Appeal details
Counselvise Citation
[2009] 115 COUNSELVISE.COM (IT) 2636 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-12-2009
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2001-2002
Appeal Filed On
09-02-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI T.R. SOOD (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO. 743/MUM/2009 ASSESSMENT YEAR-2006-07 THE DY. CIT 4(2), AAYAKAR BHAVAN, MUMBAI-400 020 VS. M/S. M.F. GLOBAL SIFY SECURITIES INDIA PVT. LTD., C-BLOCK MODERN MILLS COMPOUND, 101, K.K. MARG, MAHALAXMI, MUMBAI-400 011 PAN-AABCR6382C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.S. RANA RESPONDENT BY: SHRI VIKAS GANDHI O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DT. 27.11.2008 PASSED BY THE LD. CIT(A)-IV, MUMBAI FOR THE ASSESSMENT 2006-07. 2. GROUNDS OF APPEAL NO. 1 TO 7 IS WITH RESPECT TO DELETION OF DISALLOWANCE OF RS. 2.22 CRORES MADE IN RESPECT OF V-SAT, LEASED LINE CHARGES AND TRANSACTION CHARGES ON THE GROUND THAT THESE WERE COMPOSITE CHARGES ALONGWITH TRANSACTION CHARGES FOR PROFESSIONAL AND TECHNICAL SERVICES RENDERED BY THE EXCHANGE TO ITS MEMBERS AND THE ASSESSEE HAS FAILED TO DEDUCT TDS THEREON. 3. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISI ON IN THE CASE OF SKYCELL COMMUNICATION LTD. VS DCIT 251 ITR 53 AND I N THE CASE OF KOTAK SECURITIES LTD. VS ACIT (MUM) 24 DTR 214 WHER EIN IT HAS BEEN HELD AS FOLLOWS: ITA NO. 743/M/09 2 TRANSACTION FEE PAID TO STOCK EXCHANGE ON THE BASI S OF VOLUME OF TRANSACTION IN PAYMENT FOR USE OF FACILIT IES PROVIDED BY STOCK EXCHANGE AND NOT FOR ANY SERVICES, EITHER TECHNICAL OR MANAGERIAL, HENCE PROVISIONS OF S. 194J ARE NOT ATT RACTED AND NO DISALLOWANCE CAN BE MADE BY INVOKING S. 40(A)(IA ). THEREFORE GROUND NO. 1 TO 7 OF THE REVENUE IS DISM ISSED. 4. GROUND NO. 8 TO 12 IS WITH RESPECT TO THE DELETI ON OF ADDITION MADE ON ACCOUNT OF PENALTY OF RS. 6,03,476/- ON VIOLATIO N OF THE BYE-LAWS OF THE STOCK EXCHANGE, WHICH ARE STATUTORY IN CHARACTE R AND THUS AMOUNTED TO INFRINGEMENT OF LAW. 5. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISI ON IN THE CASE OF SHRI PRASHANT J. PATEL, FOR THE ASSESSMENT YEAR 200 5-06 WHEREIN THE ITAT C BENCH IN ITA NO. 213/M/09 HAS FOLLOWED THE ORDER OF THE A.Y. 2004-05 WHICH READS AS FOLLOWS: GROUND NO. 3 PERTAINS TO DELETION MADE BY THE LD. CIT(A) IN RESPECT OF PENALTY PAID TO NSE, FOR INFRINGEMENT OF STATUTORY LAW, FRAMED BY THE SEBI, WHICH IS A STATUTORY BODY AND THE PAYMENT NOT BEING COMPENSATORY IN NATURE. THE AO L EVIED PENALTY OF RS. 1,38,468/- ON ACCOUNT OF VIOLATION O F STOCK EXCHANGE RULES AND REGULATION BY TREATING THE SAME INFRACTION OF LAW. THE LD. CIT(A) DELETED THE IMPU GNED AMOUNT TREATING THE SAME AS NOT IN THE NATURE OF P ENALTY BUT COMPENSATORY IN NATURE. THE FINDING OF THE LD. CIT (A) ARE REPRODUCED HEREUNDER:- AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, IT HAS BEEN FOUND THAT THE CHARGES PAID WERE COMPENSATORY IN NATURE AND THE SAME DID NOT ARISE BECAUSE OF ANY INFRACTION OF LAW. THESE WERE FOR VIOLATION EXCHANGE REGULATIONS AND COULD NOT BE TRE ATED AS PENALTY FOR ANY PUNISHABLE OFFENCE. HENCE, THE SAME ARE ALLOWABLE U/S. 37(1) OF THE ACT. THE ADDITION MADE IS THEREFORE, DELETED ITA NO. 743/M/09 3 IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, IT WAS CONTENDED BY THE LD. AR THAT THERE IS NO INFRACTION OF LAW. THE SAID ALLEGED PENALTY WAS FOR BAD DELIVERY/SHORT DELIVERY ETC., WHICH ARE UNAVOIDABLE BUSINESS INCIDENCES. I N THE ORDINARY COURSE OF SHARE BROKING BUSINESS. THE LD. DR PLACED RELIANCE ON THE DECISION REPORTED IN (2009) 27 SOT 469(BOM), IN THE CASE OF ITO VS VRM SHARE BROKING PVT. LTD., WHICH IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE BEI NG FACTUALLY DIFFERENCE AND DISTINGUISHABLE. ON A CAREFUL PERUS AL OF THE FACT SITUATION OF THE CASE, RIVAL SUBMISSIONS AND B OTH THE ASSESSMENT ORDER AND IMPUGNED APPELLATE ORDER, WE A RE OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE TO BE TREATED AS PAYMENT ON ACCOUNT OF PENALTY BUT THE PAYMENT IS OF COMPENSATORY IN NATURE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A), WHICH ARE BASED ON FACTS OF THE CASE AND VARIOUS DECISIONS QUOTED AND RELIED BY THE ASSESSEE, INCLUDING THE DECISIONS OF THE HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS R. D. SHARMA & CO. 137 ITR 333 (BOM). IN VIEW OF THIS, THE IMPUGN ED DELETION MADE BY THE LD. CIT(A), IS UPHELD AND THESE GROUND RAISED BY THE REVENUE ARE DISMISSED. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDI NATE BENCH IN THE CASE OF PRASHANT J. PATEL, WE DISMISS THE REVENUES APPEAL ON THIS ISSUE. 6. GROUND NO. 13 IS GENERAL IN NATURE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 4 TH DAY OF DECEMBER, 2009 SD/- SD/- (T.R. SOOD) (ASH A VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 4 TH DECEMBER, 2009 RJ ITA NO. 743/M/09 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 743/M/09 5 DATE INITIALS 1 DRAFT DICTATED ON: 2.12.09 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 2.12.09 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______
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