, ""
IN THE INCOME TAX APPELLATE TRIBUNAL" B" BENCH, MUMBAI
BEFORE HON'BLE S/SHRI B.R.BASKARAN (AM) and SANJAY GARG (JM)
.. , ,
./I.T.A. No.8741/Mum/2011
( / Assessment Year : 2008-09)
Dy.Commissioner of Income / M/s Mehta Vakil and Co.,Pvt.Ltd.,
Tax, 4(3), Vs. PG -11, Ground Floor,
6th floor, Room No.649, Rotunda Bldg,
Aayakar Bhavan, M K Road, Mumbai Samachar Marg,
Mumbai-400020 Mumbai-400001
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. :AAACM3089L
/ Appellant by Shri Asghar Zain-VP
/ Respondent by Shri Satish Chandak
/ Date of Hearing
: 14.1.2015
/Date of Pronouncement :13.3.2015
/ O R D E R
Per B.R.BASKARAN, Accountant Member:
The appeal of the revenue is directed against the order dated
24.10.2011 passed by Ld CIT(A)-8, Mumbai and it relates to the
assessment year 2008-09. The revenue is aggrieved by the decision of Ld
CIT(A) in respect of the following issues:-
(a) Whether the tax liability arising under normal provisions of
the Act and u/s 115JB should be compared before allowing Rebate
u/s 88E of the Act or after allowing the rebate.
(b) Whether the transaction charges paid to BSE/NSE is not
liable to disallowed us 40(a)(ia) of the Act for non-deduction of tax
at source.
2 ITA. No.8741/Mum/2011
2. We have heard the parties and perused the record. The assessee
company is engaged in the business of Share broking, trading and
investment in shares. We shall first take up the issue relating to the
disallowance made u/s 40(a)(ia) of the Act. The assessee had paid
transaction charges of Rs.98,85,800/- and VSAT charges/lease line charges
of Rs.4,35,363/- to BSE/NSE without deducting tax at source under any of
the provisions of the Act. The AO held that the above said payments are
liable for Tax deduction at source u/s 194J of the Act, as they fall in the
category of `fee for technical services'. Accordingly he disallowed both the
amounts by invoking the provisions of sec. 40(a)(ia) of the Act, since the
assessee had not deducted tax at source. In the appellate proceedings,
the Ld CIT(A) deleted the disallowance by following the decisions rendered
by the co-ordinate benches in the following cases:-
(a) GSB Securities Pvt Ltd (ITA No.1825/Mum/2009)
(b) Kotak Securities Ltd (2009)(318 ITR (AT) 268)
(c) Shri Vinod K Nevatia (ITA No.6556/Mum/2009)
(d) M/s Angel Broking Ltd (2010)(35 SOT 457)(Mum).
The revenue is aggrieved by the decision of Ld CIT(A) in respect of
transaction charges.
3. We notice that the Hon'ble jurisdictional Bombay High Court has held
in the case of CIT Vs. Kotak Securities Ltd (2012)(340 ITR 333) that the
transaction charges paid by the assessee to the stock exchanges constitute
`fee for technical services' and the same is liable for tax deduction at
sources u/s 194J of the Act. However, before the Hon'ble High Court, the
assessee therein pleaded that it was under bonafide belief that no tax was
deductible at source. The Hon'ble High Court also noticed that the
assessee has been paying the transaction charges for the past several
years without subjecting the same to tax deduction at source and the
3 ITA. No.8741/Mum/2011
department has also allowed the claim. Hence the Hon'ble High Court,
under these peculiar facts, held as under:-
"However, since both the revenue and assessee were under the bona
fide belief for nearly a decade that tax was not deductible at source on
payment of transaction charges, no fault can be found with the
assessee in not deducting the tax at source in the assessment year in
question consequently disallowance made by the assessing officer
under section 40(a)(ia) of the Act in respect of the transaction charges
cannot be sustained. We made it clear that we have arrived at the
above conclusion in the peculiar facts of the present case, where both
the revenue and the assessee right from the insertion of section 194J
in the year 1995 till 2005 proceeded on the footing that the assessee is
not liable to deduct tax at source and in fact immediately after the
assessment year in question, i.e. from A.Y. 2006-07 the assessee has
been deducting tax at source while crediting the transaction charges to
the account of stock exchange."
