SVS COMMODITY BROKERS P.LTD, MUMBAI V. ADDL CIT (TTDS) RG 3, MUMBAI

ITA 7266/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1941 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 08-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-12-2014
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGHLADR
• Assessee Lawyers: VIRAG SHAH
• Keywords: Deemed to accrue or arise in india; Non-deduction of tax; Reasonable cause
• Section: 28; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.7266/MUM/2014 (ASSESSMENT YEAR: 2008-09) M/S SVS COMMODITY BROKERS PVT LTD 32-B, KHATAU BLDG, ALKESH DINESH MODI MARG, FORT, MUMBAI 23 VS ADDL.CIT (TDS), RANGE-3 MUMBAI PAN : AAICS1321H (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VIRAG SHAH (AR) RESPONDENT BY MS. ANUPAMA SINGHLA(DR) DATE OF HEARING : 21-11-2016 DATE OF ORDER : 25-11-2016 O R D E R PER ASHWANI TANEJA, AM: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)14, MUMB AI [HEREINAFTER CALLED CIT(A)] DATED 08-10-2014 PASSED AGAINST PENA LTY ORDER OF THE AO U/S 271C OF THE ACT DATE 22-02-2013 FOR A.Y. 2008-0 9 ON THE FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRE D IN CONFIRMING PENALTY U/S 271C OF INCOME TAX ACT, 1961 OF RS. 2,67,100/- FOR NON-DEDUCTION OF TAX, AT SOURCE. 2 I.T.A. NO.7266/MUM/2014 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN APPRECIATING THE FACT THAT THERE WERE CONFLICTING J UDGEMENTS IN RESPECT OF DEDUCTIBILITY OF TDS ON TRANSACTION CHAR GES TO BSE AND NSE. 2. THE BRIEF FACTS AND BACKGROUND OF THIS CASE ARE THA T THE ASSESSEE IS A STOCK BROKING COMPANY AND HAD PAID DU RING THE YEAR, TRANSACTION CHARGES OF RS.11,84,390.43 TO THE STOCK EXCHANGE. THE AO FOUND THAT THE ASSESSEE FAILED TO DEDUCT TDS ON THIS AMOUNT AND ACCORDINGLY A SHOW-CAUSE NOT ICE WAS ISSUED BY THE AO FOR LEVYING PENALTY U/S 271C OF TH E ACT. IN REPLY, THE ASSESSEE SUBMITTED VIDE LETTER DATED 28- 9-2012 THAT ASSESSEE WAS NOT SURE WHETHER TDS ON THE IMPUG NED AMOUNT WAS LIABLE TO BE DEDUCTED IN VIEW OF THE JUD GEMENTS AVAILABLE ON BOTH THE SIDES. HOWEVER, THE AO DID N OT ACCEPT THE SUBMISSION OF THE ASSESSEE ON THE GROUND THAT TRANSACTION CHARGES PAID BY THE ASSESSEE WERE IN T HE NATURE OF FEE FOR TECHNICAL SERVICES RENDERED BY STOCK EXC HANGE TO THE ASSESSEE, AS PER SECTION 9(1)(VII) OF THE ACT A S HELD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS KOT AK SECURITIES LTD 15 TAXMANN.COM 77. THEREFORE, THE A SSESSEE SHOULD HAVE DEDUCTED TDS UPON THE SAME AND SINCE TH E ASSESSEE DID NOT DEDUCT TAX AT SOURCE ON THE TRANSA CTION CHARGES PAID WITHOUT ANY REASONABLE CAUSE, THE AO H ELD THAT IT WAS A FIT CASE FOR LEVY OF PENALTY, THUS, PENALT Y OF RS.1,18,439 WAS LEVIED U/S 271C. IN FIRST APPEAL, LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE EXPARTE AND HELD THAT THE AO HAD RIGHTLY LEVIED THE PENALTY. 3. DURING THE COURSE OF HEARING BEFORE US, THE LD. CO UNSEL 3 I.T.A. NO.7266/MUM/2014 OF THE ASSESSEE PLACED RELIANCE UPON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF M/S KOTAK SECU RITIES LTD IN CIVIL APPEAL NO. 3141 OF 2016 DATED 29-03-20 16 AND SUBMITTED THAT THIS ISSUE NOW STANDS COVERED BY THE AFORESAID JUDGEMENT WHEREIN IT WAS HELD THAT THE SE RVICES RENDERED BY THE STOCK EXCHANGE WERE NOT IN THE NATU RE OF TECHNICAL SERVICES AS ENVISAGED IN SECTION 9(1)(VII ) OF THE ACT. 4. PER CONTRA, THE LD. DR RELIED UPON THE ORDERS OF TH E LOWER AUTHORITIES. 5. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AS WELL AS THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF KOTAK SECURITIES LTD (SUPRA) . DURING THE COURSE OF HEARING BEFORE THE AO, IT HAS BEEN OBSERV ED BY THE AO THAT ASSESSEE WAS A STOCK BROKING COMPANY AND, THEREFORE, AMOUNT OF TRANSACTION CHARGES PAID TO ST OCK EXCHANGE WAS ON ACCOUNT OF TECHNICAL SERVICES RENDE RED BY THE STOCK EXCHANGE TO THE ASSESSEE, AND THEREFORE, UNDER THE PROVISIONS OF SECTION 194J OF THE ACT, TDS WAS DEDU CTIBLE AT SOURCE FROM SUCH PAYMENTS AND SINCE THE ASSESSEE FA ILED TO DEDUCT TAX AT SOURCE IT WAS LIABLE TO PAY PENALTY U /S 271C. 6. UNDER THESE CIRCUMSTANCES, THE FIRST ISSUE THAT WE NEED TO DECIDE IS WHETHER THE AMOUNT PAID BY THE ASSESSE E TO THE STOCK EXCHANGE WAS FOR TECHNICAL SERVICES AS ENVISA GED IN SECTION 194J R.WS.S. 9(1)(VII) OR NOT. IN THIS REG ARD IT IS NOTED BY US THAT THIS ISSUE IS NO MORE RES INTEGRA SINCE PRECISELY, THIS ISSUE HAS BEEN DECIDED BY THE HONBLE SUPREME COURT IN THE CASE OF KOTAK SECURITIES LTD (SUPRA). WE FIND IT 4 I.T.A. NO.7266/MUM/2014 APPROPRIATE TO REPRODUCE HEREUNDER THE RELEVANT PAR T OF THE ORDER:- 3. BY THE IMPUGNED ORDER DATED 21 ST OCTOBER, 2011 PASSED IN THE AFORESAID APPEAL, THE HIGH COUR T OF BOMBAY HAS HELD THAT THE TRANSACTION CHARGES PAI D BY A MEMBER OF THE BOMBAY STOCK EXCHANGE TO TRANSACT BUSINESS OF SALE AND PURCHASE OF SHARES AMOUNTS TO PAYMENT OF A FEE FOR 'TECHNICAL SERVICES ' RENDERED BY THE BOMBAY STOCK EXCHANGE. THEREFORE, UNDER THE PROVISIONS OF SECTION 194J OF THE INCOME TAX ACT,1961 (FOR SHORT 'THE ACT'), ON SUCH PAYMENT S TDS WAS DEDUCTIBLE AT SOURCE. THE SAID DEDUCTIONS NOT HAVING BEEN MADE BY THE APPELLANT - ASSESSEE, THE ENTIRE AMOUNT PAID TO THE BOMBAY STOCK EXCHANGE ON ACCOUNT OF TRANSACTION CHARGES WAS NOT DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OF THE APPELLANT - ASSESSEE FOR THE ASSESSMENT YEAR IN QUESTION I.E.2005-2006. THIS IS ON ACCOUNT OF THE PROVISIONS OF SECTION 40 (A)(IA) OF THE ACT. NOTWITHSTANDING THE ABOVE, THE BOMBAY HIGH COURT HELD THAT IN VIEW OF THE APPARENT UNDERSTANDING OF BOTH THE ASSESSEE AND THE REVENUE WITH REGARD TO THE LIABILITY TO DEDUCT TDS ON TRANSACTION CHARGES PAID TO THE BOMBAY STOCK EXCHANGE RIGHT FROM THE YEAR 1995 I.E. COMING INTO EFFECT OF SECTION 194J TILL THE ASSESSMENT YEAR IN QUESTION, BENEFIT, IN THE FACTS OF THE CASE, SHOULD BE GRANTED TO THE APPELLANT - ASSESSEE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40 (A)(IA) OF THE ACT MUST BE HELD TO BE NO T CORRECT. 4. AGGRIEVED BY THE FINDING THAT TRANSACTION CHARGE S PAID TO THE STOCK EXCHANGE ARE FEES FOR 'TECHNICAL SERVICES', THE ASSESSEE - KOTAK SECURITIES LTD. IS IN APPEAL BEFORE US WHEREAS THE REVENUE SEEKS TO CHALLENGE THE LATER PART OF THE ORDER OF THE HIGH COURT SET OUT ABOVE. THE ASSESSEE IS ALSO IN APPEAL AGAINST SIMILAR ORDERS PASSED IN RESPECT OF 5 I.T.A. NO.7266/MUM/2014 SUBSEQUENT ASSESSMENT ORDERS IN THE CASE OF THE ASSESSEE ITSELF. AS THE ORDER OF THE HIGH COURT, WI TH REGARD TO TRANSACTION CHARGES BEING IN THE NATURE O F FEE FOR TECHNICAL SERVICES, HAS BEEN MADE APPLICABL E TO THE ASSESSMENTS IN CASE OF OTHER ASSESSEES, SUCH OF THE ASSESSEES WHO ARE AGGRIEVED THEREBY HAVE FILED THE OTHER APPEALS BEFORE US. 5. THE RELEVANT PROVISIONS OF THE ACT WHICH HAVE A MATERIAL BEARING TO THE ISSUES ARISING FOR DETERMINATION IN THE PRESENT APPEALS MAY NOW BE NOTICED. SECTION 194J; SECTION 40 9(A)(IA) OF THE ACT INTRODUCED BY FINANCE (NO.2) AC T, 2004 WITH EFFECT FROM 1ST APRIL, 2005; AND EXPLANATION 2 OF SECTION 9(1)(VII) WHICH ARE RELEVA NT FOR THE PURPOSE OF THE PRESENT CASE READS AS UNDER: 194J. FEES JAR PROFESSIONAL OR TECHNICAL SERVICES. (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF- (A) FEES FOR PROFESSIONAL SERVICES, OR (B) FEES FOR TECHNICAL SERVICES OR (C) ROYALTY, OR (D) ANY SUM REFERRED TO IN CLAUSE (VA) OF SECTION 2 8 SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCO UNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTH ER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO FIVE PER CENT OF SUCH SUM AS INCOME-TAX ON INCOM E COMPRISED THEREIN: EXPLANATION.-FOR THE PURPOSES OF THIS SECTION,- (A) (B) 'FEES FOR TECHNICAL SERVICES' SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9; 40. AMOUNTS NOT DEDUCTIBLE . NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' (A) IN THE CASE OF ANY ASSESSEE- 6 I.T.A. NO.7266/MUM/2014 (I) . . (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT,ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEE S FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNT S PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPP LY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED IN THE PREVIOUS YEAR BUT PAID IN ANYSUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 SUC H SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING TH E INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION. - .. 9. INCOME DEEMED TO ACCRUE OR ARISE IN INDIA (1) THE FOLLOWING INCOMES SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA- (I) .. .. (VII) INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABLE BY- (A) .. (B) .. (C) . EXPLANATION 2.-FOR THE PURPOSES OF THIS CLAUSE, 'FE ES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION(INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBL Y, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR 7 I.T.A. NO.7266/MUM/2014 CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIEN T CHARGEABLE UNDER THE HEAD 'SALARIES '. 6. WHAT MEANING SHOULD BE ASCRIBED TO THE WORD 'TECHNICAL SERVICES' APPEARING IN EXPLANATION 2 TO CLAUSE (VII) TO SECTION 9(1) OF THE ACT IS THE MOOT QUESTION. IN COMMISSIONER OF INCOME-TAX VS. BHARTI CELLULAR LTD.1. THIS COURT HAS OBSERVED AS FOLLOWS: 'RIGHT FROM 1979, VARIOUS JUDGMENTS OF THE HIGH COURTS AND TRIBUNALS HAVE TAKEN THE VIEW THAT THE WORDS 'TECHNICAL SERVICES JJ HAVE GOT TO BE READ IN THE NARROWER SENSE BY APPLYING THE RULE OF NOSCITUR A SOCIIS, PARTICULARLY, BECAUSE THE WORDS 'TECHNICA L SERVICES IN SECTION 9(1 )(VII) READ WITH EXPLANATI ON 2 COMES IN BETWEEN THE WORDS 'MANAGERIAL AND CONSULTANCY SERVICES'. 