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Income Tax Appellate Tribunal, BENCH “E”, MUMBAI
Before: SHRI SANJAY ARAORA & SHRI PAWAN SINGH
O R D E R PER BENCH: 1. These four appeals filed by assessee against the order of CIT(A)-14, Mumbai dated 02.09.2014 for AYs 2008-09 to 2011-12. In all the appeals the assessee has raised identical Grounds of appeal. (i) AO erred in levying interest u/s. 201(1A) and also alleged short payment of TDS, even though TDS was not deductable when transaction charges were paid. (ii) Ld.CIT(A) also erred in confirming the addition by passing ex-parte order without granting any opportunity of being heard.
As all appeals are based on identical facts and identical Grounds of appeals are raised by the assessee. For the sake of convenience, we are discussing with the fact of for AY-2008-09.
3. The brief facts of the case are that on receipt of information from Bombay Stock Exchange (BSE)/National Stock Exchange (NSE) it was noticed that assessee has not deducted TDS on the payment on account of transaction charges made to NSE and BSE amounting to Rs. 4,71,819/- as per the provision of Section 194J of the Act. The assessee was issued a show cause notice dated 05.03.2012, seeking explanation as to why the assessee should not be treated as assessing default in term of section 201(1) & 201(1A) of the Act, for non-deduction of TDS on the payments as per the requirement of provision of section 194J of the Act. Assessee submitted its reply and contended as under: 1) BSE has informed us that they are not allowed to revise their return, so as to claim the credit of the TDS now demanded. 2) Please note we had not deducted any tax at source because of the favourable judgment by the Hon’ble ITAT, Mumbai in the case of Kotak Securities. 3) BSE has also paid the due taxes on the above Transaction Charges in their INCOME TAX returns. Therefore this notice tantamount to collection of additional taxes and same tax once again form us, only after the judgment from High Court.”
4. The reply of assessee was not accepted by the AO. AO concluded that the expenses on account of transaction charges paid to BSE are in the nature of technical/managerial services to which provision of section 194A applies. The AO on the basis of payment made on account of transaction charges to BSE/NSE of Rs. 471819/-, calculated TDS @ 10.30% of Rs. 48,739/-. AO further calculated interest u/s 201(1A) of the Act from 01.04.2007 to March 2012 of Rs. 29,243/- in its order dated 30.03.2012. Aggrieved by the order of AO, the assessee filed appeal before CIT(A) but without any success. Against the said order, the assessee filed the present appeal before us.
We have heard the Ld. Authorised Representative (AR) of the assessee and Ld. Departmental Representative (DR) for Revenue. Ld. AR of the assessee argued that the present case is squarely covered by the judgment of Hon’ble Supreme Court vide Civil Appeal No. 3141/2016 in case titled as CIT vs. Kotak Securities Ltd. dated 29.03.2016. Ld. DR for Revenue fairly agreed that the issue raised in the present appeal are covered against the Revenue.
We have seen the order of Hon’ble Apex Court. The Hon’ble Apex Court while considering the identical grounds held as under: “10. For the aforesaid reasons, we hold that the view taken by the Bombay High Court that the transaction charges paid to the Bombay Stock Exchange by its members are for ‘technical services’ rendered is not an appropriate view. Such charges, really, are in the nature of payments made for facilities provided by the Stock Exchange. No TDS on such payments would, therefore, be deductible under Section 194J of the Act.”
Keeping in view the above observation of the Hon’ble Apex Court, the appeal of the assessee is allowed and the order passed by AO/ITO-TDS dated 30.03.2012 and confirmed by CIT(A) vide order dated 02.09.2014 is quashed. No order as to costs.
In to 6650/Mum/2014, the identical Grounds of appeal
are raised, we have already allowed Hon’ble Apex Court in Kotak Securities Ltd.(supra), hence, all these three appeals filed by assessee are also allowed.
9. In the result, all appeals filed by assessee are allowed. Order pronounced in the open court on this 30th May, 2016.