AJCON GLOBAL SERVICES LTD, MUMBAI V. ITO 4(1)(1), MUMBAI

ITA 50/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3948 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMCHANDRAN
• Keywords: Earning of tax free income; Proportionate interest
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. : 5 0 /MUM/20 1 3 (ASSESSMENT YEAR: 200 9 - 1 0 ) AJCON GLOBAL SERVICES LTD. , 101, SAMARTH, 151 LT P.N. KOTNIS ROAD, MAHIM, MUMBAI - 400 0 16 PAN: AA BC A 19 50 B VS INCOME TAX OFFICER TAX - 4 ( 1 )( 1 ), AAYAKAR BHA VAN, M K MARG, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BHUPENDRA KARKHANIS RESPONDENT BY : SHRI A RAMCHANDRAN /DATE OF HEARING : 01 - 0 8 - 201 6 / DATE OF PRONOUNCEMENT : 01 - 0 8 - 2016 ORDER , : PER AMIT SHUKLA , J M: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 1 9 . 1 0.201 2 , PASSED BY LD. CIT (A PPEALS ) - 8 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) FOR THE ASSESSMENT YEAR 200 9 - 1 0 , ON THE FOLLOWING GROUNDS: - 1 A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.8,88,154/ - U/S 14A READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 BY REJECTING THE EXPLANATIONS AND SUBMISSION GIVEN BY THE APPELLANT AND THE REASONS ASSIGNED FOR 2 AJ CON GLOBAL SERVICES LTD. ITA 5 0 /MUM/ 2013 DOING SO ARE WRONG AND CONTRARY TO THE PROVISIONS OF INCOME TAX ACT, 1961, AND RULES MADE THEREUNDER. B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF PROPORTIONATE INTEREST U/S 14A READ WITH RULE 81) (2)(II) OF RS.7,09,975/ - WITHOUT APPRECIATING THAT OWN FUNDS ARE MORE THAN THE INVESTMENTS IN SHARES AND AS SUCH NO INTEREST SHOULD BE ATTRIBUTED TO EARN EXEMPT INCOME AND THE REASON ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS OF THE CASE, TH E PROVISIONS OF INCOME TAX ACT, 1961 AND THE RULES MADE THEREUNDER. C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE U/S. 14A READ WITH RULE 81)(2)(III) OF RS.1,78,179/ - WITHOUT APPRECIATING THE FACT THAT APPELLANT HAS NOT INCURRED ANY EXPENDITURE FOR EARNING EXEMPT DIVIDEND INCOME, AND THE REASON GIVEN FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF INCOME TAX ACT, 1961, AND RULES MADE THEREUNDER. D) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) ERRED IN HOLDING THAT EVEN STOCK - IN - TRADE HAVE TO BE CONSIDERED FOR DISALLOWANCE U/S 14A READ WITH RUL E 8D OF THE INCOME TAX RULES, 1962 AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS OF THE CASE, THE PROVISIONS OF INCOME TAX ACT, 1961 AND THE RULES MADE THEREUNDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF AMOUNT OF RS. 1,71,840/ - BEING THE TRANSACTION CHARGES PAID TO THE STOCK EXCHANGES BY HOLDING THAT THE APPELLANT FAILED TO DEDUCT TAX AT SOURCE U/S 194J OF THE INCOME TAX ACT, 1961 AND INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE INCOME TAX ACT., 1961 WHICH IS WRONG AND CONTRARY TO THE PROVISIONS OF INCOME TAX ACT, 1916 AND RULES MADE THEREUNDER. 