08 April 2010
TDS is not applicable to Listing fees to NSE or BSe.
TDS provisions are specific.There are no residual provisions for TDS meaning unless specifically covered every payment is not subjected to TDS. ITAT Mumbai Bench A in the case of Kotak Securities Ltd Vs Addl. CIT opined inter alia, that there can not be any legal obligation by ay of abundant caution. The liability to tax either exists are does not exist. In the light of above, LIsting Fees paid to stock exchange are seemingly not covered by any provisions of TDS. The agreement between a Company and a Stock Exchange cannot be construed to say that it is a contract to do any work, nor to receive any professional or technical service. Mere the fact that the fees are subjected to service tax, one should not get carried away that the fees are in the nature of fees for professional or technical services. It is pertinent to note that the Madras High Court has observed in the case of Skycell Communications Ltd 251 ITR 53 that " Technical service referred in section 9(1)(vii) contemplates rendering of a “service” to the payer of the fee. Mere collection of a “fee” for use of a standard facility provides to all those willing to pay for it does not amount to the fee having been received for technical services." Taking clue from this the Honourable Bench in the above referred case of Kotak Securities Ltd observed that stock exchanges merely provide facility for its members to purchase and sell shares, securities etc by providing a place where the members meet and trasact business. It further observed that the stock exchanges do not render any managerial service nor do they render any technical consultancy service. The transaction fee is not paid in consideration of any service provided by the stock exchange. It is a payment for use of facilities provided by the stock exchange. In the result it concluded the payment of transaction fee to the stock exchange is not attracted by TDS provisions (u/s 194J). The same anology can be extended to the listing fee as well. And basing on the above, I opine that Tax need not be deducted from the payment of listing fee to a stock exchange.
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