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TMI Blog2016 (10) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... ided by the Stock Exchange and therefore no TDS on such payment would be deductible under section 194C/194J of the Act. The orders of the authorities below making disallowance under section 40(a)(ia) for non-deduction of tax on such payment of transaction charges are accordingly reversed - ITA No. 1243/Mum/2014 - - - Dated:- 5-10-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain , Judicial Member For The Appellant : Shri Satish R. Mody For The Respondent : Shri Mallikarjun Utture ORDER Per Jason P. Boaz, A.M. This appeal by the assessee is directed against the order of the CIT(A)- 8, Mumbai dated 10.12.2013 for A.Y. 2010-11. 2. The facts of the case, briefly, are as under: - 2.1 The assessee, a company engaged in business as share broker filed its return of income for A.Y. 2010-11 on 08.10.2010 declaring total income of ₹ 50,49,390/- after setting off business loss of ₹ 2,01,95,300/-. Book Profits under section 115JB of the Act was computed at ₹ 1,28,29,061/-. The return was processed under section 143(1) of the Income Tax Act, 1961 (in short, 'the Act') and the case was subsequently taken up for scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 14A r.w. Rule 8d was before a Coordinate Bench of this Tribunal in the assessee s own case for A.Y. 2009-10 and the Coordinate Bench in its order in ITA 966/Mum/2013 dated 19.03.2015 had restored the matter to the file of the Assessing Officer (AO) to re-work the disallowance, if any, thereunder after taking into consideration the assessee s contention that no such disallowance should have been made by the AO since its investments are entirely in group concerns which are foreign entities, the income from which investments are taxable as income of the assessee. It is submitted that the factual situation being the same in the year under consideration, the matter of re-working the disallowance under section 14A r.w. Rule 8D be restored back to the file of the AO for verification of assessee s claim. 4.2 Per contra, the learned D.R. for Revenue placed reliance on the orders of the authorities below. 4.3.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited. In this year, the assessee has earned dividend income of ₹ 15,60,000/-. The AO computed the disallowance under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. We hold and direct accordingly. Ground No. 1 of assessee s appeal is treated as partly allowed for statistical purposes as indicated above. 5. Ground No. 2 Disallowance under section 40(a)(ia) 5.1 In this ground, the assessee assails the order of the learned CIT(A) in confirming the disallowance of ₹ 9,18,509/- under section 40(a)(ia) of the Act made by the AO for non-deduction of tax by the assessee for transaction charges payments made to Stock Exchanges, i.e. BSE and NSE. The learned counsel for the assessee submitted that this issue is now settled in favour of the assessee by the decision of the Hon'ble Apex Court in the case of CIT vs. Kotak Securities Ltd. (2016) 383 ITR 1 (SC), wherein it was held that transaction charges paid to BSE, etc. by its members are not technical services rendered, but the nature of such payments are for facilities provided by the Stock Exchange and therefore no TDS on such payments would be deductible under section 194C or 194J of the Act. 5.2 Per contra, the learned D.R. supported the impugned order of the learned CIT(A) on this issue. 5.3.1 We have heard the rival contentions and perused and carefully considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e former. The service provided by the Stock Exchange for which transaction charges are paid fails to satisfy the aforesaid test of specialized, exclusive and individual requirement of the user or consumer who may approach the service provider for such assistance/service. It is only service of the above kind that, according to us, should come within the ambit of the expression technical services . appearing in Explanation 2 of Section 9(1)(vii) of the Act. In the absence of the above distinguishing feature, service, though rendered, would be mere in the nature of a facility offered or available which would not be covered by the aforesaid provision of the Act. 9. There is yet another aspect of 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 avail 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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