EDELUISS SECURITIES LTD, V. ITO (OSD) TDS 1(2),

MA 696/MUM/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0330 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 20-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Rectification of order
• Section: 201(1)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , !' !' !' !' # $% # $% # $% # $% , ,, , & & & & ' ' ' ' BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ('(' ') . / M.AS NO.695 TO 698/MUM./2012 . / ITAS NO. 6335 TO 6338/MUM./2010 ( &) + ',+ / A.YS : 200708, 200506, 200809 & 200607 ) M/S. EDELWEISS SECURITIES LIMITED 14 TH FLOOR, EXPRESS TOWERS NARIMAN POINT, MUMBAI 400 021 .. -. / APPLICANT ) V/S INCOME TAX OFFICER (TDS) WARD1(2), MUMBAI 400 002 .... /0-. / RESPONDENT - . / PERMANENT ACCOUNT NUMBER AAACK3792N &) +2# 3 4 / ASSESSEE BY : MR. RAJAN R. VORA ' 3 4 / REVENUE BY : MR. MANOJ KUMAR )' 3 # / DATE OF HEARING 10.05.2013 $ 56, 3 # / DATE OF ORDER 17.05.2013 $ $ $ $ / ORDER # $% # $% # $% # $% , ,, , & & & & 7 7 7 7 / PER AMIT SHUKLA, J.M. BY WAY OF THESE MISCELLANEOUS APPLICATIONS, THE ASS ESSEE SEEKS MODIFICATION OF THE DIRECTIONS GIVEN BY THE TRIBUNA L IN DEPARTMENTAL APPEALS IN ITA NO.6335 TO 6338/MUM./2010, FOR THE A SSESSMENT YEARS 200708, 200506, 200809 & 200607. THE RELEVANT S UBMISSIONS OF THE M/S. EDELWEISS SECURITIES LIMITED 2 ASSESSEE IN ITS M.AS, FOR THE SAKE OF READY REFEREN CE, ARE REPRODUCED HEREIN BELOW: 11. WHILE DECIDING THE APPEAL, YOUR HONOUR HAS AT P ARA 6 OF ITS ORDER STATED THE FOLLOWING: AT THE OUTSET, BOTH PARTIES FAIRLY CONCEDED THAT N OW THIS ISSUE STANDS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. M/S KOTAK SECURITIES LIMITED, REPORTED IN (2012) 340 ITR 333. LEARNED AR, HOWEVER, SUBMITTED THAT THE INTEREST LEVIED IS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW AND, THEREFORE, FOR QUANTIFICATION PART ONLY THE SAME SHOULD BE SENT TO THE ASSESSING OFFICER FOR VERIFICATION. 12. YOUR HONOUR WHILE DECIDING THE APPEAL HAS STAT ED THAT THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE (AR) HAS CONCEDED TH AT TAXES SHOULD BE WITHHELD ON TRANSACTION CHARGES UNDER SECTION 194J OF THE ACT. IN THIS REGARD, IT IS RESPECTFULLY SUBMITTED THAT THE DEPAR TMENT REPRESENTATIVE HAD RELIED ON THE BOMBAY HIGH COURTS DECISION, DATED 2 1 OCTOBER 2011, IN THE CASE OF KOTAK SECURITIES LTD. THE BOMBAY HIGH COURT HAD IN THIS CASE HELD THAT TRANSACTION CHARGES PAID BY THE ASSESSEE TO TH E STOCK EXCHANGE CONSTITUTED FEES FOR TECHNICAL SERVICES UNDER SEC TION 1 94J OF THE ACT. AT THIS STAGE, THE AR STATED THAT ALTHOUGH THE FACTS O F THE ASSESSEE ARE SIMILAR TO KOTAK SECURITIES, PAYMENTS MADE FOR TRAN SACTION CHARGES SHOULD NOT BE CONSIDERED AS 1 94J PAYMENTS. YOUR HONOUR CO MMUNICATED THAT THE BOMBAY HIGH COURTS DECISION WILL BE FOLLOWED FOR T HE PURPOSE OF THE GROUND IN QUESTION FOR ASSESSMENT YEAR 2005-06. ACC ORDINGLY, THE AR ONLY PRAYED THAT WHERE THE PAYMENT OF TRANSACTION CHARGE S IS CONSIDERED AS FEES FOR TECHNICAL SERVICES UNDER 194J OF THE ACT , THE INTEREST UNDER SECTION 201(IA) OF THE ACT SHOULD BE COMPUTED ONLY TILL THE DAY THE PAYEE HAS DISCHARGED TAXES ON THE PAYMENT RECEIVED BY IT AS PER MUMBAI SPECIAL BENCHS DECISION IN THE CASE OF MAHINDRA AND MAHIND RA V. DCIT [2009] 313 ITR (AT) 263. