALLOWANCES MADE BY THE AO. AG GRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE TH E US. 4. THE LEARNED REPRESENTATIVES OF THE PARTIES FAIRL Y AGREED THAT THE ISSUES UNDER CONSIDERATION ARE COVERED BY THE DECIS ION OF THE ITAT, MUMBAI BENCHE, IN ASSESSEES OWN CASE FOR ASSESSMEN T YEARS 2004-05 AND 2005-06 VIDE ITA NOS. 5981 & 5982/MUM/08 ORDER DATED 02/12/2009 WHEREIN THE ITAT HELD AS UNDER:- 25. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE F IND MERIT IN THE PEAL OF THE LEARNED COUNSEL FOR THE ASSESSEE TH AT THE ISSUE IS SQUARELY COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. IN THE CASE OF KOTAK SECURITIES LTD., VS. ACIT [2008] 25 SOT 440 ..THAT TRANSACTION FEE PAID CANNOT BE SAID TO BE A FEE PAID IN CONSIDERATION OF THE STOCK EXCHANGE R ENDERING ANY TECHNICAL SERVICES TO THE ASSESSEE. THE PROVISION O F SECTION 194J ARE THEREFORE NOT ATTRACTED. THEREFORE, THERE WAS N O OBLIGATION ON THE PART OF THE ASESSSEE TO DEDUCT TAX AT SOURCE. C ONSEQUENTLY, THE PROVISIONS OF SECTION 40(A)(IA) WERE ALSO NOT A TTRACTED AND THEREFORE THE DISALLOWANCE MADE IS DIRECTED TO BE D ELETED. THE ABOVE ORDER HAS BEEN FOLLOWED IN THE CASE OF HITESH KUMAR DAGA VS. ITO IN ITA NO. 5549/M/08 DATED 05/08/2009. IN T HE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF T HE TRIBUNAL DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE L D. CIT(A) ON THIS ACCOUNT AND ACCORDINGLY THE GROUND TAKEN BY THE REV ENUE IS REJECTED. ITA NO. 3653/M/2010 M/S SSJ FINANCE & SECURITIES PVT. LTD. 3 5. SINCE THE FACTS OF THE CASE UNDER CONSIDERATION ARE IDENTICAL TO THAT OF AYS. 2004-05 & 2005-06 IN ASSESSEES OWN CA SE, WE RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT IN THOSE YEARS AND IN THE LIGHT OF THAT WE UPHOLD THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCES OF RS. 8,79,759/- AND RS. 7,87,450/- MADE U/S 40(A)(IA) BY THE AO IN RESPECT OF VSAT CHARGES AND TRANSPORTATION CHARGES RESPECTIVELY PAID TO STOCK EXCHANGE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 23/06/2011. (PRAMOD KUMAR) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 23 RD JUNE, 2011 KV 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. ITA NO. 3653/M/2010 M/S SSJ FINANCE & SECURITIES PVT. LTD. 4 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 23/06/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 23/06/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER