SSJ COMMODITIES P.LTD, MUMBAI V. ITO (TDS) WD 3(3), MUMBAI

ITA 6621/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8732 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSHDR
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , BEFORE SHRI RAJENDRA, A.M. AND SHRI PAWAN SINGH,J.M . ./ ITA NO.6621/MUM/2014 / ASSESSMENT YEAR: 2008-09 ./ ITA NO.6622/MUM/2014 / ASSESSMENT YEAR: 2009-10 M/S.SSJ COMMODITIES PVT. LTD. 1 ST FLOOR, SURYA MAHAL BB MARG, FORT, MUMBAI-400 023. PAN: AAHCS 5863 M VS. INCOME TAX OFFICER-(TDS) WARD-3(3) MUMBAI-400 020. ( / // / APPELLANT ) ( / RESPONDENT ) ./ ITA NO.6623/MUM/2014 / ASSESSMENT YEAR: 2011-12 M/S.SSJ FINANCE & SECURITIES PVT. LTD. 1 ST FLOOR, SURYA MAHAL BB MARG, FORT, MUMBAI-400 023. PAN: AABCS 4245 H VS. INCOME TAX OFFICER-(TDS) WARD-3(3) MUMBAI-400 020. ( / // / APPELLANT ) ( / RESPONDENT ) REVENUE BY: MS. BEENA SANTOSH-DR ASSESSEE BY: SHRI RITESH JAIN / // / DATE OF HEARING: 12.01.2017 !'#$ / DATE OF PRONOUNCEMENT: 18.01.2017 , ,, , 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) ! ! ! ! , '# '# '# '# / PER RAJENDRA A.M. - CHALLENGING THE ORDERS,DATED 18/08/2014 OF THE CIT (A)-14,MUMBAI THE ASSESSEES HAVE FILED APPEALS FOR THE ABOVE MENTIONED ASSESSMENT YEARS(AY .S). ISSUES INVOLVED IN ALL THE APPEALS ARE IDENTICAL EXCEPT FOR THE AMOUNTS INVOLVED AND A LL THE ASSESSEES ARE FROM THE SAME GROUP.SO,FOR THE SAKE OF CONVENIENCE, WE ARE ADJUDI CATING THESE APPEALS BY PASSING A SINGLE ORDER. ITA/6623/MUM/2014,AY. 2011-12: 2. EFFECTIVE GROUND OF APPEAL IS ABOUT LEVY OF INTERES T UNDER SECTION 201(1A)OF THE ACT.AS PER THE INFORMATION OBTAINED FROM THE BOMBAY STOCK EXCH ANGE/NATIONAL STOCK EXCHANGE OF INDIA/MULTI COMMODITIES EXCHANGE/NATIONAL COMMODITI ES EXCHANGE, THE (ASSESSING OFFICER) AO FOUND THAT THE ASSESSEE HAD NOT DETECTE D TAX AT SOURCE ON PAYMENT ON ACCOUNT OF TRANSACTION CHARGES (TC) MADE TO VARIOUS EXCHANGES, AMOUNTING TO RS.14.48 LAKHS. THE AO WAS OF THE OPINION THAT THE ASSESSEE SHOULD HAVE DETECTED TAX AT SOURCE AS PER THE PROVISIONS OF SECTION 194J OF THE ACT.HE ISSUED A N OTICE TO THE ASSESSEE REQUIRING IT TO EXPLAIN AS TO WHY IT SHOULD NOT BE TREATED AS ASSESSEE-IN-D EFAULT(AID) IN TERMS OF SECTION 201(1)/201(1A) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE. AS PER THE AO, THE ASSESSEE DID 6621,6622&6623/M/14 SSJ COMMODITIES/FINANCIAL 2 NOT FILE ANY REPLY TO THE NOTICE.AFTER CONSIDERING THE NATURE AND MANNER OF THE SERVICES BEING PROVIDED BY THE STOCK EXCHANGES,THE AO HELD THAT TC WERE LEVIED BY THE EXCHANGES ON THE MEMBERS WHO ENTERED INTO TRANSACTIONS THROUGH THE S YSTEM PROVIDED BY THEM, THAT THE SYSTEM WAS A SCREEN-BASED SYSTEM WHERE THE TRADING OPERATI ONS WERE MADE INTERACTIVE BY CONNECTING THE VARIOUS STOCKBROKERS TO THE EXCHANGES THROUGH V SAT AND LEASED LINE CONNECTIONS PROVIDED BY THE EXCHANGES TO ITS MEMBERS, THAT THE SYSTEMS PROVIDE ALL THE DAUGHTER THAT WOULD BE NECESSARY FOR AN INTENDING BUYER AND THE I NTENDING SELLER OF THE RESPECTIVE SECURITIES/COMMODITIES, UNDER THE SYSTEMS MEMBERS C OULD PROACTIVELY ENTER ORDERS IN THE SYSTEM, THAT THE EXPENSES WOULD COLLECT TRANSACTION CHARGES DEPENDING UPON THE VALUE OF THE TRANSACTIONS, THAT THE SYSTEM PROVIDED BY THE EXCHA NGES WERE COMPLETE PLATFORM CONTAINING THE ENTIRE SPECTRUM OF TRADING IN SECURITIES, THAT THE SYSTEM WOULD NOT MERELY PROVIDE THE LIVE CONNECTION BETWEEN PROSPECTIVE PURCHASERS AND THE P ROSPECTIVE SELLERS OF THE RESPECTIVE SECURITY/DERIVATIVES TOGETHER WITH THE RATES, THAT THEY ALSO PROVIDED A MECHANISM FOR CONCLUDING THE TRANSACTIONS BETWEEN THE TWO PARTIES , THAT WITH A VIEW TO REGULATE THE TRADING IN SECURITIES THE EXCHANGES WOULD PROVIDE RISK MANA GEMENT AND SURVEILLANCE TO THE STOCKBROKERS, THAT THE SURVEILLANCE FUNCTIONS INVOL VED PRICE MONITORING EXPOSER