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE SUBMIT S THAT SINCE THE PAYEES HAVE ALREADY OFFERED THE TRANSACTION CHARGES PAID BY THE ASSESSEE TO TAX, TAX WITHHELD AND DEPOSITED BY THE ASSESSEE ON THE TRANSACTION CHARGES PAID SHOULD BE REFUNDED TO IT. A LETTER REC EIVED FROM THE PAYEES STATE THAT THEY HAVE ALREADY DEPOSITED TAXES ON THE TRANSACTION CHARGES PAID BY THE ASSESSEE (ENCLOSED AS EXHIBIT B). GIVEN THE ABOVE, IT IS SUBMITTED THAT THE ASSESSEE DID NOT CONCEDE THAT TRANSACTION CHARGES ARE IN THE NATURE OF FEES FOR T ECHNICAL SERVICES UNDER SECTION 1 94J OF THE ACT AND LIABLE TO DEDUCTION OF TAX AT SOURCE. 13. THE ASSESSEE PLEADS YOUR HONOUR TO RECTIFY THE ABOVE MISTAKE APPARENT FROM THE RECORDS AND AMEND THE ORDER. 2. THE LEARNED COUNSEL, MR. RAJAN R. VORA, APPEARING O N BEHALF OF THE ASSESSEE, SUBMITTED THAT THE TRIBUNAL, WHILE FOLLOW ING THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S KOTAK SECURITIES LTD., [2012] 340 ITR 333 (BOM.) HAS HELD THAT THE TRANSACTION CH ARGES FEE PAID BY THE M/S. EDELWEISS SECURITIES LIMITED 3 ASSESSEE TO THE STOCK EXCHANGE, CONSTRUES FEES FOR TECHNICAL SERVICES AND ARE COVERED UNDER SECTIONS 194J / 94J, THEREFOR E, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE WHILE CREDITING THE TRANSACTION CHARGES TO THE ACCOUNT OF STOCK EXCHANGE. HOWEVER, FOR THE PURPOSE OF QUANTIFICATION OF INTEREST, THE MATTER WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO CARRY OUT NECESSARY VERIFICATION AND QUANTIFY TH E INTEREST. THE TRIBUNAL, HOWEVER, DID NOT QUALIFY THAT INTEREST UNDER SECTIO N 201(IA) SHOULD BE COMPUTED ONLY TILL THE DATE THE PAYEE HAS DISCHARGE D THE TAX ON THE PAYMENT RECEIVED BY IT AND FURTHER THAT THE PAYEE H AS ALREADY OFFERED THE TRANSACTION CHARGES PAID BY THE ASSESSEE TO TAX THE N TAX WITHHELD AND DEPOSITED BY THE ASSESSEE ON THE TRANSACTIONS CHARG ES PAID SHOULD BE REFUNDED TO IT. IN SUPPORT OF THIS CONTENTION, HE R ELIED UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN HINDUSTAN COCA COLA BEVERAGE P. LTD. V/S CIT, [2007] 293 ITR 226 (SC). HE, THEREFORE, SUBMIT TED THAT THE DIRECTIONS OF THE TRIBUNAL SHOULD BE ELABORATE AND SPECIFIC TO THIS EXTENT. 3. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT ONCE THE TRIBUNAL HAS GIVEN A DIRECT ION FOR QUANTIFICATION OF THE INTEREST, THERE IS NO NEED TO GIVE FURTHER CLAR IFICATION ON THESE ASPECTS. