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| The Tax Publishers2020 TaxPub(DT) 0525 (Bom-HC) INCOME TAX ACT, 1961
Section 194J
Any person responsible for paying to a resident any income by way of commission or brokerage, require deduction of tax at source under section 194H and not under section 194J. But, by virtue of the Explanation to section 194H, no requirement of deducting tax at source would arise on payment of brokerage towards securities.
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Tax deduction at source - Under section 194J - Sub-brokerage payments made to holding company of assessee -
Whether Tribunal erred in holding that sub-brokerage paid would fall under the provisions of section 194H and not under the provisions of section 194J, despite the holding company providing various “Professional or Technical Services” and assessee not specifically availing any services exclusively pertaining to buying and selling of securities.Held:As decided in Pr. CIT v. SHCIL Services Ltd. [ITA No. 1486 of 2016, dt. 5-2-2019] : 2019 TaxPub(DT) 1140 (Bom-HC) any person responsible for paying to a resident any income by way of commission or brokerage would at the time of crediting of such income to account of payee or at the time of payment of such income, whichever is earlier, deducted income tax at the rate of 5%. In view of the specific provision contained in section 194H requiring deduction of tax at source in relation to payment of commission or brokerage could not be ignored while examining the payment of brokerage in the instant case so as to take the case within ambit of section 194J as was admitted by AO, CIT (A) and Tribunal correctly assessed the statutory position and deleted the disallowance.
REFERRED : Pr. CIT v. SHCIL Services Ltd. [ITA No. 1486 of 2016, dt. 5-2-2019] : 2019 TaxPub(DT) 1140 (Bom-HC) and SHCIL Services Ltd. v. ACIT [I.TA No. 5743 /Mum/2014, 6019 /Mum/2014, dt. 27-7-2016].
FAVOUR : In assessee's favour.
A.Y. :
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