KHANDWALA SECURITIES LTD, MUMBAI V. ITO TDS 2(2), MUMBAI

ITA 6994/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2872 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C TIWARI
• Assessee Lawyers: DR PRAYAG JHA ARS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI RAMIT KOCHAR , A M ITA NO . 6994 /MUM/201 4 (ASSESSMENT YEAR: 2008 - 09) M/S. KHANDWALA SECURITIES LTD., G - 7, GROUND FLOOR, VIKASH BUILDING, GREEN STREET, FORT, MUMBAI 4 00 023 VS. THE INCOME TAX OFFICER (TDS), WARD - 2(2) , AYURVED PRACHAR SANSTHA BUILDING, CHARNI ROAD, MUMBAI 400 020 PAN: A A A C K 2214 P APPELLANT .. RESPONDENT APPELLANT BY SHRI PRATEEK JHA AND DR. PRAYAG JHA, ARS RESPONDENT BY SHRI S. C. TIWARI, DR DATE OF HEARING 15 - 06 - 2016 DATE OF PRONOUNCEMENT 22 - 06 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF THE CIT (A) - 14 , MUMBA I PASSED IN APPEAL NO.CIT (A) - 14 / IT - 655/TDS - RG. 2(2) /2 01 1 - 2012 DATED 0 3 - 09 - 2014 . TDS A SSESS MENT WAS COMPLETED BY THE IT O , TDS - 2(2) , MUMBAI FOR FINANCIAL YEAR 2007 - 08 RELEVANT ASSESSMENT YEAR 2008 - 09 VIDE HIS ORDER DATED 31 - 03 - 2011 PASSED U/S 201 (1) AND 201 (1A) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) . 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF THE CIT (A) SUSTAINING THE ORDER OF THE AO IN HOLDING THE ASSESSEE IN DEFAULT AND ALSO CHARGING INTEREST U/S 201 (1) AND 201 (1A) OF THE ACT IN RESPECT TO TRANSACTION CHARGE S AND VSAT CHARGES BY HOLDING THE SAME AS IN THE NATURE OF FEE FOR TECHNICAL/PROFESSIONAL SERVICES UNDER THE PROVISIONS OF SECTION 194 - J OF THE ACT. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS PAID THE FOLLOWING EXPENSES: - ITA NO. 6994 /MUM/20 1 4 2 TRANSACTION CHARGES RS.12,98,744/ - VASAT RENTALS RS. 1,93,178 TOTAL RS.14,91,922/ - ACCORDING TO THE ITO, TDS, MUMBAI THE ASSESSEE HAS PAID THE ABOVE S TATED TRANSACTION CHARGES AND V SAT CHARGE S WITHOUT DEDUCTION OF TDS U/S 194 - J OF THE ACT. ACCORDING TO THE AO, THE CHARGES ARE IN THE NATURE OF FEE FOR TECHNICAL/PROFESSIONAL SERVICES AND PAID WITHOUT DEDUCTION OF TDS UNDER THE PROVISIONS OF THE ABOVE SECTION. ACCORDINGLY, THE ASSESSEE WAS HELD T O BE IN DEFAULT U/S 201 OF THE ACT AND CONSEQUENTLY INTEREST WAS ALSO CHARGED U/S 201 (1A) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A), WHO ALSO CONFIRMED THE ACTION OF THE AO. AGGRIEVED, THE ASSESSEE IS NOW IN SECOND APPEAL BEF ORE THE TRIBUNAL. 4 . AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THIS ISSUE OF TRANSACTION CHARGES PAID TO STOCK EXCHANGES FOR FACILITATING IS HELD TO BE NOT FEE FOR TECHNICAL SERVICES AND THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS ON S UCH PAYMENT U/S 194 - J OF THE ACT AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS KOTAK SECURITIES LTD. REPORTED IN (2016) 383 ITR 1 (SC) AND ACCORDING TO HIM THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. THE LEARNED COUNSEL FOR TH E ASSESSEE IN RESPECT TO VSAT CHARGES