OF THE MEMBERS, THAT FOR RENDERING ALL THE MANAGER SERVICE S TC WERE LEVIED BY THE STOCK EXCHANGES, THAT THERE WAS A DIRECT LINKAGE BETWEEN THE MANAGER IAL SERVICES RENDERED AND THE TRANSACTION CHARGES LEVIED BY THE STOCK EXCHANGES.REFERRING TO THE PROVISIONS OF SECTION 194-J R.W. EXPLANATION 2 TO SECTION 9 (1)(VII)OF THE ACT HE HE LD THAT THE EXPRESSION FEE FOR TECHNICAL SERVICES INCLUDED RENDERING OF MANAGERIAL SERVICES. HE RELIED UPON THE CASE OF KOTAK SECURITIES LTD. (15 TAXMANN. COM.77) OF THE HONBLE , BOMBAY HIGH COURT AND HELD THAT TC PAID BY THE ASSESSEE TO THE STOCK EXCHANGE CONSTITU TED FEE FOR TECHNICAL SERVICES COVERED UNDER SECTION 194 J OF THE ACT, THAT THE ASSESSEE W AS LIABLE TO DEDUCT TAX AT SOURCE WHILE CREDITING THE TC TO THE ACCOUNT OF STOCK EXCHANGE, THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE AT THE RATE OF 10.30% OF THE TC PAID WHILE C REDITING THE SAME TO THE ACCOUNT OF THE STOCK EXCHANGE, THAT IT WAS THE PRIMARY OBLIGATION ON PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE WHILE MAKING THE PAYMENT TO THE CREDIT OF TH E STOCK EXCHANGES, THAT THE PAYMENT OF TC WAS PAYMENT FOR TECHNICAL AND MANAGERIAL SERVICE S RENDERED BY THE STOCK EXCHANGES.ACCORDINGLY,HE TREATED THE ASSESSEE AS A- I-D AND LEVIED INTEREST OF RS. 1.79 LAKHS FOR THE DEFAULT OF 24 MONTHS. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). AS PER THE FAA NO ONE AP PEARED BEFORE HER NOT ANY WRITTEN 6621,6622&6623/M/14 SSJ COMMODITIES/FINANCIAL 3 SUBMISSIONS WERE FILED IN SUPPORT OF THE APPEAL. RE LYING UPON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF KOTAK SECURITIES L TD,(SUPRA),SHE CONFIRMED THE ORDER OF THE AO AND DISMISS THE APPEAL FILED BY THE ASSESSEE . 4. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) STATED THAT THE HONBLE SUPREME COURT HAD REVERSED THE JUDGMENT OF THE KOTAK SECURITIES LTD.,DELIVERED BY THE HONBLE BOMBAY HIGH COURT,VIDE ITS ORDER DATED 29/03/2016.THE DEPARTMENTAL REPRESENTATIVE (DR) STATED THAT THE MATTER COULD BE DECIDED ON MERITS. 5. WE FIND THAT THE HONBLE APEX COURT HAD IN THE CASE OF KOTAK SECURITIES LTD.(383 ITR 1) HAS HELD THAT THE SERVICES PROVIDED BY THE STOCK EX CHANGE FOR WHICH TRANSACTION CHARGES ARE PAID FAILS TO SATISFY THE TEST OF SPECIALISED, EXCL USIVE AND INDIVIDUAL REQUIREMENT OF THE USER OR CONSUMER WHO MAY APPROACH THE SERVICE PROVIDER FOR SUCH ASSISTANCE/SERVICE, THAT IT IS ONLY SERVICE OF THE ABOVE KIND THAT SHOULD COME WITHIN T HE AMBIT OF THE EXPRESSION TECHNICAL SERVICES APPEARING IN EXPLANATION 2 OF THE SECTION 9 (1) (VII) OF THE ACT, THAT IN THE ABSENCE OF THE ABOVE DISTINGUISHING FEATURE, SERVICE, THOUGH R ENDERED, WOULD BE MERE IN THE NATURE OF A FACILITY OFFERED OR AVAILABLE WHICH WOULD NOT BE CO VERED BY THE AFORESAID PROVISION OF THE ACT.THE HONBLE COURT FURTHER HELD THAT NO TAX WAS DIRECTED AT SOURCE FOR SUCH PAYMENT AS PER THE PROVISIONS OF SECTION 194J. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT OF THE HO NBLE SUPREME COURT,WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSE E. ITA.S/6621 AND 6622/MUM/2014,AY.S. 2008-09 AND 2009 -10: AS STATED EARLIER,THE ISSUE IS IDENTICAL IN BOTH TH E APPEALS. THE AMOUNT OF INTEREST LEVIED BY THE AO IS RS. 1.68 LAKHS AND RS. 1.79 LAKHS FOR THE AY. S. 2008-09 AND 2009-10 RESPECTIVELY. FOLLOWING OUR ORDER IN THE CASE OF SSJ FINANCE AND SECURITIES PRIVATE LTD.,WE DECIDE EFFECTIVE GROUNDS OF APPEAL IN FAVOUR OF THE ASSESS EE FOR BOTH THE AY.S. AS A RESULT,APPEALS FILED BY THE ASSESSEES STAND ALLOWED. % &'( ) * + ,-. / . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY 2017. ,+ 0- 18 , 2017 SD/- SD/- ( /PAWAN SINGH) ( / RAJENDRA) / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER MUMBAI; 0- DATED : 18.01.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT /