2013 (6) TMI 597 - AT - Income Tax

Non deduction of TDS - leaseline charges and Transaction charges - CIT(A) deleted the disallowance - Held that - It is now well settled that no TDS liability is attracted so far as VSAT charges, Leaseline charges and other charges paid to BSE or NSE. So far as transaction charges are concerned, this issue is also covered in favour of the assessee by the decision of Kotak Securities Ltd 2011 (10) TMI 24 - Bombay High Court . Against revenue.

Summary

Issues:
Disallowance of leaseline charges and transaction charges under section 40(a)(ia) for non-deduction of TDS.

Analysis:
The Revenue appealed against the order of the Ld. CIT(A) regarding the disallowance of leaseline charges and transaction charges under section 40(a)(ia) for non-deduction of TDS. The Assessing Officer disallowed these charges as technical in nature and subject to TDS. The assessee, a stock broking company, argued that the charges were for infrastructure use, not technical services. The Ld. CIT(A) agreed, citing precedents and holding that TDS was not required. The Revenue challenged this decision.

Regarding leaseline charges, the Hon'ble High Court held that they were reimbursement, not income, so TDS was unnecessary. Upholding this, the Tribunal found no need for TDS on leaseline charges. Similarly, for transaction charges, the Tribunal relied on a High Court decision and previous assessment findings to support the non-deduction of TDS. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the Ld. CIT(A)'s decision on both leaseline and transaction charges.

In conclusion, the Tribunal affirmed that TDS was not required on leaseline and transaction charges paid by the stock broking company. The decision aligned with precedents and previous findings, leading to the dismissal of the Revenue's appeal. The judgment emphasized the distinction between technical services and infrastructure use, clarifying the TDS obligations in such cases.