FIRST GLOBAL STOCKBROKING P. LTD, MUMBAI V. ITO (TDS) 1(5), MUMBAI

ITA 5256/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3733 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 19-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUKUNDRAJ M CHATE
• Section: 201(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, F MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.5256/MUM/2014 ASSESSMENT YEAR: 2010-11 FIRST GLOBAL STOCKBROKING PVT. LTD. 2, CRESCENT CHAMBERS, 4 TH FLOOR, TAMARIND LANE, FORT, MUMBAI-400001 / VS. ITO(TDS)-1(5), R. NO.808, SMT. K.G. MITTAL AAYURVEDIC HOSPITAL BLDG, CHARNI ROAD, MUMBAI-400002 ( #$% & /ASSESSEE) ( ' / REVENUE) PAN. NO. AAACF0661K ( ') * & + / DATE OF HEARING : 07/03/2016 * & + / DATE OF ORDER: 11/03/2016 #$% & ! / ASSESSEE BY SHRI SATISH R. MODY ' ! / REVENUE BY SHRI MUKUNDRAJ M. CHATE ITA NO.5256/MUM/2014 FIRST GLOBAL STOCKBROKING PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THIS ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 12/06/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO CONFI RMING THE STAND OF THE ASSESSING OFFICER IN TREATING THE ASSE SSEE IN DEFAULT IN TERMS OF SEC. 201(1) AND 201(1A) OF THE ACT FOR NON- DEDUCTION OF TDS ALLEGEDLY DEDUCTIBLE UNDER THE PRO VISION OF SEC. 194J OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) 2. DURING HEARING THE LD. COUNSEL FOR THE ASSESSEE, SHRI SATISH R. MODY CONTENDED THAT THE ASSESSEE WAS WRON GLY TREATED AS AN ASSESSEE IN DEFAULT BY PLACING RELIAN CE UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT V. M/S . MEHTA VAKIL & COMPANY PVT. LTD. ORDER DT. 13.3.2015 (ITA NO. 8741/MUM/2011) AND FURTHER THE DECISION IN HINDUSTA N COCA COLA BEVERAGE PVT. LTD. VS. CIT, 293 ITR 226 (SC). ON THE OTHER HAND, THE LD. DR, SHRI MUKUNDRAJ M. CHATE, DE FENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY PLACING RELIANCE UPON THE DECISION OF THE TRIBUNAL IN ACIT V. TWENTY FIRST CENTURY SHARES & SECURITIES LTD. (2013) 39 TAXMANN.COM 176 (MUMBAI TRIB) BY FURTHER CONTENDING THAT THE DECISION RELIED UPON BY THE ASSESSEE IN THE CAS E OF HINDUSTAN COCA COLA BEVERAGE PVT. LTD. VS. CIT (SUP RA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEAL BEING ON DIFFERENT FACTS. ITA NO.5256/MUM/2014 FIRST GLOBAL STOCKBROKING PVT. LTD. 3 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. FACTS IN BRIEF A RE THAT THE LD. ASSESSING OFFICER, WHILE FRAMING THE ASSESSMENT, FO UND THAT THE ASSESSEE PAID TRANSACTION CHARGES TO BSE AND NS E AMOUNTING TO RS.2,70,567/- AND RS.21,70,924/- RESPE CTIVELY BUT DID NOT DEDUCT TDS FROM THE AFORESAID AMOUNTS A S REQUIRED BY SEC. 194J OF THE ACT. THE ASSESSEE WAS ISSUED SHOW CAUSE NOTICE DT. 13.12.2011 ASKING THE ASSESSE E- COMPANY TO EXPLAIN AS TO WHY THE ASSESSEE BE NOT TR EATED AS ASSESSEE IN DEFAULT IN TERMS OF SEC. 201(1) AND 201 (1A) OF THE ACT FOR NON-DEDUCTION OF TDS U/S 194J OF THE ACT. THE ASSESSEE VIDE LETTER DT. 7.11.2012 CLAIMED THAT TDS IS NOT DEDUCTIBLE. THE EXPLANATION OF THE ASSESSEE WAS NO T ACCEPTED AND THE ASSESSEE WAS TREATED AS ASSESSEE IN DEFAULT . ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) THE STAND TAKEN IN THE ASSESSMENT ORDER WAS AFFIRME D, WHEREIN THE DECISION FROM HONBLE BOMBAY HIGH COURT IN KOTAK SECURITIES LTD. WAS FOLLOWED. THE ASSESSEE I S IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DR AWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSER TIONS MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUXTAPOS ITION AND ANALYZED, UNDER THE FACTS DISCUSSED HEREINABOVE WE NOTE THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F M/S. KOTAK SECURITIES PVT. LTD. HELD AS UNDER : ITA NO.5256/MUM/2014 FIRST GLOBAL STOCKBROKING PVT. LTD. 4 THE ASSESSEES ARGUMENT, BASED ON M/S. SKYCELL COMMUNICATIONS VS. DCIT 251 ITR 53 [MAD.] THAT THE STOCK EXCHANGE DOES NOT RENDER MANAGERIAL OR TECHN ICAL SERVICES IS NOT ACCEPTABLE BECAUSE WHILE IN THAT C ASE THE SUBSCRIBER HAD PAID A FIX AMOUNT FOR THE USE OF AIR TIME ON THE MOBILE PHONE AND WAS NOT CONCERNED WITH THE TECHNOLOGY OR THE SERVICES RENDERED BY THE MANAGERI AL STAFF IN KEEPING THE CELLULAR MOBILE ACTIVATED, IN THE CASE OF A STOCK EXCHANGE, THERE IS DIRECT LINKAGE BETWEE N THE MANAGERIAL SERVICES RENDERED AND THE TRANSACTION CHARGES LEVIED BY THE STOCK EXCHANGE. THE BOLT SYS TEM PROVIDED BY THE BSE IS A COMPLETE PLATFORM FOR TRAD ING IN SECURITIES. A STOCK EXCHANGE MANAGES THE ENTIRE TR ADING ACTIVITY CARRIED ON BY ITS MEMBERS AND ACCORDINGLY RENDERS MANAGERIAL SERVICES. CONSEQUENTLY, THE TRANSACTION CHARGES CONSTITUTED FEES FOR TECHNICAL SERVICES U/S. 194J AND THE ASSESSEE OUGHT TO HAVE DEDUCTED TDS. IT IS NOTED THAT THE HONBLE HIGH COURT HAS CLEARLY HELD THAT TDS WAS TO BE DEDUCTED BY THE ASSESSEE AS PER THE P ROVISIONS OF SEC. 194J OF THE ACT. IT IS WORTH MENTIONING TH AT THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IS DT. 21.10.2011 WHEREAS THE ASSESSMENT WAS FRAMED ON 21. 3.2012 MEANING THEREBY WHILE FRAMING THE ASSESSMENT THE OR DER FROM HONBLE JURISDICTIONAL HIGH COURT WAS VERY MUCH AVA ILABLE BUT STILL THE ASSESSEE DID NOT DEDUCT THE TDS. IT IS W ORTH MENTIONING THAT EVEN ISSUANCE OF SHOW CAUSE NOTICE BY THE ASSESSING OFFICER TO THE ASSESSEE STILL THE ASSESSE E DID NOT DEDUCT THE TAX. IT IS ALSO NOTED THAT THE MUMBAI B ENCH OF THE TRIBUNAL IN ACIT V. TWENTY FIRST CENTURY SHARES & S ECURITIES LTD. (2013) 39 TAXMANN.COM 176 (MUM) VIDE ORDER DT. 15.5.2013 IN PARA 5 OF THE ORDER HAS CLEARLY MENTIO NED ABOUT THE CASE OF THE PRESENT ASSESSEE (APPEAL ON. 8105/M UM/2010) ITA NO.5256/MUM/2014 FIRST GLOBAL STOCKBROKING PVT. LTD. 5 FOR A.Y 2006-07 AND MADE CERTAIN OBSERVATION IN ORD ER DT. 28.9.2012 WHICH IS REPRODUCED HEREUNDER : FURTHER, THERE IS NO BIFURCATION OF THE AMOUNTS OF VSAT, LEASE LINE AND TRANSACTION CHARGES. IN THE C ASE OF DEPUTY CIT V. ANGEL BROKING LTD. [2012] 3 ITR (TRIB ) 294 (MUM.) IN ITA NO. 475 OF 2011 DATED 28TH JULY, 2011 , THE HONBLE HIGH COURT HELD THAT VSAT AND LEASE LINE CH ARGES PAID TO THE STOCK EXCHANGE ARE NOT PAID IN CONSIDER ATION OF TECHNICAL SERVICES. THEREFORE, THERE IS NO NEED FOR DEDUCTING TAX. THE SAME PRINCIPLES WERE REITERATED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. STOCK AND BOND TRADING COMPANY IN ITA NO. 4117 OF 2010 DATED 14TH OCTOBER, 2011 WHEREIN VSAT CHARGES, NSE LEASE LINE CHARGES AND TRANSACTION CHARGES WERE CONSIDERED AND HELD AGAINST THE REVENUE FOLLOWING T HE DECISION IN THE CASE OF DEPUTY CIT V. ANGEL BROKING LTD. [2010] 3 ITR (TRIB) 294 (MUM). THE SAME PRINCIPLES WERE REITERATED IN THE CASE OF CIT V. KOTAK SECURITIES L TD. [2012] 340 ITR 333 (BOM); [2011] 203 TAXMAN 86 (BOM ). TO THE EXTENT OF VSAT, LEASE LINE CHARGES THE REVEN UE DID NOT EVEN CONTEST. EVEN THOUGH THE HONBLE COURT HE LD THAT THE TRANSACTION CHARGES PAID TO THE STOCK EXCH ANGE CONSTITUTE FEES FOR TECHNICAL SERVICES ON BONA FIDE BELIEF IT WAS CONSIDERED THAT THE DISALLOWANCE CANNOT BE MADE IN THAT YEAR AS THE REVENUE DID NOT PROCEED ON THE FOO TING THAT ASSESSEE IS NOT LIABLE TO DEDUCT THE TAX AT SO URCE AFTER INTRODUCTION OF THE PROVISIONS. SINCE THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ONLY GIVEN PARTIAL RELIEF OF RS. 2,50,000, AFTER CONSIDERING T HE INCOME-TAX APPELLATE TRIBUNAL ORDERS IN THE CASES O F KOTAK SECURITIES LTD. [2009] 318 ITR (AT) 268 (MUM) ; [2009] 124 TTJ 241 AND ANGEL BROKING LTD. [2010] 3 ITR (TRIB) 294 (MUM); 35 SOT 457 (MUM), WE ARE OF THE OPINION THAT THERE IS NO NEED TO DISTURB THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). IN VIEW OF T HIS, GROUNDS RAISED ARE DISMISSED. ITA NO.5256/MUM/2014 FIRST GLOBAL STOCKBROKING PVT. LTD. 6 TOTALITY OF FACTS CLEARLY INDICATES THAT THE ISSUE WAS NOT NEW TO THE ASSESSEE AS IT AROSE EARLIER ALSO AND KNOWING F ULLY WELL THAT THE ASSESSEE IS TO DEDUCT TAX AT SOURCE STILL THE A SSESSEE DID NOT DEDUCT THE SAME AND INSPITE OF A DECISION FROM HONBLE JURISDICTIONAL HIGH COURT HOLDING THAT TDS HAS TO B E DEDUCTED, STILL THE ASSESSEE DID NOT DEDUCT. AS ME NTIONED EARLIER, EVEN AFTER GETTING SHOW CAUSE NOTICE FROM THE ASSESSING OFFICER STILL THE ASSESSEE DID NOT DEPOSI T THE AMOUNT OR DEDUCT THE TAX. THEREFORE, WE FIND NO MERIT IN THE CONTENTION OF THE ASSESSEE. THE TRANSACTION CHARGE S PAID TO BSE AND NSE ARE FEE FOR TECHNICAL SERVICES, THEREFO RE, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AS REQUIRED U/S 1 94J. THEREFORE, WE FIND NO INFIRMITY IN THE CONCLUSION D RAWN IN THE IMPUGNED ORDER, ACCORDINGLY, THE ASSESSEE WAS RIGHT LY HELD AS ASSESSEE IN DEFAULT U/S. 201(1) AND 201(1A) OF THE ACT. THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) IS AFFIRMED. FINALLY, THE APPEAL OF THE ASSESSEE IS D ISMISSED. 5. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11/03/2016. SD/- SD/- ( JASON P. BOAZ ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER ( ) MUMBAI; , DATED : 11/03/2016 F{X~{T? P.S/. .. ITA NO.5256/MUM/2014 FIRST GLOBAL STOCKBROKING PVT. LTD. 7 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./ / THE APPELLANT (RESPECTIVE ASSESSEE) 2. 01./ / THE RESPONDENT. 3. 2 2 ( 3& ( - ) / THE CIT, MUMBAI. 4. 2 2 ( 3& / CIT(A)- , MUMBAI, 5. 5'6 0&# , 2 -+ -# 7 , ( ) / DR, ITAT, MUMBAI 6. 8$ ) / GUARD FILE. ! / BY ORDER, 15& 0& //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , ( ) / ITAT, MUMBAI