TaxTMI 
TaxTMI 
2016 (1) TMI 349
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....,77,626 made under section 40(a)(ia) of the Act basing his decision on the pronouncement in CIT v. Kotak Securities Ltd.(|ITA No.3111 of 2009). b) The learned CIT(A) while relying on the decision of the Hon'ble Bombay High Court in the case of Kotak Securities which held such payments as 'fee for technical services' failed to take note of the fact that even though such payments are held to be subjected to TDS, the Hon'ble High Court did not approve disallowance u/s 40(1)(ia) on the ground of the disputed nature of the issue. c) The learned CIT(A) failed to take note of the fact that the provision of Section 194J and 40(1)(ia) are two distinct and independent provisions and application of the TDS provision does not necessary involve ap....
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....ices and distribution etc . 3. During course of assessment proceeding , the Assessing officer observed that the assessee company has claimed an amount of Rs. 37,77,626/- on account of transaction charges paid to Stock Exchanges on which TDS was not deducted u/s 194J of the Income Tax Act,1961("the Act"). On being asked by AO, the assessee company explained that there is no requirement to deduct TDS on transaction charges payable to Stock exchange. The assessee relied upon the decision of Tribunal in ITA No 1955/Mum/08 in Kotak Securities Limited v. Addl. CIT wherein such services were held to be not technical in nature and there is no requirement to deduct TDS. 4. The Assessing Officer observed that the afore-stated decision of the Tribun....
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.... u/s 40(1)(ia) as during the financial year view held by Tribunal Mumbai in ITA No 1955/Mum/2008 will hold the field that transaction charges does not constitute 'fees for technical services'. The ld. CIT(A) respectfully following jurisdictional High Court in Kotak Securities(supra) upheld the decision of the assessing officer and confirmed the addition. 6. Aggrieved, the assessee is in appeal before us. The assessee reiterated its submissions and contended that the assessee was under bona-fide belief that no TDS is to be deducted u/s 194 J as the transaction charges payable by the assessee does not constitute the 'fees for technical services' which view has been approved by Tribunal in Kotak Securities Limited (supra) and the said decisio....
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....ansaction charges payable to stock exchanges constitute 'fees for technical services', and are covered u/s 194J of the Act, and hence TDS is to be deducted. The Hon'ble Bombay High Court also held that since last decade, i.e., 1995 (when Section 194J was introduced in the Act) to 2005 (till the impugned assessment year), both the Revenue and the assessee have accepted the position that no TDS is payable. The Hon'ble Court noted that for the immediate succeeding year, i.e., assessment year 2006-07, the assessee (Kotak Securities) had deposited TDS on the transaction charges, and also that no prejudice is caused to Revenue for non-deduction of TDS as the stock exchanges must have presumably included these charges in their income. The Hon'ble ....
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.... case had from the succeeding year, i.e. A.Y. 2006-07, itself deposited the tax, while inferring that for A.Y. 2005-06 it would have been paid by the stock exchange itself, so that no prejudice would stand caused to the Revenue. The matter thus has been treated as disputed up to that year. This we understand to be the ratio of the said decision, binding on us. Continuing further, therefore, if the stock exchange has deposited the tax for the current year, the principle as laid down by the Hon'ble Court, i.e., of the saving from the provision where no prejudice is caused to the Revenue, would hold. In fact, the provision stands amended by Finance Act, 2012 w.e.f. 1st April, 2013 by way of second proviso to section 40(a)(ia) of the Act. The s....