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TMI Blog2012 (11) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolved and even the grounds of appeals are common except for the figures. Thus, for the sake of convenience, all the four appeals are being disposed of by this consolidated order. 2. For the sake of ready reference, grounds of appeal for the assessment year 2007-2008, raised by the department in ITA No.6335/M/2010, are reproduced herein below :- "1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the tax is not deductible at source in respect of transaction charges fees paid of Rs. .13,32,13,255/- to the Bombay Stock Exchange, National Stock Exchange and IL & FS. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educted at source together with interest calculated under Section 201(1)/201 (1A) for a sum of Rs. .86,07,708/-. 4. However, during the course of the TDS proceedings, the assessee vide submission dated 22 & 29th September, 2008, referred and relied upon the decision of ITAT Mumbai Bench in the case of Kotak Securities Limited Vs ACIT, reported in (2008) 25 SOT 440 Mum, wherein it was held that the transaction fees paid cannot be said to be fee paid to the Stock Exchange for rendering any technical services and, therefore, not liable to tax deduction at source. The Assessing Officer seems to have not considered the said submission and levied the interest in order passed under Section 201(1)/201 (1A) of the Act. 5. In the first appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at now this issue stands covered against the assessee by the decision of the Hon'ble jurisdictional High Court in the case of CIT Vs. M/s Kotak Securities Limited, reported in (2012) 340 ITR 333. Learned AR, however, submitted that the interest levied is not in accordance with the provisions of law and, therefore, for quantification part only the same should be sent to the Assessing Officer for verification. 7. We have carefully considered the finding of the CIT(A) and also the decision of the Hon'ble jurisdictional High Court. On perusal of the judgment of Bombay High Court in the case of CIT Vs. Kotak Securities Limited (supra), we find that the decision of ITAT Mumbai Bench in the case of Kotak Securities Limited(supra) has been reverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pects. The very object of establishing the stock exchanges is to regulate the transactions in securities and to prevent undesirable speculation in the transactions. To achieve this goal, the stock exchange continuously upgrades its BOLT system so that the transactions carried on through that system inspire confidence in the general public and that the transactions are settled smoothly and expeditiously. Thus, the entire trading in securities is managed by the Bombay Stock Exchange through the BOLT system provided by the stock exchange. x x x x x x 25.The argument that in the present case there was no contract for rendering technical/managerial service is without any merit, because, the very object of providing the BOLT system is to provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stock exchange constantly monitors the transactions relating to the sale or purchase of the securities right from the stage when the two contracting parties interact through the BOLT system, it would be impossible to ensure safety of the market. When there is considerable variation in the price of the securities offered to be sold or purchased the in-built system alerts and remedial measures are taken immediately so that no panic situation arises in the stock market. With a view to regulate the trading in securities, the stock exchange provides risk management and surveillance to the stock brokers to ensure the safety of the market. The surveillance function involves price monitoring, exposure of the members, rumour verification on a da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k exchanges are established under the Securities Contracts (Regulation) Act, 1956, with a view to prevent undesirable transactions in securities by regulating the business of dealing in shares, it is obvious that the stock exchanges have to manage the entire trading activity carried on by its members and accordingly managerial services are rendered by the stock exchanges. Therefore, in the facts of the present case, the transaction charges were paid by the assessee to the stock exchange for rendering the managerial services which constitutes fees for technical services under section 194J read with Explanation 2 to section 9(1)(vii) of the Act and hence the assessee was liable to deduct tax at source before crediting the transaction charges ..... X X X X Extracts X X X X X X X X Extracts X X X X
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