Itxa/2547/2011 Of The Commissioner Of Income Tax -4 Mumbai v. Alchemy Share And Sock Brokers Pvt. Ltd

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (LOD) NO.1969 OF 2010 The Commissioner of Income Tax-4, Mumbai ..Appellant. V/s. Alchemy Share & Stock Brokers Pvt. Ltd. ..Respondent. Mr. Vimal Gupta for the appellant. Mr. S.C. Tiwari for the respondent. CORAM : J.P. DEVADHAR AND A.R. JOSHI, JJ. DATED : 18TH NOVEMBER, 2011 P.C. :- 1.The appeal is admitted on the following questions of law:- 1)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that lease line,V-SAT and transaction charges paid to the Stock Exchange by the assessee company amounting to Rs.65,48,174/- were allowable as a deduction from taxable income even though the assessee company had failed to deduct TDS thereon and such payments were disallowable u/s.40(a)(ia) of the Income Tax Act ?law, the Tribunal was justified in holding that lease line,V-SAT and transaction charges paid to the Stock Exchange by the assessee company amounting to Rs.65,48,174/- were allowable as a deduction from taxable income even though the assessee company had failed to deduct TDS thereon and such payments were disallowable u/s.40(a)(ia) of the Income Tax Act ? 2)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the transaction charges, VSAT and lease charges paid to the stock exchange by the assessee company were not paid in consideration of technical services rendered by the stock exchange within the meaning of law, the Tribunal was justified in holding that the transaction charges, VSAT and lease charges paid to the stock exchange by the assessee company were not paid in consideration of technical services rendered by the stock exchange within the meaning of Section 194J read with Explanation 2 to Section 9(1)(vii) of the Income Tax Act ? 3)Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in deleting the disallowance made by the assessing officer of claim of the assessee company for a deduction of payment of Rs.3,04,005/- towards penalty paid to the stock exchange even though such penalty payment was clearly disallowable under Explanation to Section 37(1) of the Income Tax Act ?law, the Tribunal was right in deleting the disallowance made by the assessing officer of claim of the assessee company for a deduction of payment of Rs.3,04,005/- towards penalty paid to the stock exchange even though such penalty payment was clearly disallowable under Explanation to Section 37(1) of the Income Tax Act ? 2.As regards the first two questions are concerned, as per the decision of this Court in the case of The Income Tax Commissioner V/s. Angel Capital & Debit Market Ltd. [Income Tax Appeal (L) No.475 of 2011] decided on 28th July, 2011, we hold that the assessee was not liable to deduct tax at source while paying the lease line and VSAT charges to the stock exchange. Similarly, for the reasons stated in the case of CIT V/s. M/s. Kotak Securities Ltd. [Income Tax Appeal No.3111 of 2009] decided on 21st October, 2011, we hold that the transaction charges paid by the assessee to the stock exchange were covered under Section 194J of the Act, however, for AY 2005-06, the assessing officer was not justified in invoking the provisions of Section 40(a)(ia) of the Income Tax Act, 1961. The first two questions are, therefore, answered accordingly. 3.As regards the third question is concerned, counsel for the parties state that the said question is answered in favour of the assessee by the decision of this Court in the case of The Commissioner of Income 3 itxal-1969-10 Tax-4 V/s. M/s. The Stock and Bond Trading Co. [Income Tax Appeal No.4117 of 2010] on 14[th] October, 2011. The third question is answered accordingly. The appeal is disposed of in the above terms with no order as to costs. (A.R. JOSHI, J.) (J.P. DEVADHAR, J.)