9911796707
TMI Blog2014 (4) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... in law in holding that commission of Rs.51,27,815/- paid by the assessee firm to Tapasya Projects Ltd. was outside the ambit of section 194H of the Income Tax Act and 2. Whether on the facts and circumstances of the case, the ITAT was justified in law in allowing expenses of Rs.51,27,815/- paid by the assessee firm, as above, without deducting tax at source, ignoring the provisions of section 40(a)(ia). The assessee is a firm of Chartered Accountants. It had commission receipts amounting to Rs.73,28,868/-. To earn the said commission, the assessee paid an amount of Rs.51,27,815/- to Tapasya Projects Ltd. ('TPL'). While paying the commission, the assessee did not deduct tax at source under Section 194H. The assessee submitted, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that the payment was made for any other purpose. TPL was admittedly a commission agent to the assessee. In view of Explanation (i) to Section 194-H, it was held that the services rendered could also be in relation to any transaction relating to an asset, valuable article or thing, not being securities. Hence, services rendered relating to securities would get excluded from the express definition of 'brokerage or commission' which was the case here, since the renumeration paid by the assessee to TPL was admittedly for canvasing, inducing or for motivation of investors. It was held to be a commission paid in relation to a transaction relating to securities and was, hence excluded from the purview of Section 194-H by the terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government to be securities; and (iii) Rights or interest in securities;" Consequently, in view of the broad and inclusive definition of the expression 'securities', it is apprehended that many transactions relating to securities would fall outside the scope of Section 194-H, if the decisions of the Tribunal were to be followed; (ii) TPL did not directly receive the commission or brokerage from Mutual Fund Houses. The assessee received commission or brokerage from Mutual Fund Houses on which tax was not liable to be deducted at source under Section 194-H. However, when the assessee paid over commission to TPL, that part of the transaction would not fall within the exception that is carved out by the latter part of Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities." The substantive part of Section 194-H requires a deduction of tax at the rate of ten per cent by any person, not being an individual or a Hindu undivided family, who is responsible for paying any income by way of commission or brokerage. What constitutes commission or brokerage is defined by the first Explanation. The expression 'commission or brokerage' is defined in an inclusive manner by Explanation (i). Commission or brokerage includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 144-A while issuing a direction to the Assessing Officer. The JCIT held that TPL through its employee had actually motivated potential investors to invest in various schemes of Mutual Funds through the assessee. Consequently, the element of rendering services by TPL was held to be proved on which the debit of brokerage had been made by the assessee. The debit of brokerage was found to be genuine. The relevant observations in that regard are as follows:- "From the above deposition it is proved that M/s Tapasya Projects Ltd., through its employee Sri Shyam Gupta, has actually motivated Potential Investors to invest in various schemes of different Mutual Fund Registrars through the assessee firm namely M/s Tandon & Mahendra. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956, would exclude a large number of transactions from the ambit of Section 194-H where 'commission or brokerage' is paid to a person acting on behalf of another person for service rendered in relation to any transaction relating to securities. This is a matter of legislative policy. The duty of the Court is to adopt the plain & natural meaning of the words used, particularly in a taxing statute. Once Parliament has legislated by specifically incorporating that the expression 'securities' would have the same meaning as in Section 2(h) of the Securities Contracts (Regulation) Act, 1956, the plain effect cannot be diluted by the Court by reading down the statutory provision. The duty of the Court is to interpret a taxing stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
