ITO 5(1)(4), MUMBAI V. EXCEL MERCANTILE P. LTD, MUMBAI

ITA 8381/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9337 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Assessee Lawyers: JIGNESH R SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI D. MANMONHAN, VICE PRESIDENT (MZ) AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.8381/M/2010 ASSESSMENT YEAR: 2007-2008 ITO-4(1)(1), R.NO.636, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 VS. M/S. EXCEL MERCANTILE PVT. LTD., 201, YASHODHAM, NEHRU ROAD, VILE PARLE (E), MUMBAI 400 057. PAN: AAACE0837E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GIRIJA DAYAL, CIT - DR RESPONDENT BY : SHRI JIGNESH R. SHAH, AR DATE OF HEARING: 20.11.2012 DATE OF ORD ER: 23.11.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 2.12.2010 IS AG AINST THE ORDER OF CIT (A)- 9, MUMBAI DATED 28.9.2010 FOR THE ASSESSMENT YEAR 2 007-2008. 2. THE FACTS IN BRIEF ARE THAT DURING THE ASSESSMEN T PROCEEDINGS AO INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR FAIL URE TO DEDUCT TAX AT SOURCE WHILE MAKING PAYMENTS TO STOCK EXCHANGES ON ACCOUNTS OF VSAT, LEASE LINE CHARGES AND LEASE LINE RENT PAID TO STOCK EXCHANGE. IN APPEAL, CIT (A) DELETED THE ADDITION ON THE GROUND THAT THE TDS PROVISIONS WERE NOT ATTRACT ED IN RESPECT OF SUCH PAYMENTS AND RELIED ON THE DECISION OF THE ITAT IN THE CASE OF DCIT VS. M/S. ANGEL BROKING LIMITED IN ITA NO.7031/M/2008. AGGRIEVED BY WHICH T HE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US, SHRI JIGNESH R. SHAH, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ASSESSEES CASE IS FULLY COVERED BY THE JUDGMEN T OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ANGEL CAPITAL & DEBIT MARKET LTD IN INCOME TAX APPEAL (L) NO. 475 OF 2011, DATED 28 TH JULY, 2011 WHEREIN REFERENCE 1(A) AND (B) INVOLVIN G 2 THE SIMILAR ISSUE WERE DECIDED BY THE HONBLE HIGH COURT IN FAVOUR OF THE ASSESSEE AND THE SAME IS EVIDENT FROM PARA 2 OF THE SAID ORD ER WHICH READS AS UNDER: 2. AS REGARDS FIRST TWO QUESTION ARE CONCERNED, TH E FINDINGS OF FACT RECORDED BY THE ITAT IS THAT VSAT AND LEASE LINE CH ARGES PAID BY THE ASSESSEE TO STOCK EXCHANGE WERE MERELY REIMBURSEMEN T OF THE CHARGES PAID / PAYABLE BY THE STOCK EXCHANGE TO THE DEPARTMENT O F TELECOMMUNICATION. SINCE, THE VSAT AND LEASE LINE CHARGES PAID BY THE ASSESSEE DO NOT HAVE ANY ELEMENT OF INCOME, DEDUCTING TAX WHILE MAKING S UCH PAYMENTS DO NOT ARISE. HENCE, QUESTION NOS. (A) AND (B) CANNOT BE ENTERTAINED. 4. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISS UE IN FAVOR OF THE ASSESSEE AT THE LEVEL OF THE HONBLE HIGH COURT OF BOMBAY, WE AR E OF THE OPINION THAT THE VSAT AND LEASE LINE CHARGES AND LEASE LINE RENT CHARGES PAID BY THE ASSESSEE TO STOCK EXCHANGE WERE MERELY REIMBURSEMENT OF THE CHARGES P AID / PAYABLE BY THE STOCK EXCHANGE AND THEY WERE NOT FEE FOR TECHNICAL SERVIC ES / PROFESSIONAL SERVICES RENDERED BY THE STOCK EXCHANGE. SINCE, THE VSAT AN D LEASE LINE CHARGES AND LEASE LINE RENT DO NOT HAVE ANY ELEMENT OF INCOME, TDS PROVISIONS ARE NOT APPLICABLE AND NO TAX IS REQUIRED TO BE DEDUCTED. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF NOVEMBER, 2012. SD/- SD/- (D. MANMOHAN) (D. KARUNAKARA RAO) VICE PRESIDENT ACCOUN TANT MEMBER DATE : 23.11.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR E, BENCH, ITAT, MUMBAI. 6. GUARD FILE. 3 // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI.