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5. The Assessing Officer had disallowed payments made to NSE on account of transaction charges at Rs. 1,01,48,148/- and other charges at Rs. 23,56,820/- and to BSE on account of transaction charges at Rs. 2,30,170/- on the ground that assessee has deducted TDS u/s. 194C instead of u/s. 194J of the I.T. Act. The Assessing Officer decided that the charges paid to stock exchange are in the nature of fees for technical services and TDS is required to be made on such payment u/s. 194J of the Act. The Ld. Commissioner of Income Tax(A) has confirmed the disallowance made by the Assessing I.T.A No. 3111/Ahd/2013 & 142/Ahd/2014 A.Y. 2010-11 Page No 9 Shah Investor's Home Ltd. vs. JCIT Officer u/s. 40(a)(ia) of the act. The decision of the Ld. Commissioner of Income Tax(A) is reproduced as under:-

On the disallowance u/s. 40(a)(ia), the assessee company relies on the following judgments of Hon'ble Courts and Tribunals:

In this regard, Assessee Company relies on the ratio laid down by the Hon'ble Mumbai Tribunal in the case of DCIT Mumbai v. M/s Asset Alliance Securities Pvt. Ltd ITA 4 NO. 1488/Mum/2009. In this case the Hon'ble Tribunal held that:

"The Revenue is in appeal to reiterate that the payment made to the Stock Exchanges represented fees for technical services within the meaning of section 194J read with Explanation 2 to clause (vii) of sub-section (1) of section 9. This issue has considered in the order of the Mumhai Bench of the Tribunal cited supra, which is now reported in (2009) 124 TTJ 241 equivalent to (2008) 25 SOT 440 equivalent (2009) 24 DTR 214. In this case it was held that the transaction charges paid by a Member to the Stock Exchange on the basis ofthe volume of transactions is a payment for the use of the facilities provided by the Stock Exchange and not for any services, either technical or managerial, and therefore the provisions of section 194j and consequently section 40(a)(ia) are not attracted. In coming to this conclusion the Tribunal has relied on the judgment of the Madras High Court in Skycell Communications Ltd. vs. DCIT (2001) 251 ITR 53 (Mad). The learned representative for the assessee has also drawn our attention to the judgment of the Delhi High court in CIT vs. Bharti Cellular Lid (2009) 319 ITR 139 (Del) in which the identical issue has been decided by holding that section 194J read with Explanation 2 below section 9(1)(vii) of the Act is not applicable to payments made by the companies engaged in providing cellular telephone facilities to the interconnection providers, access charges and port charges. In this judgment it was held that the services rendered qua interconnection / port access did not involve any human interface and, therefore, the services could not be regarded as technical services as 'contemplated by section 194J. It was observed that though the facility of interconnection and port access was technical in the sense that it made use of sophisticated technology, but the expression "technical services" in section was not to be construed in the abstract and general sense but in the narrower sense as circumscribed by the expressions "managerial services" and "consultancy services" which appear in in Explanation 2 below section 9 (1)(vii) of the Act, The Delhi High Court further went on to observe that the expression "technical services" would have reference to only technical services rendered by a human being but I.T.A No. 3111/Ahd/2013 & 142/Ahd/2014 A.Y. 2010-11 Page No 12 Shah Investor's Home Ltd. vs. JCIT would not include any services provided by machines or robots. In coming to this conclusion the Delhi High Court agreed with the views expressed by the Madras High court in Skycell Communications Ltd. (supra). The Delhi High Court further examined the question, which was not before the Madras High Court, as to what would be the nature of the payment made by one cellular network provider to another. It was in this context that the provisions of section 194J read with Explanation 2 below section 9(1)(vii) were examined and the observations as noted earlier were made.

(iv) It is submitted that M/s. ACBPL is Sub-Broker of the appellant company, they are in the field of broking business much prior to the inception of the appellant company. The payments-of office management fees of Rs. 39,00,000/~ are paid to them as consulting charges for providing services to the clients and sub-brokers of the appellant company TDS is deducted u/s. 194J. It is submitted that the agreement is for broking business and there is no agreement for taking premises on rent, as the same are used by them for their own business as sub-brokers of the appellant of the company. Thus, the, appellant company deducted TDS u/s. 194J, which is the proper head to deduct TDS on payment of office management charges far share broker business.

(vi) With regard to payment of reimbursement of expenses, though there is CBDT Circular for non-deduction of TDS in case of separate bills. TDS had been deducted u/s. 194J (till January 2010 TDS was made u/s. 194C I.T.A No. 3111/Ahd/2013 & 142/Ahd/2014 A.Y. 2010-11 Page No 32 Shah Investor's Home Ltd. vs. JCIT i.e. @ 2%, but at the time of TDS payment of January 2010, the differential TDS of 194J i.e. @ 10% and 194C were made , thus, on the whole year payment of reimbursement of expenses, TDS u/s, 194J was deducted). Thus, the appellant company has complied with the provisions of TDS deduction on reimbursement of expenses.