TaxTMI 
TaxTMI 
2012 (9) TMI 1106
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....ssessee has failed to deduct TDS thereon.". ii. "On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that these services are essential in nature as they can only be availed by members of Stock Exchange." iii. "On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in ignoring the facts that use of technology and algorithmic based programs have converted an erstwhile physical market into a digitally operated market." iv. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the fact that the services rendered by the brokers are not standard services but services that has been developed to cater to the needs of the broker community to facilitate trading." v. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has overlooked the fact that the brokers have in subsequent years themselves started deducting the TDS on such payments and that there is no reason to give a different treatment in this year." 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting ....
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.... Ground No.1,2 &5(incorrectly numbered) the assessee is supporting the order of Ld. CIT(A) vide which addition regarding VSAT charges and transaction charges is deleted and in Ground No.3 assessee is supporting the order of Ld. CIT(A) on deletion made by him in respect of section 14A. 5. Notice of hearing was sent to the assessee which has duly been served. In response to the said notice a letter dated 27/08/2012 has been filed by the assessee before the Tribunal contending therein that the issues raised in Ground No.1 by revenue are covered in favour of assessee and so as it relates to issue raised in Ground No.2 relating to deletion of addition under section 14A the assessee has stated that it is not interested in pressing the said issue and it is mentioned that the appeal may be disposed of. Accordingly the present appeal and cross objection were heard. 6. Ld. D.R submitted that though the issue is covered in favour of the assessee by the earlier decision of the Tribunal in assessee's own case but subsequently Hon'ble Bombay High Court in the case of CIT vs. Kotak Securities Ltd., 340 ITR 333 (Bom) has held that transaction charges paid by the assessee constitute "fee for ....
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....the case of ACIT vs. M/s. J.G. Shah Financial Consultants Pvt. Ltd.,( in which one of us, A.M is a party), we pass similar order as has been passed in that case. The relevant portion of the said order regulating issue of transaction charges is reproduced below: "5. In so far as the disallowance made on account of transaction charges is concerned, it is observed that the decision of the Tribunal in the case of Kotak Securities Ltd. (supra) relied upon by the learned CIT(Appeals) in his impugned orders while giving relief to the assessee on this issue has been subsequently overruled by Hon'ble Bombay High Court vide its judgment dated October 21, 2011 passed in ITA No. 3111 of 2009 wherein it is held that with a view to regulate the trading in securities, the Stock Exchange provides risk management and surveillance to the stock brokers to ensure the safety of the market. It is held that the surveillance function involves price monitoring, exposure of the members, rumour verification on a daily basis and remedial actions like reduction of filters, imposition of special margin, suspension of scrips / members. It is held that these are some of the identified managerial services....
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....n 40(a)(ia) of the Act. It is relevant to note that from AY 2006-07 the assessee has been deducting tax at source while crediting the transaction charges to the account of the stock exchange though not as fees for technical services but as royalty. It is further relevant to note that it is not the case of the revenue that on account of the failure on the part of the assessee to deduct tax at source, the revenue has suffered presumably because, the stock exchange has discharged its tax liability for the assessment year in question. In any event, in the facts of the present case, in view of the undisputed decade old practice, the assessee had bonafide reason to believe that the tax was not deductible at source under Section 194J of the Act and, therefore, the assessing officer was not justified in invoking Section 40(a)(ia) of the Act and, therefore, the assessing officer was not justified in invoking Section 40(a)(ia) of the Act and disallowing the business expenditure by way of transaction charges incurred by the assessee." 7. The learned counsel for the assessee has submitted that the relevant fact situation involved in the present case is similar to the one involved in t....