AI Drafter 
TaxTMI 
TaxTMI 
2016 (6) TMI 1087
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....Technology Pvt. Ltd.- Rs. 2,97,500/- towards SMS charges without deduction of tax at source. The Ld. AO made disallowance u/s. 40(a)(ia) of the Act towards the same. 2.2. Before the Ld. CIT(A) the assessee stated that the aforesaid amount of Rs. 6,22,008/- paid for SMS charges was not covered under the provisions of chapter XVII of the Act. Hence, the assessee had no liability to deduct tax on the said payment. The assessee further states and submits that according to the provisions of explanation 2 to section 9(1)(vii) and section 194J of the Act the aforesaid SMS service provided in the Mobile Phone cannot be regarded as "technical service". The Ld. CIT(A) observed that the service provider i.e. M/s. Max Motilities Pvt. Ltd. and M/s. E Biz Technology P. Ltd. are not themselves telephone operators but they are providing the services on behalf of the telecom operators. They act as contractors for giving the service between the assessee and the telecom service provider. It was held that M/s. Max Motilities Pvt. Ltd. and M/s. E Biz Technology P. Ltd. are contractors between the assessee and the telecom operator for carrying out the work and to provide the facility of sending of bu....
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.... a role for transmission of SMS to the customers of the assessee. Accordingly, he argued that the works indeed carried out by these two parties and hence, the provisions of section 194C of the Act are very much applicable. 2.5. We have heard rival submissions and perused the material available on record and the case laws cited by the parties. We find that the nature of services rendered by these two parties are just to provide an Internet platform wherein the software of stock broker gets automatically interfaced with Internet platform without any human intervention and SMS gets automatically generated and sent to customers of assessee. It can at best be considered only as these two parties selling SMS credits to the assessee. It is nobody's case that the transactions fall under the ambit of section 194J of the Act. In order to apply the provisions of section 194C of the Act, there should be two main ingredients - (i) the existence of contract (whether oral or written) and (ii) such contract should be for carrying out any work requiring the human intervention. In the instant case, there is no contract entered into by and between the assessee with two parties as we find that SMS ....
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....nsmission charges and/or wheeling charges entail distribution of electricity in the area of corporation and the charges could not be subject matter to the provisions of section 194C or 194J of the Act. This was restricted to the case of the assessee in view of the public function to be undertaken by it, as a result of restructuring of West Bengal State Electricity Distribution Co. Ltd. The wheeling charges represent the charges for permitting use of state transmission utility for permitting use of state transmission utility by the person other than the distribution licensee. The transmission charges simply constitute a fee for availing of the transmission utility to be used by open asset concept for distribution of electricity, licensees and consumers. In our view, the wheeling charges and transmission charges are neither contractual payments nor fee for technical services u/s. 194C or 194J of the Act as contended by revenue because there is no human intervention or human interface and, therefore, this cannot be contractual payments or fee for technical services. Therefore, we are of the view that there is nothing on record to support the contentions of the revenue that the wheelin....
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....2. The Ld. CIT(A) observed as follows: "48. I have carefully considered the observations of the Assessing Officer in the assessment order and submissions of the appellant. The Assessing Officer has determined the ratio of receipt from share trading by taking the gross receipt as per income in the profit and loss account which includes sale of shares; increase in stock but without subtracting purchase of shares. On the other hand, the appellant has calculated the rebate u/s 88 by dividing the gross income from share trading with the net taxable income shown in the return without allocating any expenses to the share trading income out of total expenditure of Rs. 17,88,61,194/-. The correct basis for the calculation is gross receipt from the various heads of income which is as follows:- Stock broking operations Rs. 13,76,75,740/- Depository services Rs. 34,20,301/- Other income Rs. 2,08,06,025/- Rs. 16,19,02,066/- Share trading & F&O Rs. 80,58.244/- Rs. 16,99,60,310/- 49. The Assessing Officer will calculate the taxable amount on account of STT related income by taking the figure of share trading at an amount of Rs. 80,....
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....is no dispute in regard to direct expenses whereas dispute is limited to indirect expenses and the nature of expenses are fixed and do not change with the volume of self business, hence should be apportioned over the core business of brokerage but Ld. Counsel for the assessee finally agreed for proportionate disallowance. In respect to interest on FD, ld. Counsel for the assessee stated that interest on FD is not made out of surplus fund but 100% of these FDs have been deposited with the Stock Exchange as margin money against which business of bunch clients and self was carried on. Qua this, ld. Counsel for the assessee filed complete chart in respect to FD interest and other interest income as well as indirect expenses. Finally, Ld. Counsel for the assessee stated that a proportionate disallowance in respect to transaction relating to brokerage can be attributed @ 5 to 10% at the best. Ld. Counsel for the assessee for this referred to assessment order and stated that assessee's self transaction i.e. own transactions are only to the extent of 41% whereas brokerage/clients' transactions are at 59%. In view of this ld. Counsel for the assessee argued that the disallowance of indirect....