TaxTMI 
TaxTMI 
2010 (12) TMI 822
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appeals relate to disallowance of expenditure under section 14A of the Income-tax Act, disallowance of transaction charges and disallowance of depository charges paid by the assessee. 2. We first take up the disallowance of expenditure under section 14A of the Income-tax Act which is common in both the appeals. The AO noted that the assessee had earned dividend income of Rs.6,27,000/- and Rs.5,76,000/- for assessment years 2005-06 and 2006-07 respectively. AO therefore asked the assessee to explain as to why the expenses relatable to the dividend income should not be disallowed. The assessee explained that the investments in shares had been made in the earlier years on long term basis and there was no specific or direct cost act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowing opportunity of hearing to the assessee. The assessment years involved in the present appeals are A.Y. 2005-06 and 2006-07. Therefore rule 8D cannot be applied. We therefore set aside the order of CIT(A) and restore the matter to the file of AO for passing a fresh order after necessary examination in the light of judgment of Hon'ble High Court of Mumbai in case of Godrej Boyce and Co. (supra) and after allowing opportunity of hearing to the assessee. 3. The second dispute which is relevant only for assessment year 2005-06 is regarding disallowance of transaction charges. The AO noted that the assessee had incurred expenditure of Rs.28,68,732/- towards stock exchange transaction charges on which no tax was deducted at source.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... included supervisory and overseeing services of the member in addition to providing the physical infrastructure facilities. CIT(A) therefore agreed with the AO that the transaction charges were paid to the assessee for use of technical services and accordingly upheld the disallowance aggrieved by which the assessee is in appeal before the tribunal. 3.1 Before us the Learned AR for the assessee submitted that transaction charges were paid by the assessee for use of infrastructure facilities and not for any technical services. Reliance was placed on the decision of Mumbai bench of tribunal in case of Kotak Securities Ltd. vs Addl. CIT (124 TTJ 241). The Learned DR on the other hand placed reliance on the findings given by the autho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Kotak Securities vs Addl.CIT (supra) and respectfully following the same we hold that the transaction charges paid were not for any technical services and therefore provisions of section 194J were not applicable and no tax was required to be deducted and no disallowance under section 40(a)(ia) is called for. Accordingly we set aside the order of CIT(A) and allow the claim of the assessee. 4. The third dispute which is also relevant only for assessment year 2005-06 is regarding disallowance of depository charges paid by the assessee to the Stock Holding Corporation of India. The AO disallowed the depository charges of Rs.7,16,267/- presumably on the same reasoning as in case of transaction charges although no specific reasons hav....