2010 (2) TMI 1259 - AT - Income Tax

Summary

Issues involved: Disallowance of V-SAT charges and Transaction charges u/s 40(a)(ia), Set off of brought forward loss against brokerage income.

Disallowance of V-SAT charges and Transaction charges u/s 40(a)(ia): The appeal pertained to disallowance of V-SAT charges and Transaction charges under section 40(a)(ia). The A.O. disallowed the amounts as TDS was not deducted under section 194J. However, the CIT(A) held that V-SAT charges were reimbursement charges for infrastructure and trade facilities, not fees for technical services. Similarly, Transaction charges were not for technical services rendered by the Stock Exchange. The ITAT Mumbai decision in a similar case was cited. The Tribunal concluded that the payments were for infrastructure use, not technical services, and upheld the CIT(A)'s order.

Set off of brought forward loss against brokerage income: The issue was whether brought forward losses could be set off against brokerage income, with the contention that the Explanation to Section 73 was not applicable. The assessee argued that losses were incurred due to trading in the nature of hedging to mitigate risks. A previous order had directed the A.O. to quantify the losses as business losses. The Tribunal deemed the issue of set off as moot and rejected the ground.

Conclusion: The Tribunal dismissed the appeal, confirming the CIT(A)'s order on the disallowance of charges and the set off of losses against brokerage income. Grounds 8 & 9 were deemed general and required no adjudication.