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TMI Blog2016 (10) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... 6843/Mum/2014 - - - Dated:- 24-8-2016 - SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) For The Appellant : Shri Jitendra Singh For The Respondent : Shri Rajesh Kumar Yadav ORDER Per ASHWANI TANEJA, AM This appeal has been filed against the order of Ld. Commissioner of Income-tax(Appeals) [hereinafter called CIT(A)] dt 18-08-2014 passed against the order u/s 201(1) / 201(1A) dt 31-03-2012 for A.Y. 2010-11 on the following grounds : Ground I a) The Commissioner of Income-tax (Appeals) - 14, Mumbai, [herein after referred to as 0T (A) ] has erred in confirming the penalty levied by the Assessing Officer [herein after referred to as AO ] u/s 201(1)/201(1A) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring of the appeal. 2. The solitary ground raised in this appeal is against the action of the lower authorities in holding the assessee in default on account of non deduction of tax at source u/s 194J on the amount of transaction charges paid by the assessee to National Stock Exchange of India (in short, NSE). 3. During the course of hearing, it was submitted by the Ld. Counsel that the Ld.CIT(A) decided this issue against the assessee by relying upon the judgement of Hon ble Bombay High Court in the case of Kotak Securities Ltd 340 ITR 333 (Bom) wherein it was held that the transaction charges paid to NSE was on account of managerial services rendered by NSE to the assessee and consequently the transaction charges constituted fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has analysed the provisions of section 194J as well as 9(i)(vii) and based on the conclusion that transaction charges did not constitute fee for technical or managerial services. Relevant observations of Hon ble Supreme Court are reproduced hereunder, for the sake of reference:- A reading of the very elaborate order of the Assessing Officer containing a lengthy discourse on the services made available by the stock exchange would go to show that apart from facilities of a faceless screen based transaction, a constant upgradation of the services made available and surveillance of the essential parameters connected with the trade including those of a particular/single transaction that would lead credence to its authenticity is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter which, in our considered view, would require a specific notice. The service made available by the Bombay Stock Exchange (BSE online trading (BOLT) System) for which the charges in question had been paid by the appellant assessee are common services that every member of the stock exchange is necessarily required to availablel of to carry out trading in securities in the stock exchange. The view taken by the High Court that a member of the stock exchange has an option of trading through an alternative mode is not correct. A member who wants to conduct his daily business in the stock exchange has no option but to avail of such services. Each and every transaction by a member involves the use of the services provided by the stock e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate view. Such charges, really, are in the nature of payments made for facilities provided by the stock exchange. No deduction of tax at source on such payments would, therefore, be deductible under section 194J of the Act. 6. Thus, from observations of the Hon ble Supreme Court, it is clear that services provided by the stock exchange to the assessee does not fall in the category of technical services as has been envisaged in section 194J and, therefore, respectfully following the judgement of Hon ble Supreme Court it is hereby held that assessee was not required to deduct tax at source from the payment made to NSE. Thus, grounds raised by the assessee are allowed. 7. As a result, appeal filed by the assessee is allowed. Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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