2012 (4) TMI 646

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....dar i/b Kanga & Co. for the Respondent. P.C. : 1. On the request of counsel appearing on behalf of the Revenue, we permit an amendment to the questions of law framed in the following terms : (1) Whether a failure to deduct tax at source on payments made to the Stock Exchange was a ground for disallowing the payment under Section 40(a) (ia) and whether the case is covered by the decision i....

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....e transaction charges paid by the assessee to a Stock Exchange for rendering managerial services constitute fees for technical services under Section 194J read with Explanation 2 to Section 9(1)(vii) of the Income Tax Act 1961 and hence the assessee was liable to deduct tax at source before crediting the transaction charges to the account of the Stock Exchange. However, the Division Bench, in the ....

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.... both the Revenue and the assessee were under the bona fide belief for nearly a decade that tax was not deductible at source on payment of transaction charges, no fault can be found with the assessee in not deducting the tax at source in the assessment year in question and consequently disallowance made by the Assessing Officer under section 40(a)(ia) of the Act in respect of the transaction charg....

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....ion 40(a)(ia) should have been made for Assessment Year 2005-06 for the reasons indicated by the Division Bench in its judgment in Kotak Securities Limited.   4. As regards VSAT and lease line charges, the issue again is covered by a judgment of a Division Bench of this Court dated 28 July 2011 in The Income Tax Commissioner v. Angel Capital & Debit Market Ltd. (ITXAL 475 of 2011). W....