CENTRUM BROKING P.LTD,MUMBAI vs. CI (A) 14, MUMBAI

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ITA 158/MUM/2015Status: DisposedITAT Mumbai27 July 2016AY 2008-094 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the disallowance made by the AO under Section 40(a)(ia) for the same assessment year and payments had already been deleted by the Tribunal in the assessee's own case. Therefore, holding the assessee in default for non-deduction of TDS was not justified.

What were the facts?

The assessee paid VSAT and lease line charges to BSE/NSE without deducting TDS. The AO treated these payments as 'fee for technical services' and held the assessee in default for non-deduction of TDS, invoking Section 40(a)(ia). The CIT(A) confirmed this order.

What were the issues?

Whether payments made to BSE/NSE for VSAT and lease line charges are liable for TDS deduction. Whether the assessee can be held in default for non-deduction of TDS when the underlying disallowance was deleted.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 201(1),Section 201(1A),Section 194C,Section 194J

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI R.C. SHARMA, AM & SHRI SANDEEP GOSAIN, JM

For Appellant: Shri Surendra Nijsure, Shri Neil Philip
For Respondent: Shri Neil Philip

सुनवाई की तायीख / : 19/07/2016 Date of Hearing घोषणा की तायीख / : 27/07/2016 Date of Pronouncement आदेश / O R D E R Per R.C. SHARMA, A. M.: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)- 14, Mumbai (‘CIT(A)’ for short) dated 10.10.2014 for the assessment year (A.Y.) 2008-09, in the matter order passed u/s 201(1)/201(1A) of the I.T. Act,1961 on the following grounds:- 1. “The learned CIT(A) erred in law by not giving us an adequate opportunity, before passing the order and in the circumstances her order is bad in law and should be quashed.

2 M/s Centrum Broking Pvt. Ltd. vs. Dy. CIT 2. The CIT(A) erred in law and on facts in confirming us as „assessee in default‟ for not deducting TDS on payment made to BSE and NSE towards lease line and VSAT charges amounting to Rs.10,45,240/- ignoring various court decisions placed before her, wherein it was held that there is no requirement to deduct TDS on such payments.

3. The CIT(A) omitted to deal with ground no.2 of our appeal wherein it was prayed that as DCIT has wrongfully assumed the jurisdiction when for the same financial year the order u/s 201(1)/201(1A) dated 28.3.2011 was also passed by ITO (TDS)1(2), Mumbai and hence the order of DCIT is bad in law and should be quashed.”

2.

Rival contentions have been heard and record perused. In the course of scrutiny of assessment u/s 143(3) the AO disallowed assessee’s claim for VSAT and lease line charges paid to BSE/NSE invoking provisions of section 40(a)(ia), treating the same as Fee for technical services since the assessee did not deduct tax at source u/s 194C and 194J AO held the assessee in default u/s 201(1) & 201(1A) of I.T. Act.

3.

At the out set Ld. AR placed on record order of tribunal in assessee’s own case for the AY 2008-09 dated 28.02.2015 wherein disallowance so made by AO u/s 40(a)(ia) has been deleted by Tribunal after observing as under: “At the time of hearing, the ld. AR submitted that this issue has been decided in favour of the assessee by the jurisdictional High Court in the case of The CIT Vs. M/s The Stock and Bond Trading Company (ITA No.4117 of 2010 dated 14.10.2011). A perusal of the said order shows that the High Court has followed its earlier decision rendered in the case of 3 M/s Centrum Broking Pvt. Ltd. vs. Dy. CIT “The Income tax Commissioner, Mumbai City-4 Vs. Angel Capital & Debit Market Ltd in Income Tax Appeal(L) No.475 of 2011 dated 28-07-2011 to hold that the there is no requirement to deduct tax at source from the payments made to NSE/BSE towards VSAT charges and Lease line charges. The ld. AR submitted that in the case of Kotak Securities Ltd, the Bombay High Court did not consider VSAT and lease-line charges issue. Accordingly, we set aside the order of Ld. CIT(A) on this issue and direct the AO to delete this addition.”

4.

Since the disallowance so made by AO itself has been deleted by Tribunal, there is no reason for holding the assessee in default u/s 201(1)/201(1A). Accordingly we do not find any merit in the order passed by AO holding the assessee in default for non deduction of tax in respect of VSAT and lease line charges.

5.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 27 July, 2016 (SANDEEP GOSAIN) (R.C. SHARMA) न्मायमक सदस्म / Judicial Member रेखा सदस्म / Accountant Member भुंफई Mumbai; ददनांक Dated : 27.07.2016 Ps. Ashwini

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