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

ITA 6127/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2182 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 18-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVIKIRAN
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.6127/M/2013 ASSESSMENT YEAR: 2010-11 M/S. PUNEET SECURITIES PVT. LTD., 6D/225, RAJABAHADUR COMPOUND, AMBALAL DOSHI MARG, FORT, MUMBAI 400 001 PAN: AAACP 2313C VS. OFFICE OF THE ACIT 4(2), AAYAKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MS. VINITA SHAH, A.R. REVENUE BY : SHRI K. RAVIKIRAN, D.R. DATE OF HEARING : 21.12.2015 DATE OF PRONOUNCEMENT : 21.12.2015 O R D E R PER N.K. BILLAIYA, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-8, MUMBAI DATED 27.08.2013 PERTAINING TO A.Y . 2010-11. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.10,59,038/- MADE BY T HE OFFICER ON ACCOUNT OF NON DEDUCTION OF TAX UNDER SECTION 194J OF THE ACT. 3. WHILE SCRUTINISING THE RETURN OF INCOME, THE AO NOTICED THAT THE ASSESSEE HAS DEBITED RS.10,59,038/- ON ACCOUNT OF TRANSACTIO N CHARGES PAID TO THE STOCK EXCHANGE. THE AO FURTHER FOUND THAT THE ASSESSEE H AS NOT DEDUCTED TAX AT SOURCE AS PER THE PROVISIONS OF SECTION 194J OF THE ACT BUT IT HAS MADE THE DEDUCTION UNDER SECTION 194C OF THE ACT. CONSIDERI NG THIS AS A VIOLATION OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE AO DISALLOWED RS.10,59,038/- AND ADDED TO THE RETURNED INCOME OF THE ASSESSEE. ITA NO.6127/M/2013 M/S. PUNEET SECURITIES PVT. LTD. 2 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A. Y. 2009-10 VIDE AN ITA NO.1212/M/2013. THE LD. D.R. COULD NOT BRING ANY D ISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. AFTER GIVING A CAREFUL CONS IDERATION TO THE ORDERS OF THE AUTHORITIES BELOW, WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. AN IDENTICAL ISSUE WAS BEFORE THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2009- 10 IN ITA NO.1212/M/2013 WHEREIN THE TRIBUNAL AT PA RA 6 ON PAGE 4 OF ITS ORDER HAS HELD AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER. ADMITTEDLY, THE ASSESS EE HAS DEDUCTED TDS ON TRANSACTION CHARGES PAYABLE TO STOCK EXCHANGE U/S 1 94C. THE DEPARTMENT'S CASE IS THAT, TDS SHOULD HAVE BEEN DEDUCTED U/S 194J, AS TH E TRANSACTION CHARGES FALLS WITHIN THE AMBIT OF 'FEES FOR TECHNICAL SERVICES', AS LATER ON HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KOTAK SECU RITIES LTD. (SUPRA) AND THEREFORE, DISALLOWANCE U/S 40(A)(IA) IS TO BE MADE . THE CONDITIONS AS LAID DOWN U/S 40(A)(IA) FOR MAKING THE DISALLOWANCE IS THAT, THE TAX ON THE AMOUNT PAID OR PAYABLE WHICH IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII B AND SUCH A TAX, HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN 139(1). IN OTHER WORDS, THERE ARE ONLY CONDITION S FOR DISALLOWANCE U/S 40(A)(IA), FIRSTLY, TAX WHICH WAS DEDUCTABLE HAS NOT BEEN DEDU CTED AND SECONDLY, AFTER DEDUCTION HAS NOT BEEN PAID. IF BOTH THE CONDITIONS ARE SATISFIED THEN ONLY DISALLOWANCE U/S 40(A)(IA) CAN BE MADE. THE SECTION DOES NOT ENVISAGES THAT, IF THE ASSESSEE HAS DEDUCED THE TAX UNDER WRONG PROVISIONS OF THE ACT OR THERE IS A SHORT DEDUCTION OF TAX THEN ALSO, IT ENTAILS DISALLOWANCE UNDER SECTION 40(A)(IA) . THERE IS NOTHING IN THE SECTION TO TREAT THE ASSESSEE AS DEF AULTER FOR CLAIMING A DEDUCTION, WHERE THERE IS A SHORT FALL IN DEDUCTION. THIS PROP OSITION HAS BEEN UPHELD BY THE HON'BLE KOLKATA HIGH COURT IN THE CASE OF CIT VS. S .K. TEKRIWAL REPORTED IN (2014) 361 ITR 432 (KOL). IN THIS CASE THE ASSESSEE HAS DE DUCTED TAX U/S 194C INSTEAD OF 194J, THE HON'BLE HIGH COURT HELD THAT THE EXPENSES CANNOT BE DISALLOWED U/S 40(A)(IA) MERELY ON ACCOUNT OF SHORT DEDUCTION OF T AX AT SOURCE. SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCHES IN THE CASES RELIED UPON BY THE LEARNED COUNSEL, WHICH HAS BEEN REFERRED IN THE FOREGOING P ARA. ACCORDINGLY, WE HOLD THAT NO DISALLOWANCE U/S 40(A)(IA) CAN BE MADE MERELY BE CAUSE ASSESSEE HAS DEDUCTED TDS UNDER SECTION 194C INSTEAD OF SECTION 194J . THUS THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. ITA NO.6127/M/2013 M/S. PUNEET SECURITIES PVT. LTD. 3 6. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-OR DINATE BENCH, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS.10,59,038/-. 7. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2015. SD/- SD/- (SANDEEP GOSAIN) (N.K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.12.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.