DCIT 4(2), MUMBAI V. RRS SHARES & STOCK BROKERS P. LTD, MUMBAI

ITA 4230/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7169 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 09-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Keywords: Depreciation; TDS; Set aside
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY (AM) AND SHRI R.S. PADVEKAR (JM) ITA NO. 4230/MUM/2009 (ASSTT. YEAR : 2005-06) THE DCIT 4(2) APPELLANT ROOM NO. 642, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 V/S. M/S. RRS SHARES & STOCK BROKERS PVT. LTD. RESPO NDENT 24/5 RAJABAHADUR MANSION, AMBALAL DOSHI MARG, FORT, MUMBAI 23. APPELLANT BY : MR. T.T. JACOB RESPONDENT BY : MR. PARESH SHAPA RIA : O R D E R : PER R.S. PADVEKAR, J.M THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE I MPUGNED ORDER OF THE LD CIT(A)- IV, MUMBAI DATED 17.04.2009 FOR THE A.Y. 2005-06. 2. THE FIRST ISSUE IS IN RESPECT OF DEPRECIATION ON THE NSC MEMBERSHIP CARD OF RS. 4,14,220/- 3. WE HAVE HEARD THE PARTIES. THE LD COUNSEL WAS FAIR ENOUGH TO SUBMIT THAT THE ISSUE OF DEPRECIATION ON THE MEMBERSHIP CA RD IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT V/S. M/S. TECHNO SHARES AND STOCK LTD., 28 DTA 201 (BOM). AS FAIRLY SUBMITTED BY THE LD COUNSEL,AS THE ISSUE OF THE DE PRECIATION ON THE MEMBERSHIP CARD OF THE STOCK EXCHANGE HAS BEEN DEC IDED AGAINST THE ASSESSEE BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF M/S. TECHNO SHARES AND STOCK LTD (SUPRA). WE, THEREFORE, RESPE CTFULLY FOLLOWING THE ITA NO. 4230/MUM/2009 2 JUDGMENT OF THE JURISDICTIONAL HIGH COURT, ALLOW TH E GROUND NO. 1 AND 2 TAKEN BY THE REVENUE AND SET ASIDE THE ORDER OF THE CIT(A ) ON THIS ISSUE AND RESTORE ORDER OF THE A.O.. 4. THE NEXT ISSUE IS THE DISALLOWANCE MADE IN RESPE CT OF VSAT, LEASELINE AND TRANSACTION CHARGES, WHICH AS PER REVENUE, WERE COMPOSITE CHARGES FOR PROFESSIONAL AND TECHNICAL SERVICES RENDERED BY THE EXCHANGE TO ITS MEMBERS AND THE ASSESSEE HAS FAILED TO DEDUCT TDS THEREON. THE REVENUE HAS TAKEN GROUND NO. 3 ON THIS ISSUE. 5. WE HAVE HEARD THE PARTIES. THE LD COUNSEL SUBMI TTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F ITAT, MUMBAI IN THE CASE OF KOTAK SECURITIES V/S. ADDITIONAL CIT, MUMBAI, 12 4 TTJ (MUM) 241, AND THE HONBLE TRIBUNAL HAS HELD THAT THE STOCK EXCHANG E DOES NOT PROVIDE ANY MANAGERIAL SERVICES AND FEES PAID BY THE MEMBERS TO THE STOCK EXCHANGE IS NOT FOR ANY TECHNICAL SERVICES RENDERED AND HENCE , THERE IS NO OBLIGATION ON THE STOCK EXCHANGE TO DEDUCT TDS. AS SUBMITTED BY THE LD COUNSEL, NOW THIS ISSUE STANDS COVERED BY THE DECISION OF THE ITAT, M UMBAI IN THE CASE OF M/S. KOTAK SECURITIES (SUPRA). WE, THEREFORE, CONFIRM T HE ORDER OF THE LD CIT(A) ON THIS ISSUE AND DISMISS GROUND NO. 3. 6. THE NEXT ISSUE IS PENALTY OF RS. 52,752/- LEVIED BY NSC WHICH WAS DELETED BY THE LD CIT(A). 