Canon Capital & Finance Ltd., Ahmedabad V. The Jt.CIT, Range-3, Ahmedabad

ITA 759/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0029 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Speculation loss
• Section: 143(3)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 759/AHD/2016 ( ASSESSMENT YEAR : 2010-11) CANON CAPITAL AND FINANCE LTD. 204, SARAP, NAVJIVAN PRESS LANE, ASHRAM ROAD, AHMEDABAD-380009 / VS. JT. COMM. OF INCOME TAX RANGE-3, PRATYAKSH KAR BHAVAN, AMBAWADI, AHMEDABAD-380015 ./ ./ PAN/GIR NO. : AAACC6315P ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI JAIMIN SHAH, A.R. / RESPONDENT BY : SHRI MUDIT NAGPAL, SR.D.R. DATE OF HEARING 05/09/2018 !'# / DATE OF PRONOUNCEMENT 25/09/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-10, AHMEDA BAD (CIT(A) IN SHORT), DATED 13.01.2016 ARISING IN THE ASSESSMENT ORDER DATED 04.03.2013 PASSED BY THE ASSESSING OFFICER (AO) UND ER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING ASSES SMENT YEAR 2010- 11. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE ADS AS UNDER:- ITA NO. 759/AHD/16 [CANON CAPITAL AND FINANCE LTD. VS. JT.CIT] A.Y. 2010-11 - 2 - 1. THAT THE LEARNED IT(A) HAS ERRED BOTH IN LAW AN D ON THE FACTS BY NOT ALLOWING SET- OFF OF SPECULATION LOSSES OF A.Y. 2003-04 OF RS.7,4 51/-. 2. THAT THE LEARNED IT(A) HAS ERRED IN LAW ON THE FACTS BY DISALLOWANCES OF FOLLOWING EXPENSES U/S40(A)(IA) OF THE IT. 1961. (A) TRANSACTION CHARGES RS.4,79,857/- (B) ANNUAL SUBSCRIPTION CHARGES RS.1,00,000/- (C) PROFESSIONAL CHARGES RS. 23,316/- (D) NSE NON-SETTLEMENT CHARGES RS. 16,171/- 3. THAT THE APPELLANT HAS PAID ALL THE EXPENSES DU RING THE YEAR UNDER CONSIDERATION AND THE EXPENDITURES ARE GENUINE, WHICH HAS NOT BEE N DOUBTED BY THE ASSESSING OFFICER AS WELL AS THE CIT(A) BUT DISALLOWED THE SA ME BY APPLYING SEC. 40(A)(IA) OF THE ACT IS BAD IN LAW AND ILLEGAL AND REQUIRES TO B E DELETED. 3. GROUND NO.1 INVOLVES SET OFF OF SPECULATION LOSS ES. OWING TO THE SMALLNESS OF THE AMOUNT INVOLVED, THE LEARNED A R FOR THE ASSESSEE FAIRLY SUBMITTED THAT HE DOES NOT INTEND TO PRESS T HE GRIEVANCE. GROUND NO.1 IS ACCORDINGLY DISMISSED AS NOT PRESSED. 4. GROUND NO.2 CONCERNS DISALLOWANCE OF VARIOUS EXP ENSES BY INVOKING SECTION 40(A)(IA) OF THE ACT ALLEGING NON DEDUCTION OF TAX AT SOURCE. 4.1 FIRST DISALLOWANCE RELATES TO EXPENSES ON ACCOU NT OF TRANSACTION CHARGES AMOUNTING TO RS.4,79,857/- PAID TO THE STOC K EXCHANGES. 4.2 IT IS THE CASE ON BEHALF OF THE ASSESSEE THAT T HE TRANSACTION CHARGES PAID TO THE STOCK EXCHANGE IS NOT SUSCEPTIB LE TO PROVISIONS OF SECTION 194J OF THE ACT AND THEREFORE NO OBLIGATION FOR DEDUCTION OF TAX AT SOURCE CAN BE FOISTED UPON THE ASSESSEE. SE CONDLY, THE REVENUE HAS NOT PRESUMABLY SUFFERED AT ALL OWING TO THE FAC T THE STOCK EXCHANGE (DEDUCTEE) HAS DISCHARGED ITS TAX LIABILIT Y FOR THE ASSESSMENT YEAR IN QUESTION. 