ALSO STATED THAT THE CIT (A) WHILE ADJUDICATING THE APPEAL OF THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143 (3) OF THE ACT, DISALLOWING THE VSAT EXPENSES FOR NON - DEDUCTION OF TDS AND INVOKING THE PROVISIONS OF SECTION 40 (A) (IA) OF THE ACT HAS GIVEN A FINDING THAT PROVISIONS OF SECTION 194 - J OF THE ACT IS NOT ATTR ACTED TO VSAT CHARGES, HE REFERRED TO PARA 5.10 OF THE ORDER OF THE CIT (A) IN APPEAL NO.CIT(A) - 8/CIR.4/232/2010 - 11 DATED 28 - 12 - 2011 IN ASSESSES OWN CASE FOR ASSESSMENT YEAR 2008 - 09 WHICH READS AS UNDER: - 5.10 IN VIEW OF THE ABOVE DECISIONS, I AM OF THE OPINION THAT THE STOCK EXCHANGES DO NOT RENDER ANY MANAGERIAL SERVICES NOR DO THEY RENDER ANY TECHNICAL CONSULTANCY SERVICES, AS FAR AS V - SAT AND LEA SE LINE CHARGES ARE CONCERNED. THE PAYMENTS MADE BY THE ASSESSEE OF VSAT CHARGES AND ITA NO. 6994 /MUM/20 1 4 3 LEASE LINE CHARGES ARE NOT IN CONSIDERATION OF ANY SERVICE PROVIDED BY THE STOCK EXCHANGE BUT IS A PAYMENT FOR USE OR FACILITIES PROVIDED BY THE STOCK EXCHANGE WHICH ARE A VAILABLE FOR USE BY ANY MEMBER. THEREFORE, THESE PAYMENTS CANNOT BE SAID TO BE FEE PAID IN CONSIDERATION OF THE STOCK EXCHANGE RENDERING ANY TECHNICAL SERVICE TO THE ASSESSEE. THE PROVISIONS OF SEC. 194J ARE THUS NOT ATTRACTED. THEREFORE, THERE IS NO OBLIG ATION ON THE PART OF THE ASSESSEE TO DEDUCT THE TAX AT SOURCE. CONSEQUENTLY, THE PROVISIONS OF SEC. 40(A) (IA) ARE ALSO NOT ATTRACTED. ACCORDINGLY, THE ADDITION ON ACCOUNT OF VSAT CHARGE OF RS.39,600 / - AND LEASE LINE CHARGES OF RS.30,000/ - ARE DELETED. IN VIEW OF THE ABOVE, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT BOTH THE ISSUES ARE COVERED IN FAVOUR OF THE ASSESSEE. THE LEARNED SR. DR JUST RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5. CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND T HE FACTS & CIRCUMSTANCES OF THE PRESENT CASE, WE FIND THAT BOTH THE ISSUES OF TRANSACTION CHARGES AND VSAT CHARGES ARE COVERED BY THE DECISION OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT VS KOTAK SECURITIES LTD. REPORTED IN (2016) 383 ITR 1 (S C) AND ALSO BY THE ORDER OF THE CIT (A) IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008 - 09 PASSED U/S 143 (3) OF THE ACT DATED 28 - 12 - 2011 RESPECTIVELY AS DISCUSSED ABOVE. IN TERMS OF THE ABOVE, WE ALLOW THE APPEAL OF THE ASSESSEE. 6 . IN THE RESULT, THE A PPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON 22 /06 / 201 6 . SD/ SD/ - ( RAMIT KOCHAR ) ( MAHAVIR SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED 22 /6 / 201 6 LAKSHMIKANTA DEKA/SR.PS ITA NO. 6994 /MUM/20 1 4 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI DATE INITIAL DICTATION PAD ATTACHED WITH THE DRAFT ORDER YES 1. DRAFT DICTATED ON 15 - 06 - 16 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 17 - 06 - 16 SR.PS 3. DRAFT PROPOSE D & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT ( A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//