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TMI Blog2013 (7) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... the Exchanges. This also forms the reason for approving non-deduction of tax at source on the payment of lease line and VSAT charges by them to the stock exchanges. The Revenue has not been able to rebut the assessee's claim that the current year is the first year for which such action has been taken by the Revenue in its case so that the assessee was only acting as it had been in the past, over which s. 194J has been on the statute. Grounds for the invocation of the doctrine of 'legitimate expectation' thus exist. Surely, going by the said decision, s. 194J does not get any more legitimacy on the co-option of sec. 40(a)(ia) on the statute. At the same time, without doubt, a continued stand by the assessee for a subsequent year/s would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Stock Exchange (NSE) and, consequently, the validity of the disallowance u/s.40(a)(ia); the assessee having admittedly not deducted any tax at source on the said charges, allowed/paid for the current year at Rs.6,79,868/-. While the basis of the disallowance by the Assessing Officer (A.O.) is that the said payments were only, in terms of Explanation to section 9, `fees for technical services', liable to deduction of tax at source u/s.194J, so that section 40(a)(ia) stood attracted on no tax having been admittedly deducted, the ld. CIT(A) in appeal deleted the same following the decision in the case of Skycell Communication Ltd. vs. Dy. CIT [2001] 251 ITR 53 (Mad.), as well as by the Tribunal, viz. Dy. CIT vs. Angel Broking Ltd. [2010] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year under reference is A.Y. 2006-07, this is for the first time that such a view has been taken by the Revenue in its case. Accordingly, applying the ratio of the said decision, the disallowance would not stand for the current year. 4. We have heard the parties, and perused the material on record, as well as the case law referred to by the parties in their arguments. In our view, each assessee could possibly claim for any year as being the 'first' year for which the provision of sec. 40(a)(ia) stands invoked by the Revenue in its case qua such payments, and seek relief on that basis. The concept of 'first year' would thus have to be accorded a more definite and contextual meaning. To begin with, the very fact that the Revenue has in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of Skycell Communication Ltd. (supra), was in favour of non-deduction of tax on such payments. The Revenue has not brought a single decision taking a different or contrary view to our notice, i.e., prior to the decision by the hon'ble jurisdictional high court in Kotak Securities Ltd. (supra). In fact, as far as we are informed, this position continues to date as far as the territorial jurisdiction of the hon'ble Madras High Court is concerned, and stands modified, as far as the state of Maharashtra is concerned, in view of the decision in the case of Kotak Securities Ltd. (supra), only in respect of 'transaction charges'. As such, the assessee-payers could not be faulted with for having not deducted tax at source thereon and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for most part transmitted by them to the entities providing the corresponding services, i.e., the service providers. The payment thereto is thus by the respective stock exchange, and which in turn stands reimbursed in its respect by its individual members, as it is for their ultimate benefit that the services stand availed of or secured by the Exchanges. This also forms the reason for approving non-deduction of tax at source on the payment of lease line and VSAT charges by them to the stock exchanges. There is another aspect of the matter, which though would engage the mind of the hon'ble courts on a suitable challenge thereto being brought up before them. The provision (s. 40(a)(ia)) as cast, gives rise to a very quizzical and, indeed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the case of Kotak Securities Ltd. (supra), so that the assessee was only acting as it had been in the past, over which s. 194J has been on the statute. Grounds for the invocation of the doctrine of 'legitimate expectation' thus exist. Surely, going by the said decision, s. 194J does not get any more legitimacy on the co-option of sec. 40(a)(ia) on the statute. At the same time, without doubt, a continued stand by the assessee for a subsequent year/s would however imply that it has chosen to contest the Revenue's stand, and which can therefore only be at its own peril, so that it could not be allowed any benefit of doubt in view of non-action by the Revenue despite the provision of s.194J being on the statute for over a decade, the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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