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. IN THE PRESENT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON THE PAYMENT TOWARDS TRANSACTION CHARGES TO BSE, NSE AND IL&FS. THE ASSESSEE WAS ASKED TO MAKE THE PAYMENT OF TDS ALONG WITH THE INTEREST UNDER SECTIONS 201(1) AND 201(1A) BY THE ASSESSING OFFICER AND THEREBY A DEMAND WAS CREATED IN THE ASSESSMENT YEARS 200506 TO 200809. THE LEARNED COMMISSIONER (APPEALS) HELD THAT THE ASSESS EE WAS NOT LIABLE TO DEDUCT TDS UNDER SECTION 194J FOLLOWING THE DECISIO N OF THE TRIBUNAL, MUMBAI BENCH, IN KOTAK SECURITIES LTD. V/S ACIT, [2 008] 25 SOT 440 (MUM.). BEFORE THE TRIBUNAL, BOTH THE PARTIES AGREE D THAT THE ISSUE INVOLVED IN THE AFORESAID CASE IS NOW STANDS COVERE D AGAINST THE ASSESSEE IN VIEW OF THE JUDGMENT OF JURISDICTIONAL HIGH COUR T IN CIT V/S KOTAK SECURITIES LTD. (SUPRA). THE TRIBUNAL, WHILE FOLLOW ING THE JUDGMENT OF THE M/S. EDELWEISS SECURITIES LIMITED 4 JURISDICTIONAL HIGH COURT, DIRECTED THE ASSESSING O FFICER TO QUANTIFY THE INTEREST AS REQUESTED BY THE LEARNED COUNSEL. NOW, THE LEARNED COUNSEL IS SUBMITTING THAT THE INTEREST SHOULD BE COMPUTED ONL Y TILL THE DATE THE PAYEE HAS DISCHARGED THE TAX ON THE PAYMENT RECEIVE D BY THE ASSESSEE IN VIEW OF THE MUMBAI SPECIAL BENCH DECISION IN MAHIND RA & MAHINDRA, 313 ITR (AT) 263 (MUM.) AND FURTHER THE PAYEE WHICH HAS ALREADY OFFERED THE TRANSACTION CHARGES PAID BY THE ASSESSEE TO TAX, TH EN THE TAX WITHHELD AND DEPOSITED BY THE ASSESSEE ON SUCH TRANSACTION CHARG ES SHOULD BE REFUNDED. THIS PLEA CANNOT BE ENTERTAINED AT THIS STAGE BECAU SE IT WAS NOT THE PART OF THE ORIGINAL ARGUMENT AT THE TIME OF HEARING. SUCH A CONTENTION CANNOT BE THE SUBJECT MATTER OF RECTIFICATION OF MISTAKE APPA RENT ON RECORD UNDER SECTION 254(2). HOWEVER, ONCE THE TRIBUNAL HAS DIRE CTED THE ASSESSING OFFICER TO QUANTIFY THE INTEREST, IT IS IMPLIED THA T THE ASSESSING OFFICER WILL COMPUTE THE SAME IN ACCORDANCE WITH THE LAW AND WIL L ALSO TAKE INTO CONSIDERATION THE TAXES PAID BY THE PAYEE AND OTHER CONTENTIONS RAISED BY THE ASSESSEE IN THE PRESENT APPLICATION. IF THE ASS ESSING OFFICER HAS NOT COMPUTED THE INTEREST AND TAX LIABILITY IN ACCORDAN CE WITH THE LAW, THEN THE ASSESSEE HAS A REMEDY OF APPEAL. SUCH A CONTENTION CANNOT BE THE SUBJECT OF RECTIFICATION OF MISTAKE APPARENT ON RECORD UNDE R SECTION 254(2). CONSEQUENTLY, WE DO NOT FIND ANY MERIT IN THE CONTE NTIONS RAISED IN THE MISC. APPLICATIONS AND THE SAME ARE DISMISSED AS SU CH. 5. 2 #8 &) +2# 3 ('(' ') 2 ) # 9 : 5. IN THE RESULT, ASSESSEES MISC. APPLICATIONS ARE TREATED AS DISMISSED. $ 3 56, ; <)8 17 TH MAY 2013 6 3 = : ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY 2013 SD/- RAJENDRA SINGH ACCOUNTANT MEMBER SD/- # # # # $% $% $% $% & & & & AMIT SHUKLA JUDICIAL MEMBER MUMBAI, <) <) <) <) DATED: 17 TH MAY 2013 M/S. EDELWEISS SECURITIES LIMITED 5 $ 3 /&#( >(,# / COPY OF THE ORDER FORWARDED TO : (1) &) +2# / THE ASSESSEE; (2) ' / THE REVENUE; (3) ? () / THE CIT(A); (4) ? / THE CIT, MUMBAI CITY CONCERNED; (5) ('B= /&#&) , , / THE DR, ITAT, MUMBAI; (6) =C+ D / GUARD FILE. 0(# /&# / TRUE COPY $) / BY ORDER / . EF / PRADEEP J. CHOWDHURY '2G &) E' / SR. PRIVATE SECRETARY H / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI