DCIT 4(1), MUMBAI v. ALKA SECURITIES LTD, MUMBAI

ITA 2455/MUM/2009 | 2005-2006
Pronouncement Date: 25-02-2010 | Result: Dismissed

Appeal Details

RSA Number 245519914 RSA 2009
Assessee PAN AAACA4853E
Bench Mumbai
Appeal Number ITA 2455/MUM/2009
Duration Of Justice 10 month(s) 9 day(s)
Appellant DCIT 4(1), MUMBAI
Respondent ALKA SECURITIES LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-02-2010
Assessment Year 2005-2006
Appeal Filed On 16-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI. BEFORE SHRI R.K. GUPTA J.M. AND SHRI J. SUDHAKAR REDDY A.M. I.T.A. NO. 2 455/MUM/2009 ASSESSMENT YEAR : 2005-06 THE INCOME-TAX OFFICER ALKA S ECURITIES LTD. 4(1) MUMBAI. VS. 20 3 ANUPAMA BLDG. DADABHAI CROSS ROAD NO.2 NEAR SONY MONY ELECTRONICS ANDHERI (W) MUMBAI 400053. PAN AAACA4853E APPELLANT RESPONDENT APPELLANT BY : SHRI LALCHAND. RESPONDENT BY : SHRI ADITYA MAHESHWARI. O R D E R PER J. SUDHAKAR REDDY A.M. THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED A GAINST THE ORDER OF THE CIT(APPEALS)-IV MUMBAI DATED 23-01-200 9 FOR ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE IN R ESPECT OF V-SAT AND TRANSACTION CHARGES WITHOUT REALIZING THE FACT THAT THESE WERE COMPOSITE CHARGES ALONGWITH TRANSACTION CHARGES FOR PROFESSIONAL AND TECHNICAL SERVICES RENDERED BY THE EXCHANGE TO ITS MEMBERS AND THE ASSESSEE HAS FAILED TO DEDUCT TDS THEREON. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THESE SERVIC ES ARE EXCLUSIVE IN NATURE IN AS MUCH THEY CAN ONLY BE AVAILED BY MEMBE R OF STOCK EXCHANGE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN ACCEPTING THE ARGUMENT THAT THESE A RE MERE 2 REIMBURSEMENTS WHEN THE POSITION IN LAW IS VERY CLE AR THAT DETERMINING AN INCOME COMPONENT IN A SPECIFIC PAYME NT AND THEN DEDUCTING TDS WOULD RENDER THE ENTIRE CONCEPT OF WI THHOLDING TAX DIFFICULT TO APPLY AND THAT TDS HAS TO BE DEDUCTED ON GROSS PAYMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN IGNORING THE FACTS THAT USE OF TECH NOLOGY AND ALGORITHMIC BASED PROGRAMS HAVE CONVERTED AN ERSTWH ILE PHYSICAL MARKET INTO A DIGITALLY OPERATED MARKET. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND 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 COMMU NITY TO FACILITATE TRADING. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS OVERLOOKED THE FACT THAT THE BROKERS HAV E IN SUBSEQUENT YEARS THEMSELVES STARTED DEDUCTING THE TDS ON SUCH PAYMENTS AND THAT THERE IS NO REASON TO GIVE A DIFFERENT TREATME NT IN THIS YEAR. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE IMPUGNED ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND CONSEQUENTLY ON MERITS IT DESERVES TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. AFTER HEARING RIVAL CONTENTIONS WE FIND THAT T HE ISSUE IN QUESTION IS COVERED BY THE DECISION OF MUMBAI A BEN CH OF THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES LTD. VS. ADDL. CIT 25 SOT 440 (MUM.) WHEREIN IT IS HELD THAT TRANSACTION FEE PAID TO ST OCK EXCHANGE ON THE BASIS OF VOLUME OF TRANSACTIONS IS PAYMENT FOR USE OF FACILITIES PROVIDED BY STOCK EXCHANGE AND NOT FOR ANY SERVICES EITHER TECHNICAL OR MANAGERIAL AND HENCE PROVISIONS OF SECTION 194J ARE NOT ATTRACTED. SIMILARLY IN THE CASE OF DCIT 4(1) VS. M/S ANGEL B ROKING LTD. THE MUMBAI A-BENCH OF THE TRIBUNAL IN ITA NO. 7031/MUM/ 2008 ORDER DATED 9 TH DECEMBER 2008 ON THE ISSUE OF VSAT CHARGES HELD THAT GIVEN NATURE OF VSTA CHARGES AND LEASE LINE CHARGES OTHE R CHARGES BOLT CHARGES DEMAT CHARGES IS NOTHING BUT FEES COLLEC TED FOR USE OF FACILITIES PROVIDED BY THE STOCK EXCHANGE AND SUCH FACILITIES ARE AVAILABLE FOR USE OF ANY MEMBER AND HENCE THE PAYMENT IS NOT FEE FOR TECHNICAL SERVICES 3 RENDERED. THUS SECTION 194J IS NOT ATTRACTED AND HE NCE NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA). RESPECTFULLY FOLLOWING T HE SAME WE UPHOLD THE ORDER OF THE CIT(APPEALS) AND DISMISS THE APPE AL OF THE REVENUE. 3. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 25 TH DAY OF FEBRUARY 2010. SD/- SD/- (R.K. GUPTA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI DATED : 25 TH FEBRUARY 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR A-BENCH. (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES MUMBAI.