4.3 AS RELIED UPON ON BEHALF OF THE ASSESSEE, THE I SSUE IS NO LONGER RES INTEGRA AND ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF CIT VS. KOTAK SECURITIES LTD. [2016] 383 ITR 1 (SC). IDENT ICAL ISSUE HAS BEEN ITA NO. 759/AHD/16 [CANON CAPITAL AND FINANCE LTD. VS. JT.CIT] A.Y. 2010-11 - 3 - ADJUDICATED IN FAVOUR OF THE ASSESSEE BY CO-ORDINAT E BENCH IN THE CASE OF FIDUCIARY SHARE & STOCK P. LTD. VS. ACIT 159 ITD 554 (MUM.) IN PARITY, THE DISALLOWANCE UNDER S.40(A)(IA) OF THE A CT TOWARDS TRANSACTION CHARGES REQUIRES TO BE DELETED. THE AO IS DIRECTED ACCORDINGLY TO DELETE THE DISALLOWANCE. 4.4 SECOND ISSUE RELATES TO ANNUAL SUBSCRIPTION CHA RGES PAID TO THE STOCK EXCHANGE AMOUNTING TO RS.1 LAKH. 4.5 THE LEARNED AR FOR THE ASSESSEE POINTED OUT THA T THE PAYMENT MADE TO THE STOCK EXCHANGE IS NOT IN THE NATURE OF MANAGERIAL OR PROFESSIONAL CHARGES AND THEREFORE TDS IS NOT LIABL E TO BE DEDUCTED. IN TUNE WITH THE PRINCIPLES LAID DOWN BY THE HONBL E SUPREME COURT IN THE CASE OF KOTAK SECURITIES LTD. (SUPRA) AND HAVIN G REGARD TO THE FACT THAT THE STOCK EXCHANGE, PRESUMABLY, HAS DISCHARGED ITS TAX OBLIGATIONS ON SUCH RECEIPTS OF ANNUAL SUBSCRIPTION CHARGES, WE FIND MERIT IN NON-APPLICABILITY OF SECTION 40(A)(IA) OF THE ACT OF SUCH PAYMENTS. ACCORDINGLY, THE AO IS DIRECTED TO CANCE L THE DISALLOWANCE OF RS.1 LAKH ON THIS SCORE. 4.6 THE ASSESSEE HAS ALSO AGITATED DISALLOWANCE OF RS.16,171/- PAID TO NSE FOR CHARGES PAID TOWARDS BREACH OF SETTLEMEN T OBLIGATIONS IN RESPECT OF CERTAIN TRANSACTIONS CARRIED ON BEHALF O F ITS CONSTITUENTS FROM TIME-TO-TIME. IT IS CONTENDED ON BEHALF OF TH E ASSESSEE THAT SUCH CHARGES TOWARDS LATE OR SHORT AMOUNT OF SETTLEMENT IS NOT ANY KIND OF PROFESSIONAL CHARGES OR MANAGERIAL SERVICES. THE P AYMENT IS MADE TO THE STOCK EXCHANGE ON VIOLATION OF CERTAIN CONTRACT UAL OBLIGATIONS AND THE ASSESSEE HAS NOT RECEIVED ANY SERVICES ON PAYME NT OF SUCH AMOUNT. WE FIND MERIT IN THE CONTENTIONS RAISED ON BEHALF O F THE ASSESSEE. THE PAYMENT MADE TO THE STOCK EXCHANGE TOWARDS BREACH O F CONTRACTUAL OBLIGATIONS CANNOT BE TERMED TO BE ANY KIND OF SERV ICE FOR INVOCATION OF PROVISIONS OF SECTION 194J/194C OF THE ACT. IN ANY EVENT, THE STOCK EXCHANGE HAS, PRESUMABLY, MET ITS TAX OBLIGAT ION OF SUCH ITA NO. 759/AHD/16 [CANON CAPITAL AND FINANCE LTD. VS. JT.CIT] A.Y. 2010-11 - 4 - COLLECTIONS FROM THE BROKER-ASSESSEE. THEREFORE, I N PARITY WITH THE VIEW TAKEN FOR OTHER ITEMS, NO DISALLOWANCE UNDER S .40(A)(IA) OF THE ACT IS CALLED FOR. THE AO IS ACCORDINGLY DIRECTED TO DELETE THE DISALLOWANCE ON THIS SCORE. 4.7 NEXT ISSUE CONCERNS DISALLOWANCE OF RS.23,316/- INCURRED TOWARDS PROFESSIONAL CHARGES FOR NON-DEDUCTION OF T DS. THE LEARNED AR FOR THE ASSESSEE IN THE COURSE OF HEARING FAIRLY SUBMITTED THAT HE DOES NOT INTEND TO PRESS THIS PART OF GROUND NO.2 O F ITS APPEAL. CONSEQUENTLY, THE DISALLOWANCE UNDER S.40(A)(IA) OF THE ACT TOWARDS PROFESSIONAL CHARGES AMOUNTING TO RS.23,316/- IS DI SMISSED. 5. GROUND NO.2 IS ACCORDINGLY ALLOWED IN PART. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 25/09/2018 S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 25/09/201 8