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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI RAMIT KOCHAR, AM (Assessment Year: 2008-09) M/s. Khandwala Securities Ltd., Vs. The Income Tax Officer (TDS), G-7, Ground Floor, Vikash Ward -2(2), Ayurved Prachar Building, Green Street, Fort, Sanstha Building, Charni Road, Mumbai 400 023 Mumbai 400 020 PAN: AAACK 2214 P Appellant .. Respondent Appellant by Shri Prateek Jha and Dr. Prayag Jha, ARs Respondent by Shri S. C. Tiwari, DR Date of hearing 15-06-2016 Date of pronouncement 22-06-2016 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of the CIT (A)-14, Mumbai passed in appeal No.CIT (A)-14/IT-655/TDS-Rg. 2(2)/2011-2012 dated 03-09-2014. TDS assessment was completed by the ITO, TDS -2(2), Mumbai for financial year 2007-08 relevant assessment year 2008-09 vide his order dated 31-03-2011 passed u/s 201 (1) and 201 (1A) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
The only issue in this appeal of the assessee is against the order of the CIT (A) sustaining the order of the AO in holding the assessee in default and also charging interest u/s 201 (1) and 201 (1A) of the Act in respect to transaction charges and VSAT charges by holding the same as in the nature of fee for technical/professional services under the provisions of Section 194-J of the Act.
We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the assessee has paid the following expenses:-
Transaction charges Rs.12,98,744/- Vasat Rentals Rs. 1,93,178 Total Rs.14,91,922/- According to the ITO, TDS, Mumbai the assessee has paid the above stated transaction charges and VSAT charges without deduction of TDS u/s 194-J of the Act. According to the AO, the charges are in the nature of fee for technical/professional services and paid without deduction of TDS under the provisions of the above Section. Accordingly, the assessee was held to be in default u/s 201 of the Act and consequently interest was also charged u/s 201 (1A) of the Act. Aggrieved, the assessee preferred appeal before the CIT (A), who also confirmed the action of the AO. Aggrieved, the assessee is now in second appeal before the Tribunal.
At the outset, the learned Counsel for the assessee stated that this issue of transaction charges paid to Stock Exchanges for facilitating is held to be not fee for technical services and the assessee is not liable to deduct TDS on such payment u/s 194- J of the Act as per the decision of the Hon’ble Supreme Court in the case of CIT Vs Kotak Securities Ltd. reported in (2016) 383 ITR 1 (SC) and according to him this issue is covered in favour of the assessee. The learned Counsel for the assessee in respect to VSAT charges also stated that the CIT (A) while adjudicating the appeal of the assessee against the assessment order passed u/s 143 (3) of the Act, disallowing the VSAT expenses for non-deduction of TDS and invoking the provisions of section 40(a) (ia) of the Act has given a finding that provisions of Section 194-J of the Act is not attracted to VSAT charges, He referred to Para 5.10 of the order of the CIT (A) in appeal No.CIT(A)-8/Cir.4/232/2010-11 dated 28-12-2011 in assesses own case for assessment year 2008-09 which reads as under:- “5.10 In view of the above decisions, I am of the opinion that the Stock Exchanges do not render any Managerial Services nor do they render any Technical Consultancy Services, as far as V-Sat and Lease Line charges are concerned. The payments made by the assessee of VSAT charges and Lease Line Charges are not in consideration of any service provided by the Stock Exchange but is a payment for use or facilities provided by the Stock Exchange which are available for use by any member. Therefore, these payments cannot be said to be fee paid in consideration of the Stock Exchange rendering any technical service to the assessee. The provisions of sec. 194J are thus not attracted. Therefore, there is no obligation on the part of the assessee to deduct the tax at source. Consequently, the provisions of sec. 40(a) (ia) are also not attracted. Accordingly, the addition on account of VSAT charge of Rs.39,600/- and lease line charges of Rs.30,000/- are deleted”. In view of the above, the learned Counsel for the assessee stated that both the issues are covered in favour of the assessee. The learned Sr. DR just relied on the orders of the lower authorities.
Considering the submissions of both the parties and the facts & circumstances of the present case, we find that both the issues of transaction charges and VSAT charges are covered by the decision of the Hon’ble Supreme Court rendered in the case of CIT Vs Kotak Securities Ltd. reported in (2016) 383 ITR 1 (SC) and also by the order of the CIT (A) in assessee’s own case for assessment year 2008-09 passed u/s 143 (3) of the Act dated 28-12-2011 respectively as discussed above. In terms of the above, we allow the appeal of the assessee.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 22/06/2016.