TaxTMI 
TaxTMI 
2011 (2) TMI 1427
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....,041/- made by the Assessing Officer u/s. 40(a)(ia) of the I.T. Act by erroneously holding that the said amount of brokerage falls in the exclusion provided in explanation to section 194H and therefore, the assessee is not liable for deduction of tax at source u/s. 194H of the I.T. Act. 2. The Ld. CIT(A) has erred in law and on facts in holding that the sub-brokerage of Rs. 6,57,57,041/- was either paid in the course of buying or selling of securities or in relation to any transaction relating to securities was paid for just introducing the clients." 3. The briefly stated facts are that the assessee is a company engaged in the business of mutual fund distribution and investment agent. The return of income declaring total income at Rs. 39,....
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....has accepted the contentions and directed the A.O. to delete the disallowance so made under section 40(a)(ia). The Revenue is aggrieved on the direction of the CIT(A) whereas the assessee in the cross objection raised the issue of service tax included in the above amount, which was pointed out to the CIT(A) but not adjudicated. The balance of the grounds in the cross objection supports the order of the CIT(A). 5. We have heard the learned D.R. and the learned counsel for the assessee and examined the paper book placed on record containing 53 pages. 6. After considering the arguments and submission we agree with the findings of the CIT(A). The provisions of section 194H are as under: - "194H. Any person, not being an individual or a Hindu....
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.... agent. From the details of brokerage received and service tax deducted there from it can be seen that out of the brokerage income of Rs. 8,28,56,873/- the brokerage income of Rs. 8,27,47,095/- is from Mutual Funds. The balance brokerage of Rs. 1,09,779/- is towards bonds and fixed deposits. The sub-brokerage is paid in relation to units of Mutual Funds. From the details placed on record, we are convinced that the sub-brokerage paid is connected with the services rendered in the course of buying and selling of units of Mutual Funds or in relation to transactions pertaining to Mutual Funds and as per the provisions of section 194H Explanation (i) these are not covered by the provision for deduction of tax at source. There is nothing on recor....