a) The assessee debited certain amount on account of transaction charges paid to the Stock Exchange. The Assessing Officer disallowed such charges on the ground that the assessee had not deducted tax at source while making the payment of transaction charges.

b) The Commissioner (Appeals) held that the transaction charges were paid to the Stock Exchange for rendering the managerial services which constituted fees for technical services under section 194J and, hence, the assessee was liable to deduct tax at source before crediting the transaction charges to the Stock Exchange. In that view of the matter, the disallowance was upheld.

c) The aggrieved-assessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

1) The question as to whether TDS is deductible under section 194J on payments of transaction charges made by members to Stock Exchange has been considered by the Apex Court in the case of CIT v. Kotak Securities Ltd. [2016] 67 taxmann.com 356 wherein it was held that no TDS is required to be deducted on transaction charges paid by members to Stock Exchange as they are not for ‘technical services’ rendered but are in the nature of payments for facilities provided by the Stock Exchange.

2) Following the decision of the Apex Court in the case of Kotak Securities Ltd. (supra), it was held that no TDS would be deductible on payment of transaction charges by members to Stock Exchange under section 194J. Accordingly, the Assessing Officer was directed to delete the disallowance made on account of transaction charges paid to Stock Exchange. – [2016] 70 taxmann.com 23 (Mumbai – Trib.)
Taxmann India


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