7. 'MANAGERIAL AND CONSULTANCY SERVICES' AND, THEREFORE, NECESSARILY 'TECHNICAL SERVICES', WOULD OBVIOUSLY INVOLVE SERVICES RENDERED BY HUMAN EFFORT S. THIS HAS BEEN THE CONSISTENT VIEW TAKEN BY THE COUR TS INCLUDING THIS COURT IN BHARTI CELLULAR LTD, (SUPR A). HOWEVER, IT CANNOT BE LOST SIGHT OF THAT MODERN DAY SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENTS MAY TEND TO BLUR THE SPECIFIC HUMAN ELEMENT IN AN OTHERWISE FULLY AUTOMATED PROCESS BY WHICH SUCH SERVICES MAY BE PROVIDED. THE SEARCH FOR A MORE EFFECTIVE BASIS, THEREFORE, MUST BE MADE. 8. A READING OF THE VERY ELABORATE ORDER OF THE ASSESSING OFFICER CONTAINING A LENGTHY DISCOURSE ON THE SERVICES MADE AVAILABLE BY THE STOCK EXCHANGE WOULD GO TO SHOW THAT APART FROM FACILITIES OF A FACELESS SCREEN BASED TRANSACTION, A CONSTANT UPGRADATION OF THE SERVICES MADE AVAILABLE AND SURVEILLANCE OF THE ESSENTIAL PARAMETERS CONNECTED WITH THE TRADE INCLUDING THOSE OF A PARTICULAR/SING LE TRANSACTION THAT WOULD LEAD CREDENCE TO ITS AUTHENTICITY IS PROVIDED FOR BY THE STOCK EXCHANGE. ALL SUCH SERVICES, FULLY AUTOMATED, ARE AVAILABLE T O ALL MEMBERS OF THE STOCK EXCHANGE IN RESPECT OF EVERY TRANSACTION THAT IS ENTERED INTO. THERE IS 8 I.T.A. NO.7266/MUM/2014 NOTHING SPECIAL, EXCLUSIVE OR CUSTOMISED SERVICE TH AT IS RENDERED BY THE STOCK EXCHANGE. 'TECHNICAL SERVICES' LIKE 'MANAGERIAL AND CONSULTANCY SERVICE' WOULD DENOTE SEEKING OF SERVICES TO CATER TO THE SPECIAL NEEDS OF THE CONSUMER/USER AS MAY BE FELT NECESSARY AND THE MAKING OF THE SAME AVAILABLE BY THE SERVICE PROVIDER. IT IS THE ABOVE FEATURE THAT WOULD DISTINGUISH/IDENTIFY A SERVICE PROVIDED FROM A FACILITY OFFERED. WHILE THE FORMER IS SPECIAL AND EXCLUSIVE TO THE SEEKER OF THE SERVICE, THE LATTER, EVEN IF TERMED AS A SERVICE, IS AVAILABLE TO ALL AND WOU LD THEREFORE STAND OUT IN DISTINCTION TO THE FORMER. T HE SERVICE PROVIDED BY THE STOCK EXCHANGE FOR WHICH TRANSACTION CHARGES ARE PAID FAILS TO SATISFY THE AFORESAID TEST OF SPECIALIZED, EXCLUSIVE AND INDIVI DUAL REQUIREMENT OF THE USER OR CONSUMER WHO MAY APPROACH THE SERVICE PROVIDER FOR SUCH ASSISTANCE / SERVICE. IT IS ONLY SERVICE OF THE ABOVE KIND THAT, ACCORDING TO US, SHOULD COME WITHIN THE AMBIT OF TH E EXPRESSION 'TECHNICAL SERVICES' APPEARING IN EXPLANATION 2 OF SECTION 9(1)(VII) OF THE ACT. IN T HE ABSENCE OF THE ABOVE DISTINGUISHING FEATURE, SERVIC E, THOUGH RENDERED, WOULD BE MERE IN THE NATURE OF A FACILITY OFFERED OR AVAILABLE WHICH WOULD NOT BE COVERED BY THE AFORESAID PROVISION OF THE ACT. 9. THERE IS YET ANOTHER ASPECT OF THE MATTER WHICH, IN OUR CONSIDERED VIEW, WOULD REQUIRE A SPECIFIC NOTIC E. THE SERVICE MADE AVAILABLE BY THE BOMBAY STOCK EXCHANGE [BSE ONLINE TRADING (BOLT) SYSTEM) FOR WHICH THE CHARGES IN QUESTION HAD BEEN PAID BY THE APPELLANT - ASSESSEE ARE COMMON SERVICES THAT EVERY MEMBER OF THE STOCK EXCHANGE IS NECESSARILY REQUIRE D TO AVAIL OF TO CARRY OUT TRADING IN SECURITIES IN T HE STOCK