2012 (6) TMI 814

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....ing and, therefore, these were of the nature of technical services and partly of the nature of managerial services and, therefore, provisions of section 40(a)(ia) were applicable as the assessee was required to deduct tax at source. The AO therefore disallowed the claim under section 40(a)(ia). In appeal CIT(A) following the decision of the Mumbai Bench of Tribunal in case of Kotak Securities vs. Addl. CIT (25 SOT 440) held that stock exchanges do not provide any managerial services or technical services and, therefore, TDS provisions were not applicable, accordingly he deleted the addition made by AO aggrieved by which, revenue is in appeal before the Tribunal . 3. Before us, the ld. AR submitted that in so far as VSAT and leaseline cha....

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....ee to stock exchange were merely reimbursement charges paid/payable by the stock exchange to department of telecommunications and, therefore, these did not have any income element and accordingly tax was not required to be deducted. Following the said judgment, the order of CIT(A) deleting disallowance in respect of VSAT and leaseline charges is upheld. As regards transaction charges, Hon'ble High Court of Bombay in case of Kotak Securities Ltd. (supra) have held that these charges constitute fees for technical services. However, the Hon'ble Court also held in that case that since both parties had proceeded on the footing that tax was not deductible for last several years and therefore, in the first year when the provisions were invoked....