2. THE BRIEF FACTS QUA THE ISSUE RAISED VIDE GROUND NO .1( A ) TO 1(D) ARE THAT, THE ASSESSEE HAS SHOWN EXEMPT INCOME OF RS.2,95,450/ - ON ACCOUNT OF DIVIDEND INCOME. THE LD. A SSESSING O FFICER NOTED THAT, THE ASSESSEE HAS NOT ALLOCATED ANY EXPENSES TOWARDS EARNING OF THE EXEMPT INCOME 3 AJ CON GLOBAL SERVICES LTD. ITA 5 0 /MUM/ 2013 AND ACCORDINGLY , HE REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE DISALLOWANCE UNDER SECTION 14A SHOULD NOT BE MADE. IN RESPONSE, THE ASSESSEE SUBMITTED THAT, INTEREST PAID IS MAINLY FOR LOANS TAKEN FOR FIXED ASSETS AND WORKING CAPITAL ; AND IN THE EARLIER YEAR, THAT IS , IN THE AY 2007 - 08, THE LD. CIT(A) HAS DELETED THE INTEREST EXPENSES. THE LD. AO RELYING UPON THE DECISION OF SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMENT P LTD. COMPUTED THE DISALLOWANCE AT RS.8,88,154/ - ; WHICH CO MPR I S ED OF DISALLOWANCE OF INTEREST OF RS.7,09,975/ - UNDER RULE 8D(2)(II) ; AND INDIRECT EXPENDITURE OF RS.1,78,179/ - UNDER RULE 8D(2)(III). 3. THE LD. CIT(A) TOO HAS CONFIRMED THE SAID DISALLOWANCE. 4. BEFORE US, THE LD. COUNSEL SUBMITTED THAT, FIRSTLY , THE ENTIRE INVESTMENT WAS MADE OUT OF SURPLUS/ INTEREST - FREE FUNDS AVAILABLE WITH THE ASSESSEE AND, THEREFORE, NO DISALLOWANCE OF INTEREST SHOULD BE MADE. IN SUPPORT OF HIS CONTENTION, HE SUBMITTED THAT ONLY 2 INVESTMENTS WERE MADE ONE IN M/S AJCON COMMODITIES PROGRESS LTD. , WH ICH WAS MADE IN THE FINANCIAL YEAR 1994 - 95 AND SECONDLY , AJCON IT FIRM LTD., WH ICH W AS MADE INVESTMENT IN THE FINANCIAL YEAR 2007 - 08. THE RELEVANT CHART OF INVESTMENTS MADE AND AVAILABILITY OF OWN FUNDS AS PER THE BALANCE SHEET IN THE RELEVANT YEAR HAVE BE EN SHOWN IN THE FOLLOWING MANNER: - SR. NO. NAME OF THE COMPANY AMOUNT OF INVESTMENT (IN RS.) FINANCIAL YEAR IN WHICH INVESTMENT MADE OWN FUNDS AVAILABLE IN THE Y EAR OF INVESTMENT (AMT IN RS.) LOAN FUNDS RELEVANT TO THE YEAR OF INVESTMENT (AMOUNT IN RS.) 1 AJCON COMMODITY BROKERS LTD. 1,77,50,000 1994 - 1995 5,46,91,249 66,11,000 2 AJCON IT COM LTD. 16,00,000 2007 - 2008 10,09,27,949 2,43,30,311 4 AJ CON GLOBAL SERVICES LTD. ITA 5 0 /MUM/ 2013 HE THUS SUBMITTED THAT, NO DISALLOWANCE SHOULD BE MADE IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES AND POWER LTD., REPORTED IN [2009] 313 ITR 340 ; AND HDFC BANK LTD., REPORTED IN [2014] 366 ITR 505. HE FURTHER POINTED OUT THAT, IN ANY CASE THE INVESTMENT HAS BEEN MADE IN THE S UBSIDIARY AND ASSO CIATE COMPANY WHICH ARE IN THE NATURE OF STRATEGIC INVESTMENTS HENCE NO DISALLOWANCE OF INDIRECT EXPENDITURE SHOULD BE MADE, BECAUSE THEY WERE MADE FOR THE PURPOSE OF BUSINESS. HE FURTHER SUBMITTED THAT, AO HAS ALSO CONSIDERED THE STOCK - IN - TRADE WHILE WO RKING OUT THE INCOME FROM INVESTMENT FOR COMPUTING THE DISALLOWANCE AS REQUIRED UNDER RULE 8D. THUS, HE SUBMITTED THAT, SAME SHOULD BE REMOVED FROM WORKING OF THE AVERAGE VALUE OF INVESTMENT. IN SUPPORT, HE RELIED UPON THE FOLLOWING DECISIONS: - SR. NO. CAS E LAW