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Issues involved:
The issue involves whether the assessee should have deducted Tax at source on payment of VSAT charges, Leasline charges, and transaction charges paid to Stock Exchange, and whether the provisions of Sec. 40a(ia) of the Act are applicable. Details of the judgment: 1. The Assessing Officer (AO) observed that the assessee paid charges to the stock exchange for services provided in transactions in securities but did not deduct tax at source. The AO disallowed the charges u/s. 40a(ia) of the Act. 2. The assessee contended before the Ld. CIT(A) that based on judicial decisions, no liability for TDS is attracted on these payments. The Ld. CIT(A) allowed the appeal of the assessee. 3. The ITAT considered the submissions and judicial decisions. Referring to a decision by the Hon'ble Jurisdictional High Court of Bombay, it was found that the charges paid were merely reimbursement and did not have any income element, thus TDS was not required. The findings of the Ld. CIT(A) on VSAT and leaseline charges were confirmed. 4. Regarding transaction charges, it was noted that both parties proceeded on the belief that tax was not deductible for several years. The AO's addition for A.Y. 2006-07 was not sustained, and since the assessee started deducting tax from A.Y. 2008-09, the disallowance for A.Y. 2007-08 was not confirmed based on the bonafide belief of the assessee. 5. Following the above analysis, the appeal filed by the Revenue was dismissed, and the findings of the lower authorities were confirmed.
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