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The Tax Publishers CIT v. Kotak Securities Ltd. [Civil Appeal Nos. 3141, 3143, 3145, 3146, 3150, 3151, 3152, 3154, 3155 & 3156 of 2016, dt. 29-3-2016] : 2016 TaxPub(DT) 1609 (SC) Transaction fee by members to stock exchange whether fee for technical services subject to TDS. Meaning of Technical fees in section 9(1)(vii) *Facts:* In the case of Kotak securities the transaction fee paid by them as members of BSE was held to be fee for technical services falling in the scope of section 194J thus TDS was found to be applicable on the same. Since section 40(a)(ia) came into the statute w.e.f. 1-4-2005 from the year 1995 to assessment year 2005-06 the Mumbai high court held that benefit of non-deduction has to be conceded to the assessee, subsequent periods disallowance due to non-deduction may be invoked. The above decision was appealed by both the assessee and the department for each of their parts along with other petitions which had come up for hearing. The brief question was what is the meaning of technical services appearing in section 9(1)(vii) for the purposes of TDS under section 194J? Held in the favour of the assessee that transaction fee paid to stock exchange was a standard facility and not a fee for technical service hence not subject to TDS under section 194J. To be called a technical service there has to be exclusivity to the customer to handle and offer the customer requirements on a customized basis. An online trading is a standard facility and nothing more. It cannot be called a technical service as it is common and standard to everyone. There is nothing technical to be read in line with noscitur associis of the words managerial and technical consultancy which was read to be of having human intervention nature (thus held by SC in Bharti Cellular Ltd. (2011) 330 ITR 239 (SC)) in section 9(1)(vii). A standard facility cannot fall in the scope of technical services. *Authors Note:* Similar views were voiced in the recent case of Bharti Airtel Limited v. ITO, (TDS)/ITA Nos. 3593 to 3596/Del/2012/Assessment years : 2008-09 to 2011-12/ITAT Del/dtd. 17-3-2016.

The Tax Publishers

CIT v. Kotak Securities Ltd. [Civil Appeal Nos. 3141, 3143, 3145, 3146, 3150, 3151, 3152, 3154, 3155 & 3156 of 2016, dt. 29-3-2016] : 2016 TaxPub(DT) 1609 (SC)

Transaction fee by members to stock exchange whether fee for technical services subject to TDS. Meaning of Technical fees in section 9(1)(vii)

Facts:

In the case of Kotak securities the transaction fee paid by them as members of BSE was held to be fee for technical services falling in the scope of section 194J thus TDS was found to be applicable on the same. Since section 40(a)(ia) came into the statute w.e.f. 1-4-2005 from the year 1995 to assessment year 2005-06 the Mumbai high court held that benefit of non-deduction has to be conceded to the assessee, subsequent periods disallowance due to non-deduction may be invoked. The above decision was appealed by both the assessee and the department for each of their parts along with other petitions which had come up for hearing.

The brief question was what is the meaning of technical services appearing in section 9(1)(vii) for the purposes of TDS under section 194J?

Held in the favour of the assessee that transaction fee paid to stock exchange was a standard facility and not a fee for technical service hence not subject to TDS under section 194J.

To be called a technical service there has to be exclusivity to the customer to handle and offer the customer requirements on a customized basis. An online trading is a standard facility and nothing more. It cannot be called a technical service as it is common and standard to everyone. There is nothing technical to be read in line with noscitur associis of the words managerial and technical consultancy which was read to be of having human intervention nature (thus held by SC in Bharti Cellular Ltd. (2011) 330 ITR 239 (SC)) in section 9(1)(vii). A standard facility cannot fall in the scope of technical services.

Authors Note: Similar views were voiced in the recent case of Bharti Airtel Limited v. ITO, (TDS)/ITA Nos. 3593 to 3596/Del/2012/Assessment years : 2008-09 to 2011-12/ITAT Del/dtd. 17-3-2016.