CITATION/ITA NO. 1 DCIT VS M/S INDIA ADVANTAGE SECURITIES LTD. ITA NO.6711/MUM/2011 & CONFIRMED BY BOMBAY HIGH COURT IN ITA NO.1131 OF 2013 2 CCI LTD VS JCIT ITA NO.351/2011 (KARNATAKA HIGH COURT) 3 FIDUCIARY SHARES & STOCK (P) LTD V ACIT IT APPE AL NO. 321/MUM/2013 4 DEVKANT SYNTHETICS (INDIA (P.) LTD. ITA NO.S 2663 TO 2665/M/2015 5 INTERGLOBE ENTERPRISES LTD. V. DCIT ITA 1580/DEL/2013 ITA 1362 & 1032/DEL/2013 6 CIT V ORIENTAL STRUCTURAL ENGINEERS PVT LTD. 216 TAXMAN.92 7 GARWARE WALL ROPES LTD. V ADDL.CIT ITA NO.5408/MUM/2012 5. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE CIT(A). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDERS, WE FIND THAT SO FAR AS DISALLOWANCE OF INTEREST EXPENDITURE IS CONCERNED UNDER RULE 8D(2)(II), WE FIND THAT, AT THE TIME OF MAKING THE INVESTMENT, THE ASSESSEE HAD HUGE SURPLUS /OWN FUNDS AVAILABLE WHICH FAR EXCEEDED THE 5 AJ CON GLOBAL SERVICES LTD. ITA 5 0 /MUM/ 2013 INVESTMENT MADE, THEREFORE, IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH C OURT IN THE CASES RELIED UPON BY THE ASSESSEE, NO DISALLOWANCE OF INTEREST SHOULD BE MADE. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE DISALLOWANCE OF INTEREST AGGREGATING TO RS.7,09,975/ - . AS REGARDS THE DISALLOWANCE OF INDIRECT EXPENDITURE UNDER RULE 8D( 2)(II) OF RS.1,79,134/ - , WE AGREE WITH THE CONTENTION OF THE LD. COUNSEL THAT, SO FAR AS THE INVESTMENT MADE IN SUBSIDIARY AND ASSOCIATE COMPANIES ARE CONCERNED, THEY ARE BY WAY OF STRATEGIC INVESTMENTS AND, THEREFORE, SAME SHOULD NOT FORM PART OF THE WOR KING OF AVERAGE VALUE OF INVESTMENT WHILE COMPUTING THE DISALLOWANCE. ACCORDINGLY, WE HOLD THAT INVESTMENTS WHICH HAVE BEEN MADE MOSTLY BY WAY OF STRATEGIC INVESTMENTS AND STOCK - IN - TRADE SHOULD NOT ROPE IN FOR THE PURPOSE DISALLOWANCE . LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ARE OF THE OPINION THAT THE DISALLOWANCE SHOULD BE SCALED DOWN A N D SOME ESTIMATE DISALLOWANCE SHOULD BE MADE, HAVING REGARD TO THE NATURE OF EXPENDITURE DEBITED AND THE EXEMPT INCOME EARNED AT RS.2,95,450/ - . ACCORDINGLY, WE HOLD THAT 10% OF THE DIVIDEND INCOME WOULD BE REASONABLE FOR ALLOCATING THE INDIRECT EXPENDITURE FOR THE EARNING OF EXEMPT INCOME. SUCH AN E STIMATE IS PURELY ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THUS, GROUNDS WITH R EGARD TO DISALLOWANCE UNDER SECTION 14A ARE TREATED AS PARTLY ALLOWED. 7 . AS REGARDS THE ISSUE RAISED IN GROUND NO.2 REGARDING DISALLOWANCE OF RS. 1,71 ,840/ - ON ACCOUNT OF TRANSACTION CHARGES PAID TO STOCK - EXCHANGE BY INVOKING OF THE PROVISIONS OF SECTION 40(A)(IA) BY THE AUTHORITIES BELOW ON THE GROUND THAT, ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE UNDER 6 AJ CON GLOBAL SERVICES LTD. ITA 5 0 /MUM/ 2013 SECTION 194J ON SUCH PAYMENTS. WE FIND THAT, THE LD. CIT(A) HAS DECIDED THE ISSUE FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. KOTAK SECURITIES LTD . , REPORTED IN [2016] 340 ITR 333 . NOW