4. The decision of the Hon'ble Bombay High Court was rendered on 21-
10-2011 and the present assessment year is AY 2008-09. We have
already noticed that, prior to the decision of Honble Bombay High Court,
the various benches of the Tribunal have been holding that the tax was
not deductible at source from the transaction charges paid to the Stock
exchanges. Hence, it can be seen that the assessee before us also, was
under bona fide belief in this regard and hence, we are of the view that
the benefit of doubt given to the assessee by the Hon'ble Bombay High
Court in the case of Kotak Securities Ltd (supra) should also be extended
to the assessee. The Ld A.R submitted that the assessee has started
deducting tax at source from the transaction charges subsequent to the
decision of Hon'ble Bombay High Court. The Ld A.R also brought to our
notice the decision rendered by the co-ordinate bench of Mumbai Tribunal
in the case of M/s Mape Securities Pvt Ltd (ITA No.842/Mum/2012 dated
24.11.2014 relating to AY 2008-09), wherein also the co-ordinate bench
has taken identical view. Hence, for the foregoing reasons, we uphold the
decision of Ld CIT(A) on this issue.
4 ITA. No.8741/Mum/2011
5. The next issue relate to the computation of MAT tax liability vis-à-vis
the rebate u/s 88E of the Act. The AO took the view that the MAT tax
liability should be compared with the tax payable under normal provisions
of the tax after deducting the rebate allowable u/s 88E of the Act.
However, the assessee contended that the tax liability under both the
provisions should be compared before deducting rebate u/s 88E of the Act.
The AO did not agree with the contentions of the assessee and held that,
if the tax payable after allowing rebate u/s 88E works out to less than 10%
of the Book Profit, the provisions of sec. 115JB shall be applicable. The
AO noticed that the tax payable under the normal provisions of the Act
after giving rebate u/s 88E of the Act was Rs.98,02,699/- and the same
worked out to less than 10% of Book Profit computed u/s 115JB of the
Act. Accordingly, the AO held that the book profit shall be deemed to be
the total income and hence the tax shall be payable at 10% of book profit.
However, the Ld CIT(A) reversed the decision of the AO and hence the
revenue has filed this appeal before us.
6. We notice that the Ld CIT(A) has followed the decision rendered by
the Bangalore bench of Tribunal in the case of M/s Horizon Capital Ltd
(ITA No.592/Bangalore/2010) and also the decision rendered by the Delhi
bench of Tribunal in the case of M/s MBL & Co. Ltd (ITA
No.2478/Del/2010), wherein it was held that the rebate u//s 88A to 88E
shall also apply to the tax computed u/s 115JB of the Act. The Tribunal
has also noticed that the Return of income (ITR-6) prescribed in the
Income tax Rules also supported the view taken by the assessees.
Accordingly, the Ld CIT(A) reversed the view taken by the AO.
7. We notice that the decision rendered by the Bangalore bench of
Tribunal in the case of M/s Horizon Capital Ltd (supra) has since been
approved by the Hon'ble High Court of Karnataka (2011)(245 CTR 601; 64
DTR 306), wherein it was held that the assessee is entitled to deduct the
rebate u/s 88E of the Act from the tax liability arising u/s 115JB of the Act.
5 ITA. No.8741/Mum/2011
The co-ordinate bench of the Tribunal has also taken identical view in the
case of M/s Ambit Securities Broking P Ltd Vs. Addl. CIT (ITA
No.7856/M/2011 dated 6.2.2013). All these decisions go to show that the
Tribunal/High Court has taken a consistent view that the tax liability arising
under normal provisions of the Act and u/s 115JB of the Act should be
compared before allowing rebate u/s 88E of the Act. Consistent with the
view taken by the Tribunal/High Court, we are of the view that there is no
infirmity in the decision rendered by Ld. CIT(A) on this issue.
8. In the result, the appeal filed by the revenue is dismissed.
Pronounced accordingly in the open court on 13th March, 2015 in the
presence of both the parties.
13th March, 2015
sd sd
( /SANJAY GARG) ( .. / B.R. BASKARAN)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai: 13th March,2015.
. ../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
true copy (Asstt. Registrar)
, /ITAT, Mumbai
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