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2018 (11) TMI 1174 - HC - Income TaxDisallowance u/s 14A - Held that - It is accepted and admitted that the assessee had not earned any exempt income in this year. In these circumstances, following the ratio of the decisions of this Court in Commissioner of Income Tax-IV versus Holcim India Private Limited, (2014 (9) TMI 434 - DELHI HIGH COURT) and Cheminvest Limited versus Commissioner of Income Tax-VI, (2015 (9) TMI 238 - DELHI HIGH COURT) and our decision in Principal Commissioner of Income Tax-6, New Delhi versus Mcdonald s India Private Limited 2018 (11) TMI 1057 - DELHI HIGH COURT no substantial question of law arises as the issue is covered by the aforesaid decisions against the Revenue. TDS u/s 194J - Failure on the part of the assessee in deducting TDS on listing and custodian fee paid to National Stock Exchange, Bombay Stock Exchange and National Securities Depository Limited u/s 194J - Held that - This issue whether TDS was required to be deducted is covered against the Revenue vide decision of the Supreme Court in CIT Vs. Kotak Securities Limited (2016 (3) TMI 1026 - SUPREME COURT) as held that Section 194J is attracted when an assessee avails of specialized, exclusive and individual services and not when it avails of common general facilities and services which are faceless, screen based transactions. Accordingly, membership fee for listing and custodian fee paid to a stock exchange would not be covered by the definition of the term technical services under Section 194J of the Act on which TDS was required to be deducted.
Issues:
1. Disallowance under Section 14A of the Income Tax Act, 1961 2. Alleged failure to deduct TDS on listing and custodian fee Analysis: Issue 1: Disallowance under Section 14A The first issue raised by the Revenue concerns the disallowance under Section 14A of the Income Tax Act. It was acknowledged that the assessee did not earn any exempt income during the relevant year. Citing precedents such as Commissioner of Income Tax-IV v. Holcim India Private Limited and Cheminvest Limited v. Commissioner of Income Tax-VI, the Court concluded that as the issue was covered by previous decisions against the Revenue, no substantial question of law arose. The decision in Principal Commissioner of Income Tax-6, New Delhi v. Mcdonald’s India Private Limited further supported this position. Issue 2: Alleged failure to deduct TDS on listing and custodian fee The second issue in the case revolved around the alleged failure of the assessee to deduct TDS on the listing and custodian fee paid to various entities. The Assessing Officer disallowed the expenditure under Section 40(a)(ia) for not deducting TDS under Section 194J of the Act. However, the Court referred to the decision of the Supreme Court in Commissioner of Income Tax v. Kotak Securities Limited, where it was established that Section 194J applies to specialized, exclusive, and individual services, not common general facilities. Consequently, the Court held that TDS was not required to be deducted on the membership fee for listing and custodian fee paid to stock exchanges, as these did not fall under the definition of "technical services" under Section 194J. In light of the above analysis, the Court dismissed the appeal, as no substantial question requiring consideration was found to exist in either of the issues raised by the Revenue.
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