AS ADMITTED BY BOTH THE PARTIES, THE DECISION OF HONBLE BOMBAY HIGH COURT HAS BEEN REVERSED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. M/S KOTAK SECURITIES LTD. IN CIVIL APPEAL NO.31 4 OF 2016 , VIDE JUDGMENT AND ORDER DATED 29 TH MARCH, 2016 WHEREIN, AFTER ANALYZING THE ENTIRE ISSUE IN DETAIL, T HEIR LORDSHIPS HAVE HELD THAT, THE PAYMENTS MADE TO THE STOCK - EXCHANGE IS NOT IN THE NATURE OF TECHNICAL SERVICES BUT FOR FACILITIES PROVIDED BY THE STOCK - EXCHANGE AND ACCORDINGLY, NO TDS IS DEDUCTIBLE UNDER SECTION 194J. THE RELEVANT OBSERVATION AND FINDING OF THE HONBLE SUPREME COURT IN THIS REGARD IS AS UNDER: - 6. WHAT MEANING SHOULD BE ASCRIBED TO THE WORD TECHNICAL SERVICES APPEARING IN EXPLANATION 2 TO CLAUSE (VII) TO SECTION 9(1) OF THE ACT IS THE MOOT QUESTION. IN COMMISSIONERS OF INCOME - TAX VS. BHARTI CELLULAR LTD.[1] THIS COURT HAS OBSERVED AS FOLLOWS: RIGHT FROM 1979, VARIOUS JU DGMENTS OF THE HIGH COURTS AND TRIBUNALS HAVE TAKEN THE VIEW THAT THE WORDS TECHNICAL SERVICES HAVE GOT TO BE READ IN THE NARROWER SENSE BY APPLYING THE RULE OF NOSCITUR A SOCIIS, PARTICULARLY, BECAUSE THE WORDS TECHNICAL SERVICES IN SECTION 9(1)(VII) READ WITH EXPLANATION 2 COMES IN BETWEEN THE WORDS MANAGERIAL AND CONSULTANCY SERVICES. 7. MANAGERIAL AND CONSULTANCY SERVICES AND, THEREFORE, NECESSARILY TECHNICAL SERVICES, WOULD OBVIOUSLY INVOL VE SERVICES RENDERED BY HUMAN EFFORTS. THIS HAS BEEN THE CONSISTENT VIEW TAKEN BY THE COURTS INCLUDING THIS COURT IN BHARTI CELLULAR LTD. (SUPRA). HOWEVER, IT CANNOT BE LOST SIGHT OF THAT MODERN DAY SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENTS MAY TEND TO BLU R THE SPECIFIC HUMAN ELEMENT IN AN OTHERWISE 7 AJ CON GLOBAL SERVICES LTD. ITA 5 0 /MUM/ 2013 FULLY AUTOMATED PROCESS BY WHICH SUCH SERVICES MAY BE PROVIDED. THE SEARCH FOR A MORE EFFECTIVE BASIS, THEREFORE, MUST BE MADE. 8. A READING OF THE VERY ELABORATE ORDER OF THE ASSESSING OFFICER CONTAINING A LENG THY DISCOURSE ON THE SERVICES MADE AVAILABLE BY THE STOCK EXCHANGE WOULD GO TO SHOW THAT APART FROM FACILITIES OF A FACELESS SCREEN BASED TRANSACTION, A CONSTANT UPGRADATION OF THE SERVICES MADE AVAILABLE AND SURVEILLANCE OF THE ESSENTIAL PARAMETERS CONNEC TED WITH THE TRADE INCLUDING THOSE OF A PARTICULAR/ SINGLE TRANSACTION 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 OR CUSTOMISED SERVICE THAT IS RENDERED BY THE STOCK EXCHANGE. TECHNICAL SERVICES LIKE MANAGERIAL AND CONSULTANCY SERVICE WOULD DENOTE SEEKING OF SERVICES TO CATER TO THE SPECIA L NEEDS OF THE CONSUMER/USER AS MAY BE FELT NECESSARY AND THE MAKING OF THE SAME AVAILABLE 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 EXCLUSIV E TO THE SEEKER OF THE SERVICE, THE LATTER, EVEN IF TERMED AS A SERVICE, IS AVAILABLE TO ALL AND 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 AFORESAID 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 SERVICE OF THE ABOVE KIND THAT, ACCORDING TO