9911796707
TMI Blog2012 (2) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... on issues involved in these appeals as per the revised grounds filed by the Revenue relate to disallowance of transaction charges and VSAT and leaseline charges made by the AO by invoking the provisions of section 40(a)(ia) which has been deleted by the learned CIT(Appeals). 3. The assessee in the present case is a company which is engaged in the business of share and stock broking as a member of Bombay Stock Exchange and National Stock Exchange. In the returns of income filed for the years under consideration, it had claimed deduction on account of transaction charges paid to Stock Exchange amounting to ₹ 7,20,317/- and ₹ 10,91,310/- for assessment years 2006-07 and 2007-08 respectively. It had also claimed deduction on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Bombay High Court in the case of CIT vs. Angel Capital Debit Market Ltd. (Income Tax Appeal (L) No. 475 of 2011), wherein it was held that VSAT and Leaseline charges paid by the assessee to Stock Exchange being merely reimbursement of the charges paid/payable by the Stock Exchange to the Department of Telecommunication, the same do not have any element of income and there is no question of deducting any tax from the payment of the said charges. Respectfully following the decision of Hon ble jurisdictional High Court in the case of CIT vs. Angel Capital Debit Market Ltd. (supra), we uphold the impugned order of the learned CIT(Appeals) deleting the disallowance made by the AO u/s 40(a)(ia) on account of VSAT and Leaseline charges. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The learned counsel for the assessee, however, has contended that the decision of the Tribunal holding that disallowance made by the AO on account of transaction charges u/s 40(a)(ia) was not sustainable, has been finally upheld by the Hon ble Bombay High Court in the case of Kotak Securities Ltd. (supra) on the ground that the assessee had bonafide reason to believe that the tax was not deductible at source from the payment of transaction charges u/s 194J and the AO, therefore, was not justified in disallowing the transaction charges by invoking section 40(a)(ia) In this context, he has invited our attention to the relevant observations recorded by the Hon ble High Court in paragraph No. 31 of the judgment which is extracted below : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumably because, the stock exchange has discharged its tax liability for the assessment year in question. In any event, in the facts of the present case, in view of the undisputed decade old practice, the assessee had bonafide reason to believe that the tax was not deductible at source under Section 194J of the Act and, therefore, the assessing officer was not justified in invoking Section 40(a)(ia) of the Act and, therefore, the assessing officer was not justified in invoking Section 40(a)(ia) of the Act and disallowing the business expenditure by way of transaction charges incurred by the assessee. 7. The learned counsel for the assessee has submitted that the relevant fact situation involved in the present case is similar to the one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the assessee has tried to demonstrate before us that the relevant facts involved in the present case are similar to the case of Kotak Securities Ltd. (supra), we are of the view that this stand of the assessee requires verification since this aspect of the matter has come up for consideration for the first time before the Tribunal. We, therefore, consider it fair and proper and in the interest of justice to restore this issue to the file of the AO for verifying the stand of the assessee from the relevant record and decide the same afresh on such verification in the light of guidelines laid down by the Hon ble Bombay High Court in paragraph No. 31 of the judgment as extracted above. 9. In the result, both the appeals of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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