Payment in relation with Security Transactions by a Sub-Broker not liable to TDS u/s 194H: ITAT [Read Order]

The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) has held that, Payment in relation with Security Transactions by a Sub-Broker not liable to Tax Deduction at Source ( TDS ) under Section 194H of the Income Tax Act, 1961.

The Tribunal was considered the appeal by the Revenue which arouse of the order of Id. CIT(A). The issue was whether the Id.CIT(A) was justified in deleting the disallowance of commission paid in the instant case.

The assessee is the proprietor of DIC Finance and Securities and is carrying on business as a share sub-broker. It had during the year derived income from share broking, other sources and short-term capital gain. The assessee received sub brokerage amount from Shree Bahubali International Limited during the year under appeal. Out of the said amount the assessee paid to several persons commissions without deducting TDS under Section 194H of the Income Tax Act, 1961.

The AO, disallowing the contentions of assessee disallowed the commission paid and proceeded under Section 40(a)(ia) for violation of provision of Section 194H. The Id.CIT(A) had granted relief to the assessee, disallowing the order of AO. The Id.CIT(A) had relied in the contentions that the commission has been paid on behalf of principal and the broker and explanation (i) to section 194 does not make any distinction between brokers and sub-brokers and it says that provisions of section 194H would apply only in respect of commission in respect of sale and purchase of securities . The finding of the Id.CIT (A)was that the payment was made in relation to security transactions carried out by the assessee. The instant case arouse of the appeal made by the revenue against the order of Id.CIT(A).

While dismissing the appeal of revenue, the Tribunal bench comprising of Judicial Member S.S Godara and Accountant Member M.Balaganesh has observed that the assessee had paid commission to the remisiers and claimed the same as the deduction. we find no infirmity in the order of Id. CIT(A).