7. WE HAVE HEARD THE PARTIES. THE LD COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE IDENTICAL ISSUE HAS BEEN CONSIDERED BY TH E TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2004-05 AND THE TRIBUNAL CONFIR MED THE ORDER OF THE LD CIT(A) DELETING THE ADDITION. WE HAVE ALSO HEARD THE LD D.R. WE HAVE PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEES OW N CASE FOR THE A.Y. 2004-05 BEING ITA NO. 5638/MUM/2007 DT. 23.10. 2009 AND THE TRIBUNAL HAS HELD AS UNDER : 3. THE SECOND DISPUTE IS REGARDING ALLOWABILITY O F DEDUCTION ON ACCOUNT OF PENALTY OF RS.2,13,807/- IMPOSED BY AO. THE AO HELD THAT PENALTY PAID TO NSE WAS IN VIOLATION OF RULES AND R EGULATION OF NSE AND ITA NO. 4230/MUM/2009 3 THEREFORE THE SAME WAS NOT ALLOWABLE AS DEDUCTION. IN APPEAL CIT(A) HELD THAT PAYMENT MADE TO NSE WAS FOR DELAYED PAYME NT OF CERTAIN VIOLATIONS WHICH WAS IN THE NORMAL COURSE OF CARRY ING ON OF THE BUSINESS AND WAS NOT FOR INFRINGEMENT OF LAW. ACCO RDINGLY HE ALLOWED THE CLAIM AGGRIEVED BY WHICH THE REVENUE IS IN APPE AL. 3.1 WE HAVE HEARD BOTH THE PARTIES IN THE MATTER. THE LEARNED AR FOR THE ASSESSEE REFERRED TO THE DECISION OF THE TR IBUNAL IN ITA NOS. 1240, 1241/M/2006 IN CASE OF GOLD CREST CAPITAL MAR KETS LTD. IN WHICH THE TRIBUNAL HELD THAT NSE WAS NOT A STATUTORY BODY ON PAR WITH SEBI AND THEREFORE FINES AND PENALTIES LEVIED FOR UNFAIR TRADE PRACTICES AS SPECIFIED IN PARA 4.6 OF NSE REGULATIONS AND FOR U NBUSINESS LIKE CONDUCT AS SPECIFIED IN CLAUSE (IV)(4) OF THE NSE RULES COULD NOT BE QUOTED WITH VIOLATION OF STATUTORY RULE OF LAW. IT WAS ACCORDINGLY HELD THAT CLAIM WAS ALLOWABLE AS DEDUCTION. THE FACTS I N THE CASE OF THE ASSESSEE ARE IDENTICAL IN WHICH ALSO THE PENALTY HA S BEEN IMPOSED BY NSE FOR VARIOUS VIOLATIONS. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL (SUPRA) WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS THEREFORE UPHELD. WE HAVE, THEREFORE, NO REASON TO DIFFER FROM THE VI EW TAKEN BY THE TRIBUNAL IN ASSESSEES OWN CASE ON THIS ISSUE FOR THE A.Y. 200 4-05. WE, ACCORDINGLY, CONFIRM THE ORDER OF THE LD CIT(A) AND DISMISS GROU ND NO. 4. 8. GROUND NO. 5 & 6 ARE GENERAL IN NATURE. 9. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH DAY OF MARCH, 2010. SD/- SD/- (J. SUDHAKAR REDDY) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI, ON THIS 30 TH DAY OF MARCH, 2010. ITA NO. 4230/MUM/2009 4 :US COPY TO: 1. APPELLANT 2. RESPONDENT , 3.THE CIT(A)- IV, MUMBAI 4.THE CIT -4, MUMBAI 5.THE DR, D BENCH, MUMBAI 6.GUARD FILE BY ORDER TRUE COPY ASSTT..REGISTRAR, ITAT, MUMBAI. ITA NO. 4230/MUM/2009 5 DATE INITIALS 1. DRAFT DICTATED ON 25/3/10 --------------- SR.P.S . 2. DRAFT PLACED BEFORE AUTHORITY 26/3/10 ---------- ---- SR.P.S. 3. DRAFT PROPOSED & PLACED ----------- ---------- --- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED ----------- ----------- -- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO ----------- ------------ - SR.P.S. THE SR. P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON --------- ----------- -- SR.P.S. 7. FILE SENT TO THE BENCH CLERK --------- --------- ---- SR.P.S. 8. DATE ON WHICH FILE GOES TO THE ------- --------- ---- 9. DATE OF DISPATCH OF ORDER --------- --------- ----