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TMI Blog2014 (2) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- The decision in Angel Capital And Debt Market Limited. Versus Assistant Commissioner Of Income-Tax [2008 (5) TMI 294 - ITAT BOMBAY-I] followed - The amount paid as penalty was on account of irregularities committed by the assessee’s clients - Such payments were not on account of any infraction of law and hence allowable as business expenditure - the capital market regulations of the stock exchanges were in the nature of indoor management governing relations between the member and the stock exchange and not an offence punishable by the statute - the CIT(A) has rightly deleted the addition – Decided against Revenue. Disallowance u/s 40(ia) of the Act - Transaction charges paid to the stock exchanges - fees for technical services TD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asonable opportunity to the assessee to place all germane material on the record - The matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Disallowance u/s 40A(IB) r.w. Section 88E of the Act - STT paid on behalf of client – Held that:- There was force in the contention of the Counsel for the assessee so far as the treatment of brokerage inclusive of STT – thus, the matter remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee. - ITA. No.5372,5992/Mum/2008 - - - Dated:- 30-10-2012 - D.K.AGRAWAL AND N.K.BILLAIYA, JJ. For the Appellant : Shri D.V. Lakhani (A.R.) For the Respondent : Shri P.K. Shukla (D.R.) ORDER :- PER : N.K.BILLAIYA, A.M. These cross- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her on the facts and in the circumstances of the case and in law the Hon ble Tribunal was justified in holding that VSAT and Lease Line charges paid to the Stock Exchange by the assessee company were not paid in consideration of technical services rendered by the Stock Exchange within the meaning of Section 194J read with Explanation 2 to Section 9 (1) (vii) of the Income Tax Act. ? 2.1. The Hon ble High Court has thus held as under : As regards the first two questions are concerned, the findings of fact recorded by the I.T.A.T. is that VSAT and Lease Line charges paid by the assessee to Stock Exchange were merely reimbursement of the charges paid/payable by the Stock Exchange to the Department of Telecommunication. Since the VSA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully perused the orders of the lower authorities and the decisions cited above. We find that the penalty was on account of irregularities committed by the assessee s clients. Moreover, the capital market regulations of the stock exchanges were in the nature of indoor management governing relations between the member and the stock exchange and not an offence punishable by the statute. Respectfully following the above decisions, we hold that the CIT(A) has rightly deleted the addition. Therefore, we do not find any merit to interfere with the findings of the CIT(A). Ground No. 8 to 13 are accordingly dismissed. 7. In the result, appeal of the Revenue is dismissed. 8. ITA.No.5372/Mum/2008:- With this appeal the assessee has challenged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the stock exchange nor had the Revenue raised any objection or initiated any proceedings for not deducting the tax at source. In these circumstances, if both the parties for nearly a decade proceeded on the footing that section 194J was not attracted, then, in the assessment year in question no fault could be found with the assessee in not deducting the tax at source under section 194J of the Act and consequently, no action could be taken under section 40(a)(ia) of the Act. From assessment year 2006-07 the assessee had been deducting tax at source while crediting the transaction charges to the account of the stock exchange though not as fees for technical services but as royalty . 9. As the assessment year involved in the present app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer is directed to re-compute the disallowance without applying Rule 8D and also considering the decision of the Hon ble Bombay High Court in the case of CIT vs. Reliance Utilities Power Ltd. 313 ITR 340. 13. Ground No.5 relates to the disallowance of STT paid on behalf of the client amounting to Rs.47,91,318/-. During the course of assessment proceedings, the Assessing Officer found that the assessee has debited Rs.47,91,318/- as STT charges in its P L account which according to the Assessing Officer is not an allowable expenses and went on to disallow the same. When the matter was argued before the CIT(A), the CIT(A) held that STT cannot be allowed as deduction as provided under section 40A (IB) but only tax rebate u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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