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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI D. KARUNAKARA RAO
सुनवाई की तायीख / Date of Hearing : 02.09.2016 घोषणा की तायीख /Date of Pronouncement : 09.09.2016 आदेश / O R D E R PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee on 8.4.2015 is against the order of the CIT (TDS)-1, Mumbai dated 18.3.2015 u/s 263 of the Act for the assessment year 2011- 2012. In this appeal, assessee raised the following revised grounds which read as under:- “1. The Ld CIT failed to appreciate that the order dated 25.3.2015 u/s 201(1) / 201(1A) is neither erroneous nor prejudicial to the Revenue, and hence, erred in passing the order dated 18.3.2015 u/s 263 holding that the appellant was liable to deduct tax at source u/s 194A and thereby made a default u/s 201(1) / 201(1A) of the Act.
The Ld CIT failed to appreciate that the payments made to National Securities Clearing Corporation Limited (NSCCL) are towards fees for borrowing of securities under the Securities Lending Scheme, 1997 and not towards interest on moneys borrowed or debt incurred. Therefore, the provisions of section 194A do not apply. Therefore, revision of order passed by the AO u/s 201(1) / 201(1A) is bad in law.
Without prejudice to the above, the Ld CIT failed to appreciate that NSCCL is only an intermediary entitled to receive the payment from the appellant and pass on the same to the lender of securities whose identity is not known to the appellant without which tax cannot be deducted. Therefore, revision of order passed by the AO u/s 201(1) / 201(1A) is bad in law.
Without prejudice to the above, the impugned payment is not in the nature of income in the hands of the intermediary, NSCCL and hence, the appellant was not required to deduct at source. Therefore, the provisions of section 194A do not apply.
Without prejudice to the above, the Ld CIT erred in passing the order dated 18.3.2015 u/s 263 without providing sufficient opportunity to the appellant of being heard and filing explanations and documents. Hence, the order u/s 263 is bad in law.”