EXCHANGE. THE VIEW TAKEN BY THE HIGH COURT THAT A MEMBER OF THE STOCK EXCHANGE HAS AN OPTION OF TRADING THROUGH AN ALTERNATIVE MODE IS NOT CORRECT. A MEMBER WHO WANTS TO CONDUCT HIS DAILY BUSINESS IN THE STOCK EXCHANGE HAS NO OPTION BUT TO AVAIL OF SUCH SERVICES. EACH AND EVERY TRANSACTION BY A MEMBER INVOLVES THE USE OF THE SERVICES PROVIDED 9 I.T.A. NO.7266/MUM/2014 BY THE STOCK EXCHANGE FOR WHICH A MEMBER IS COMPULSORILY REQUIRED TO PAY AN ADDITIONAL CHARGE (BASED ON THE TRANSACTION VALUE) OVER AND ABOVE THE CHARGES FOR THE MEMBERSHIP IN THE STOCK EXCHANGE. THE ABOVE FEATURES OF THE SERVICES PROVIDED BY THE STOCK EXCHANGE WOULD MAKE THE SAME A KIND OF A FACILITY PROVIDED BY THE STOCK EXCHANGE FOR TRANSACTING BUSINESS RATHER THAN A TECHNICAL SERVIC E PROVIDED TO ONE OR A SECTION OF THE MEMBERS OF THE STOCK EXCHANGE TO DEAL WITH SPECIAL SITUATIONS FACE D BY SUCH A MEMBER(S) OR THE SPECIAL NEEDS OF SUCH MEMBER(S) IN THE CONDUCT OF BUSINESS IN THE STOCK EXCHANGE. IN OTHER WORDS, THERE IS NO EXCLUSIVITY T O THE SERVICES RENDERED BY THE STOCK EXCHANGE AND EACH AND EVERY MEMBER HAS TO NECESSARILY AVAIL OF SUCH SERVICES IN THE NORMAL COURSE OF TRADING IN SECURITIES IN THE STOCK EXCHANGE. SUCH SERVICES, THEREFORE, WOULD UNDOUBTEDLY BE APPROPRIATE TO BE TERMED AS FACILITIES PROVIDED BY THE STOCK EXCHANGE ON PAYMENT AND DOES NOT AMOUNT TO 'TECHNICAL SERVICES' PROVIDED BY THE STOCK EXCHANGE, NOT BEING SERVICES SPECIFICALLY SOUGHT FOR BY THE USER OR THE CONSUMER. IT IS THE AFORESAID LATTER FEATURE OF A SERVICE RENDERED WHICH IS THE ESSENTIAL HALLMARK OF THE EXPRESSION 'TECHNICAL SERVICES' AS APPEARING IN EXPLANATION 2 TO SECTION 9 ( 1) (VII) OF THE ACT. 10. FOR THE AFORESAID REASONS, WE HOLD THAT THE VIE W TAKEN BY THE BOMBAY HIGH COURT THAT THE TRANSACTION CHARGES PAID TO THE BOMBAY STOCK EXCHANGE BY ITS MEMBERS ARE FOR 'TECHNICAL SERVICES' RENDERED IS NO T AN APPROPRIATE VIEW. SUCH CHARGES, REALLY, ARE IN T HE NATURE OF PAYMENTS MADE FOR FACILITIES PROVIDED BY THE STOCK EXCHANGE. NO TDS ON SUCH PAYMENTS WOULD, THEREFORE, BE DEDUCTIBLE UNDER SECTION 194J OF THE ACT. 7. FROM THE PERUSAL OF THE ABOVE, IT IS CLEAR THAT HON BLE SUPREME COURT HAS HELD THAT THE SERVICE PROVIDED BY THE STOCK EXCHANGE TO THE ASSESSEE COMPANY WOULD NOT FA LL 10 I.T.A. NO.7266/MUM/2014 WITHIN THE AMBIT OF EXPRESSION TECHNICAL SERVICES AS PER SECTION 9(1)(VII) OF THE ACT, SINCE SERVICE WOULD B E MERELY IN THE NATURE OF FACILITY OFFERED OR AVAILABLE WHICH W OULD NOT BE COVERED BY THE AFORESAID PROVISION OF THE ACT. UND ER THESE CIRCUMSTANCES, IT WAS HELD THAT NO TDS ON SUCH PAYM ENT WOULD THEREFORE BE MADE U/ S 194J OF THE ACT. 8. THUS, THE ASSESSEE WOULD NOT LIABLE FOR LEVY OF PEN ALTY U/S 271C WHEN THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS U/S 194J. THUS, PENALTY LEVIED BY THE AO IS DIRECTED T O BE DELETED. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCL USION OF THE HEARING. SD/- SD/- (MAHAVIR SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 25 TH NOVEMBER, 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , E-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES