PUNEET SECURITIES P.LTD,MUMBAI vs. ASST CIT CIR 4(2), MUMBAI

This appeal by the assessee is preferred against the order of the Ld. CIT(A)-8, Mumbai dated 27.08.2013 pertaining to A.Y. 2010-11.

The sole grievance of the assessee is that the Ld. CIT(A) erred in sustaining the addition of Rs.10,59,038/- made by the officer on account of non deduction of tax under section 194J of the Act.

While scrutinising the return of income, the AO noticed that the assessee has debited Rs.10,59,038/- on account of transaction charges paid to the stock exchange. The AO further found that the assessee has not deducted tax at source as per the provisions of section 194J of the Act but it has made the deduction under section 194C of the Act. Considering this as a violation of the provisions of section 40(a)(ia) of the Act, the AO disallowed Rs.10,59,038/- and added to the returned income of the assessee. 2 M/s. Puneet Securities Pvt. Ltd.

Aggrieved by this, the assessee carried the matter before the Ld. CIT(A) but without any success.

Before us, the Ld. Counsel for the assessee stated that the issue is squarely covered in favour of the assessee and against the Revenue by the order of the Tribunal in assessee’s own case for A.Y. 2009-10 vide an ITA No.1212/M/2013. The Ld. D.R. could not bring any distinguishing decision in favour of the Revenue. After giving a careful consideration to the orders of the authorities below, we find force in the contention of the Ld. Counsel. An identical issue was before the Tribunal in assessee’s own case for A.Y. 2009- 10 in wherein the Tribunal at para 6 on page 4 of its order has held as under: “6. We have heard the rival submissions and also perused the relevant findings given in the impugned order. Admittedly, the assessee has deducted TDS on transaction charges payable to stock exchange u/s 194C. The department's case is that, TDS should have been deducted u/s 194J, as the transaction charges falls within the ambit of 'fees for technical services', as later on held by the Hon'ble Bombay High Court in the case of CIT Vs. Kotak Securities Ltd. (supra) and therefore, disallowance u/s 40(a)(ia) is to be made. The conditions as laid down u/s 40(a)(ia) for making the disallowance is that, the tax on the amount paid or payable which is deductible at source under chapter XVII B and such a tax, has not been deducted or after deduction has not been paid on or before the due date specified in 139(1). In other words, there are only conditions for disallowance u/s 40(a)(ia), firstly, tax which was deductable has not been deducted and secondly, after deduction has not been paid. If both the conditions are satisfied then only disallowance u/s 40(a)(ia) can be made. The section does not envisages that, if the assessee has deduced the tax under wrong provisions of the act or there is a short deduction of tax then also, it entails disallowance under section 40(a)(ia). There is nothing in the section to treat the assessee as defaulter for claiming a deduction, where there is a short fall in deduction. This proposition has been upheld by the Hon'ble Kolkata High Court in the case of CIT Vs. S.K. Tekriwal reported in (2014) 361 ITR 432 (Kol). In this case the assessee has deducted tax u/s 194C instead of 194J, the Hon'ble High Court held that the expenses cannot be disallowed u/s 40(a)(ia) merely on account of short deduction of tax at source. Similar view has been taken by the Co-ordinate Benches in the cases relied upon by the learned counsel, which has been referred in the foregoing para. Accordingly, we hold that no disallowance u/s 40(a)(ia) can be made merely because assessee has deducted TDS under section 194C instead of section 194J. Thus the ground raised

Appeal filed by the assessee is accordingly allowed.