TaxTMI 
TaxTMI 
2016 (11) TMI 881
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.... We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the order of the Tribunal dated 07/05/2014 (Assessment year 2007-08) for ready reference and analysis:- "4. In so far as the appeal of the assessee is concerned, the solitary issue involved therein relates to the disallowance of Rs. 1,42,500/- made by the A.O. and confirmed by the ld. CIT(A) on account of assessee's claim for depreciation on membership rights of Multi Commodity Exchange Ltd. (MCX). 5. The assessee in the present case is a company which is engaged in the business of commodities broking in respect of commodities exchange and dealing in shares and securities and commodities. The return of income for the year under consideration was filed by it on 28-10-2007 declaring total income at "nil". In the said return, depreciation of Rs. 1,42,500/- was claimed by the assessee @ 25% on the amount of Rs. 7,60,000/- paid for acquiring rights of Multi Commodities Exchange claiming that it was intangible asset in the form of commercial right as per provisions of section 32(1)(ii) of the income Tax Act, 1961 as amen....
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....nidhi Consultancy Services (supra) decided by the Tribunal thus are materially different from the facts of the present case inasmuch as the assessee in the present case has paid non-refundable admission fees for acquiring trading rights in Multi Commodity Exchange Ltd. The ld. Counsel for the assessee in this regard has relied on the decision of co-ordinate Bench of this Tribunal in the case of Pyramid Commodities vs. ITO rendered vide its order dated 28-8-2013 passed in ITA No 558/Mum/2011 for A.Y. 2007-08. In the said case, the assessee had paid a sum of Rs. 6,99,000/- to MCX and the amount so paid was claimed to be a revenue expenditure by the assessee. The ld. CIT(A), however, treated the same as capital expenditure and directed the A.O. to allow depreciation thereon. On further appeal, the Tribunal upheld the order of the ld. CIT(A) treating the payment of membership fees to MCX as capital expenditure relying on the decision of Hon'ble Supreme Court in the case of Techno Shares and stocks Ltd. (supra) and also held that the said capital expenditure was eligible for depreciation u/s 32 of the Act. The issue involved in the present case thus is squarely covered in favour of the ....
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....and lease line charges cannot be considered as rendering of technical services, hence, provisions of section 40(a)(ia) are not applicable. The AO disallowed the above amount invoking section 40(a)(ia) on the ground that the assessee failed to comply with the applicable TDS provisions. The ld. CIT(A) following the decision of co-ordinate Benches in the case of Kotak Mahindra Securities (25 SOT 44) and Angel Broking (35 SOT 457) allowed the claim of the assessee . This issue is also covered by the decision of the Hon'ble A.Y.08-09 M/s. Angel Commodities Broking P. Ltd. Bombay High Court in assessee's own case for the assessment year 2006-07 wherein the Hon'ble High Court upheld the orders of ITAT following its own decision in the case of CIT vs. Angel Capital and Debit Market Ltd. in Income Tax Appeal(L) No.475 of 2011 dated 28th July,2011. Since CIT's order is in line with the principle laid down by the Hon'ble High Court in this matter, the same is upheld. The Revenue ground is dismissed." It is noted that the Hon'ble Jurisdictional High Court vide order dated 28/07/2011 (ITA No. 475/2011) in the case of assessee dismissed the appeal of the Revenue, upho....
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....en made applicable to the assessments in case of other assessees, such of the assessees who are aggrieved thereby have filed the other appeals before us. 5. The relevant provisions of the Act which have a material bearing to the issues arising for determination in the present appeals may now be noticed. Section 194J; Section 40(a)(ia) of the Act introduced by Finance (No.2) Act, 2004 with effect from 1st April, 2005; and Explanation 2 of Section 9(1)(vii) which are relevant for the purpose of the present case reads as under: "194J. Fees for professional or technical services. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of- (a) fees for professional services, or (b) fees for technical services or (c) royalty, or (d) any sum referred to in clause (va) of section 28 shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to five per cent of such sum as income-tax on income comprised therein: ................................. ......
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....ould be ascribed to the word "technical services" appearing in Explanation 2 to clause (vii) to Section 9(1) of the Act is the moot question. In Commissioner of Income-Tax Vs. Bharti Cellular Ltd.1 this Court has observed as follows: "Right from 1979, various judgments of the High Courts and Tribunals have taken the view that the words "technical services" have got to be read in the narrower sense by applying the rule of noscitur a sociis, particularly, because the words "technical services" in section 9(1)(vii) read with Explanation 2 comes in between the words "managerial and consultancy services". 7. "Managerial and consultancy services" and, therefore, necessarily "technical services", would obviously involve services rendered by human efforts. This has been the consistent view taken by the courts including this Court in Bharti Cellular Ltd. (supra). However, it cannot be lost sight of that modern day scientific and technological developments may tend to blur the specific human element in an otherwise fully automated process by which such services may be provided. The search for a more effective basis, therefore, must be made. 8. A reading of the very elaborate order of ....
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....hrough an alternative mode is not correct. A member who wants to conduct his daily business in the Stock Exchange has no option but to avail of such services. Each and every transaction by a member involves the use of the services provided by the Stock Exchange for which a member is compulsorily required to pay an additional charge (based on the transaction value) over and above the charges for the membership in the Stock Exchange. The above features of the services provided by the Stock Exchange would make the same a kind of a facility provided by the Stock Exchange for transacting business rather than a technical service provided to one or a section of the members of the Stock Exchange to deal with special situations faced by such a member(s) or the special needs of such member(s) in the conduct of business in the Stock Exchange. In other words, there is no exclusivity to the services rendered by the Stock Exchange and each and every member has to necessarily avail of such services in the normal course of trading in securities in the Stock Exchange. Such services, therefore, would undoubtedly be appropriate to be termed as facilities provided by the Stock Exchange on payment and ....