SAL SECURITIES P. LTD,MUMBAI vs. ITO (TDS) 3(2), MUMBAI

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ITA 6298/MUM/2014Status: DisposedITAT Mumbai15 December 2016AY 2010-112 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that transaction charges paid to the Stock Exchange are for facilities provided, not technical services, and thus no TDS is deductible under Section 194J. The Supreme Court decision in CIT vs. Kotak Securities Ltd. was followed.

What were the facts?

The assessee paid transaction charges to the National Stock Exchange (NSE) without deducting TDS under Section 194J. The AO held the assessee in default and levied interest. The CIT(A) confirmed the AO's order.

What were the issues?

Whether transaction charges paid to the National Stock Exchange are subject to TDS under Section 194J of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 194J,Section 201(1),Section 201(1A)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

For Appellant: Shri. B.S. Bist, DR
For Respondent: Shri. B.S. Bist, DR

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI ASHWANI TANEJA, AM (A.Y:2010-11) Sal Securities P. Ltd. Income Tax Officer 703-A, Lakshchandi Apartments, (TDS)-3(2), Room No. 910, Smt. Krishna Vatika Marg, Gokul K.G. Mittal Aurvedic Hospital Vs. Dham, Goregaon East, Mumbai- Building Charni Road(W), 400063 Mumbai-400002 PAN No.AAHCS8674E Appellant .. Respondent .. None Assessee by Revenue by .. Shri. B.S. Bist, DR .. Date of hearing 15-12-2016 Date of pronouncement .. 15-12-2016 O R D E R PER MAHAVIR SINGH, JM:

This appeal by assessee is arising out of the order of CIT(A) -14, Mumbai in appeal No. CIT(A)-14/IT-169/ITO TDS-3(2)/2012-13 dated 11-08-2014. The Assessment was framed by ITO(TDS)-3(2), Mumbai for the A.Y. 2010-11 vide order dated 31-03-2012 u/s 201(1) r. w. s. 201(1A) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2.

The only issue in this appeal of assessee is against the order of CIT(A) treating the assessee as assessee in default for non-deduction of TDS u/s 194J by passing the order u/s 201(1) r. w. s. 201(1A) of the Act on transaction charges paid to National Stock Exchange of India, hence, the consequential interest also on the same. For this assessee has raised following grounds: - “2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the order passed by the Ld. A.O. u/s 201(1) r. w. s. 201(1A) without properly appreciating the fact that the order was passed by the Ld. A.O. without considering the facts and figures on record and without application of mind.

3. In the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the action of the Ld. A.O. in holding that the appellant has not deducted TDS u/s 194J of Rs. 99,282/- on transaction charges of Rs. 9,92,820/- paid to National Stock Exchange of India (NSE) and further erred in confirming the interest u/s 201(1A) of Rs. 35,741/- as levied by the Ld. A.O.”

3.

The brief facts leading to the above issue are that the AO in view of the information received from the National Stock Exchange that during the financial year 2009-10 relevant

A.Y. 2010-11 the assessee has paid transaction charges amounting to Rs. 9,92,820/- on which no TDS has been deducted u/s 194J of the Act. Accordingly, the AO hold the assessee as deemed to be in default u/s 201(1) of the act and consequential interest u/s 201 (1A) was also levied. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of the AO by following the decision of Hon’ble Bombay High Court in the case of CIT(A) Vs. Kotak Securities Ltd [2012] 20 taxman dotcom 846 (Bom).

4.

At the outset, it is noticed that this issue is now covered in favour of assessee by the decision of Hon’ble Supreme Court in the case of CIT Vs. Kotak [2016] 67 taxman.com 356(SC), wherein, Hon’ble Supreme Court has reversed the judgement of Hon’ble Bombay High Court by stating that the transaction charges paid to the Bombay Stock Exchange by its members are for technical services rendered is not appropriate view of the Bombay High Court. It was held that such charges really in the nature of payments made for facilities provided by this Stock Exchange and no TDS on such payment would be deductible u/s 194J of the Act. According to the learned Counsel this issue is squarely cover in favour of assessee and against the Revenue.

5.

After hearing the learned Sr. DR and going through the facts of the case, we find that the issue is covered by the Supreme Court judgement in the case of Kotak Securities Ltd. and hence, respectfully following the same, we allow the claim of assessee and reverse the orders of the lower authorities. Appeal of the assessee is allowed.

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