DCIT CIR 4(2), MUMBAI V. PUNEET SECURITIES P. LTD, MUMBAI

ITA 5429/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55336 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37(1)

Judgement Text

1 ITA NO. 5429/MUM/2010 (ASST YEAR 2006-07) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI T R SOOD, AM & SHRI VIJAY PAL RAO, JM ITA NO. 5429/MUM/2010 (ASST YEAR 2006-07) THE DY COMMR OF INCOME TAX CIR 4(2), MUMBAI VS PUNEET SECURITIES P LTD 105/5 GROUND FL BOMBAY SAMACHAR MARG FORT, MUMBAI 23 (APPELLANT) (RESPONDENT) PAN NO. AAACP2313C ASSESSEE BY NONE REVENUE BY SHRI ALEXANDER CHANDY DT.OF HEARING 29 SEPT 2011 DT OF PRONOUNCEMENT 5 OCT 2011 PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16.4.2010 OF THE CIT(A) FOR THE AY 2006-07. 2 THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GR OUNDS: I) THE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 16,30,552/- MADE U/S 40(A)(IA) IN RESPECT OF V-SAT CHARGES PAID TO STOCK EXCHANGE, WITHOUT APPRECIATING THE FACTS THAT THESE WERE COMPOSITE CHA RGES FOR PROFESSIONAL AND TECHNICAL SERVICES RENDERED BY THE STOCK EXCHANGE TO ITS MEMBERS AND THE ASSESSEE HAS FAILED TO DEDUCT TDS THEREON. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF P ENALTY OF RS. 4,54,905/- ON VIOLATION OF THE BYE LAWS OF THE STOCK EXCHANGE, WHICH ARE STATUTORY IN CHARACTER AND THUS AMOUNTED TO INFRINGEMENT OF LAW. 3 NOBODY HAS APPEARED ON BEHALF OF THE RESPONDENT A SSESSEE WHEN THE APPEAL WAS CALLED FOR HEARING. THE NOTICE ISSUED T O THE ASSESSEE FOR FIXING THE DATE OF HEARING ON 29.9.2011 HAS BEEN RECEIVED BACK UNDE LIVERED WITH POSTAL REMARKS 2 ITA NO. 5429/MUM/2010 (ASST YEAR 2006-07) ADDRESSEE LEFT. IN THESE CIRCUMSTANCES AS WELL A S THE ISSUE RAISED BY THE REVENUE, IN THIS APPEAL ARE COVERED IN FAVOUR OF THE ASSESSE E, WE PROPOSE TO HEAR AND DISPOSE OFF THIS APPEAL EX-PARTE. 4 WE HAVE HEARD THE LD DR AND THE LD AR OF THE ASSE SSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. 4.1 AS REGARDS GROUND NO.1 FOR DISALLOWANCE U/S 40( A)(IA) IN RESPECT OF V-SAT CHARGE PAID TO STOCK EXCHANGE, WE FIND THAT THE CIT (A) HAS DECIDED THIS ISSUE BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES VS ACIT REPORTED IN 25 SOT 440. THUS, WHEN THE ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES (SUPRA) AS WELL AS IN THE SUBSEQU ENT ORDER IN THE CASE OF SPECIFIC INTERNET (INDIA) LTD (2009) REPORTED IN 27 SOT 523 (BOM) AND SINCE THE REVENUE HAS NOT BROUGHT ON RECORD ANYTHING CONTRARY; THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A), QUA THI S ISSUE AND THE SAME IS UPHELD. 4.2 AS FAR AS THE ISSUE OF DISALLOWANCE OF PENALTY PAID TO THE STOCK EXCHANGE IS CONCERNED, THE SAME IS FOR VIOLATION OF BYE-LAWS A ND QUESTION ARISES WHETHER FALLS UNDER EXPLANATION TO SEC. 37(1) OR NOT ?. 5 WE HAVE HEARD THE LD DR AND CONSIDERED THE RELEVA NT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THIS ISSUE IS ALSO COVERED BY FOLLOWING DECISIONS OF THE TRIBUNAL: I) ITO-4(2)(2) VS. VRM SHARE BROKING (P) LTD. -27 SOT 46 9 (MUM) II) ITO VS. GDB SHARE & STOCK BROKING SERVICES LTD. -3 SOT 569 (KOL) -88 TTJ 352 (KOL) III) MASTER CAPITAL SERVICES LTD. VS. DCIT -23 SOT 60 (CHD). IV) NATIONAL PLASTIC INDUSTRIES P LTD VS ITO 11 SOT 415 3 ITA NO. 5429/MUM/2010 (ASST YEAR 2006-07) 5.1 IT HAS BEEN CONSISTENTLY HELD BY THE TRIBUNAL T HAT PENALTY PAID TO THE STOCK EXCHANGE IN VIOLATION OF BYE-LAWS DOES NOT AMOUNT, AN EXPENDITURE INCURRED FOR THE PURPOSES, WHICH IS OFFENCE OR WHICH IS PROHIBITED BY LAW. SINCE THE BYE-LAWS OF STOCK EXCHANGE ARE NOT STATUTORY PROVISION; THEREFO RE, THE PENALTY IS NOT FOR ANY VIOLATION/INFRACTION OF LAW. ACCORDINGLY, RESPECT FULLY FOLLOWING THE VARIOUS DECISIONS OF THE TRIBUNAL, WE FIND NO ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A), QUA, THIS ISSUE. 6 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 5 TH DAY OF OCT 2011. SD/ SD/- ( T R SOOD ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 5 OCT 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI