ARCADIA SHARE & STOCK BROKERS PVT. LTD. Vs. DCIT
INCOME TAX APPELLATE TRIBUNAL
Arcadia Share And Stock Brokers Pvt. Ltd.
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D.Manmohan, Vice President -
(1.) THIS appeal by the assessee company is directed against the order passed by the CIT(A) -8, Mumbai and it pertains to AY 2006 -07.
(2.) FOLLOWING grounds were urged before us: -
"1. The learned CIT(A) erred upholding the reopening of assessment by issue of notice u/s. 148 dt. 29/3/2011, without appreciating that the original assessment has completed u/s. 143(3) by the A.O. after application of mind to the provisions of sec. 40(a)(ia) of the Act and also the TDS provisions, therefore again reopening of assessment on same set of facts merely on change of opinion is bad in law.
2. The learned CIT(A) failed to appreciate that reopening of assessment was based on mere change of opinion as there were no new facts or tangible material before the A.O. to come to a conclusion that there is escapement of income.
The learned CIT(A) erred in upholding the disallowance of depository charges paid of Rs. 6,27,423/ - u/s. 40(a)(ia) of the Act without appreciating that depository charges paid was not for technical services therefore provisions of Sec. 194C/194J were not applicable.
3. THE learned CIT(A) filed to appreciate that Sec. 40(a)(ia) is applicable to amount payable and not already paid. Further the expenses had been claimed year after year and no disallowance was made in scrutiny assessment therefore on bona fide belief no disallowance u/s. 40(a)(ia) ought to be made.
4.THE learned CIT(A) also failed to appreciate that the payee are assessed to tax and already paid taxes on the said amount and therefore there should not be any disallowance, the aforesaid view is also supported by the subsequent amendment made by the Finance Act 2012 inserting proviso to section 40(a)(ia) of the Act which is clarificatory in nature and inserted with a view to rationalize the provisions of disallowance, therefore the amendment should be applicable with retrospective effect."
(3.) Facts necessary for disposal of the appeal are stated in brief. The assessee is engaged in the business of share and stock broking. It debited a sum of Rs. 6,27,423/ - to the Profit & Loss Account under the head 'depository charges' which are payable on account of services provided with regard to transactions in securities through Stock Exchange. According to the AO assessee ought to have deducted tax at source, under section 194C of the Act, with reference to payments made to the contractor. Assessee paid depository charges in accordance with the agreement made with depository participants for execution of work, as per the rate already fixed. According to the assessee there is no need to deduct tax on payments because these are not for technical services/for execution of work. The AO, however, in the reassessment proceedings, was of the opinion that the payments made to the Stock Exchange, by whatever name called, are technical service falling within the purview of section 194J and 194C and the assessee having not deducted tax he invoked provisions of section 40(a)(ia) of the Act. The learned CIT(A) affirmed the action of the AO and thus the assessee preferred an appeal before us.;
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