S. 40(a) (ia): Amounts not deductible-Deduction at source–Provisions of section 194J applicable on settlement and custody fees paid. [S.194J]

S. 40(a) (ia): Amounts not deductible-Deduction at source–Provisions of section 194J applicable on settlement and custody fees paid. [S.194J]

ACIT v. Karvy Computershare P. Ltd. (2013) 23 ITR 599 (Hyd.)(Trib.)

During the assessment proceedings, the Assessing Officer noticed that the assessee has claimed a deduction for ‘settlement and custody fees’ on which tax was not deducted at source. The Assessing Officer disallowed the said expenses under section 40(a) (ia) of the Act, since in his view tax was deductible at source thereon under section 194J of the Act. The CIT (A) allowed the appeal of the assessee. On appeal by the department the Tribunal reversed the decision of the CIT (A) by following the decision of the Bombay High Court in the case of CIT v. Kotak Securities Ltd. (2011) 203 Taxman 86 and holding that the assessee is availing managerial services for which the assessee paid the fees in question. (A.Y. 2008-2009).

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