US, SHOULD COME WITHIN THE AMBIT OF THE E XPRESSION TECHNICAL SERVICES APPEARING IN EXPLANATION 2 OF SECTION 9(1)(VII) OF THE ACT. IN THE 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 AFORESAID PROVISION OF THE ACT. 8 AJ CON GLOBAL SERVICES LTD. ITA 5 0 /MUM/ 2013 9. THERE IS YET ANOTHER ASPECT OF THE MATTER WHICH, IN OUR CONSIDERED VIEW, WOULD REQUIRE A SPECIFIC NOTICE. THE SERVICE MADE AVAILABLE BY THE BOMBAY STOCK EXCH ANGE [BSE ONLINE TRADING (BOLT) SYSTEM] FOR WHICH THE CHARGES IN QUESTION HAD BEEN PAID BY THE APPELLANT ASSESSEE ARE COMMON SERVICES THAT EVERY MEMBER OF THE STOCK EXCHANGE IS NECESSARILY REQUIRED TO AVAIL OF TO CARRY OUT TRADING IN SECURITIES IN THE ST OCK EXCHANGE. THE VIEW TAKEN BY THE HIGH COURT THAT A MEMBER OF THE STOCK 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 HAS NO OPTION BUT TO AVAIL OF SUC H SERVICES. EACH AND EVERY TRANSACTION BY A MEMBER INVOLVES THE USE OF THE SERVICES PROVIDED BY THE STOCK EXCHANGE FOR WHICH A MEMBER IS COMPULSORILY REQUIRED TO PAY AN ADDITIONAL CHARGE (BASED ON THE TRANSACTION VALUE) OVER AND ABOVE THE CHARGES FOR THE M EMBERSHIP IN THE STOCK EXCHANGE. THE ABOVE FEATURES OF THE SERVICES PROVIDED BY THE STOCK EXCHANGE WOULD MAKE THE SAME A KIND OF A FACILITY PROVIDED BY THE STOCK EXCHANGE FOR TRANSACTING BUSINESS RATHER THAN A TECHNICAL SERVICE PROVIDED TO ONE OR A SECTION OF THE MEMBERS OF THE STOCK EXCHANGE TO DEAL WITH SPECIAL SITUATIONS FACED BY SUCH A MEMBER(S) OR THE SPECIAL NEEDS OF SUCH MEMBER(S) IN THE CONDUCT OF BUSINESS IN THE STOCK EXCHANGE. IN OTHER WORDS, THERE IS NO EXCLUSIVITY 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 SECURITIES IN THE STOCK EXCHANGE. SUCH SERVICES, THEREFORE, WOULD UNDOUBTEDLY BE APPROPRIATE TO BE TERMED AS FACILITIES PROVIDED BY THE S TOCK EXCHANGE ON PAYMENT AND DOES NOT AMOUNT 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 HAL LMARK OF THE EXPRESSION TECHNICAL SERVICES AS APPEARING IN EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT. 10. FOR THE AFORESAID REASONS, WE HOLD THAT THE VIEW TAKEN BY THE BOMBAY HIGH COURT THAT THE T RANSACTION CHARGES PAID TO 9 AJ CON GLOBAL SERVICES LTD. ITA 5 0 /MUM/ 2013 THE BOMBAY STOCK 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 PAY MENTS WOULD, THEREFORE, BE DEDUCTIBLE UNDER SECTION 194J OF THE ACT. THUS, RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT, ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS ON SUCH PAYMENT AND ACCORDINGLY, NO DISA LLOWANCE UNDER SECTION 40(A)(IA) IS CALLED FOR . ACCORDINGLY, GROUND NO.2 IS ALLOWED. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST AUGUST, 2016 . SD/ - SD/ - ( ) ( ) ( B R BASKARAN ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, D ATE: 1 ST AUGUST , 2016 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3 ) THE C IT 8 , MUMBAI . 4 ) THE C IT 4, MUMBAI 5 ) , , / THE D.R. A BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS