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Brokerage / Commission paid in Connection with Share Transaction is not subject to TDS

In SPT Securities Pvt. Ltd. vs DCIT,  Kolkata bench of Income Tax Appellate Tribunal (ITAT) held  that brokerage or commission paid in connection with share transaction is not liable for Tax Deduction at source under the provisions of the Income Tax Act, 1961. 

Assessee is a private company in the present case has duly filed its return of income and declared a total income of Rs. 15,75,802. During the course of assessment proceedings the Assessing Officer (AO) found that the assessee had paid sub brokerage of Rs.10,67,725 to its agents for doing share business in its name and he also disallowed the expenses of the said amount. He was of the view that the sub brokerage given to the agents was for doing business and not for sale of shares and securities. Therefore, it cannot be said that the sub-brokerage was against brokerage on securities, but it was for doing business on behalf of the company as its agents, which was fixed on the basis of the volume of the transactions, Hence he opinioned that TDS on such payments should have been deducted.

Article referred: http://www.taxscan.in/brokerage-commission-paid-connection-share-transaction-not-subject-tds-itat/16884/

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