TMI Blog2019 (8) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has made investment in equity share of listed company s debentures, bond units of mutual fund etc. and all these have been made through portfolio management consultant who has provided full fledge services in that respect. The assessee had suo-motu disallowed an amount of ₹ 73,034/- u/s 14A. However, looking to the quantum of exempt income and investment made by the assessee it will be appropriate to restrict the disallowance out of administrative expenditure to the amount of ₹ 3,00,000/-. Therefore, appeal of the assessee is partly allowed. Disallowance u/s 14A for calculating book profit u/s 115JB - HELD THAT:- In view of the decision of Special Bench of ITAT Delhi CIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it is held that disallowance u/s 14A cannot be added to book profit u/s 115JB, the decision of the Ld. CIT(A) s is not justified. Accordingly, appeal of the assessee is allowed. Disallowance of expenses in computation of short term capital gain u/s 48 - HELD THAT:- We allow the claim of the assessee for deduction under Sec. 48 to the extent of expenses incurred toward portfolio manual fees. See JOY BEAUTY CARE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O u/s. 14A of the Act rw.r. 8D of the Income Tax Rules, 1962 to the extent of ₹ 10,28,141/-. 3. The learned CIT(A) has erred both in law and on the facts of the case in confirming that disallowance u/s. 14A is to be made while calculating book profit u/s. 115JB. 4. The learned CIT(A) has erred both in law and on facts of the case in confirming disallowance of expenses to the extent of ₹ 2,79,788/- in the computation of short term capital gain u/s. 48 of the Act. 5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. The learned CIT(A)has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s. 234A/B/C of the Act. 7. The learned CIT(A) has erred in law and on facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed the disallowance to the amount of ₹ 11,01,175/- after reducing the disallowance of ₹ 73,074/- already made by the assessee, the net disallowance of ₹ 10,28,141/- was confirmed. We have heard the rival contention and perused the material on record. The AO has computed the disallowance under Sec. 14A to the amount of ₹ 12,62,770/-. However, the Ld. CIT(A) has confirmed the disallowance to the extent of ₹ 10,28,141/- after excluding investment in the nature of mutual fund etc. With regard to the issue in appeal that AO has not recorded any satisfaction for making disallowance under Sec. 14A of the Act, we noticed that AO at Page 5 of the assessment order has clearly stated that assessee has not maintained any record to demonstrate that no administrative expenditure has been incurred for the purpose of earning exempt income. The AO has also cited instances ofadministrative expenditure such as the review of investment,monitoring of the activities of the company in which the assessee company has made substantial investment by the director of the assessee company and the employees of the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed appeal before Ld. CIT(A). Ld. CIT(A) has partly allowed the appeal of the assessee and restricted the disallowance to the extent of ₹ 2,79,788/-(consisting of ₹ 96,172/- toward management fees and ₹ 1,83,616/- toward portfolio management fees). During the course of appellate proceeding before us the Ld. Counsel has contended that Ld. CIT(A) has failed to appreciate that portfolio management fees are allowable as deduction under Sec. 48 of the Act and reliance was placed on the decision of Joy Beauty Care Pvt. Ltd. vs. DCIT ITA 856/Kol/2017. We have perused the above cited decision of the Co-ordinate Bench. The relevant part of the above cited decision is reproduced as under:- 12. We have heard rival submissions. At the outset, we find that the Ld. CIT(A) had accepted that the gains on sale of shares through PMS providers to be taxed under the head capital gains. Against these findings of the Ld. CIT(A), the revenue has not preferred the appeal before us as per the material available on record. The assessee placed reliance on the decision of Co-ordinate Bench of Pune Tribunal in the case of KRA Holding Trading Pvt. Ltd. vs. DCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is premature at this stage which does not require any adjudication at this stage. Therefore, the same stands dismissed. 9. In the result, appeal of the assessee is partly allowed. ITA No. 2525/Ahd/2017 (A.Y. 2014-15):- Ground No. 1:- Disallowance of ₹ 14,076 under Sec. 36(1)(va):- 10. During the assessment the AO noticed that assessee has made late payment of employees contribution towards Provident Fund and ESI on the various date as reported at Page 2 3 of the assessment order. Therefore, an aggregating amount of ₹ 14,076/- was disallowed after considering the decision of Hon ble Gujarat High Court in the case of CIT vs. GSRTC (Tax Appeal No. 637 of 2013) as per provision of Sec. 3691)(va) r.w.s. 2(24)(x) of the Act. 11. Aggrieved assessee has filed appeal before Ld. CIT(A). Ld. CIT(A) has dismissed the appeal. We have heard the rival contention and consider that Hon ble Gujarat High Court in the above cited decision has held that the deduction towards employees contribution to Provident Fund and ESI is available if such sum is credited by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short term capital gain or long term capital gain depending upon the period of holding and no income is shown from mutual fund from year to year basis. Therefore, the Ld. CIT(A) has computed the disallowance to the amount of ₹ 11,01,175/- and after reducing the disallowance of ₹ 73,074/- already made by the assessee, the net disallowance of ₹ 10,28,141/- was confirmed. We have heard the rival contention and perused the material on record. The AO has computed the disallowance under Sec. 14A to the amount of ₹ 12,62,770/-. However, the Ld. CIT(A) has confirmed the disallowance to the extent of ₹ 10,28,141/- after excluding investment in the nature of mutual fund etc. With regard to the issue in appeal that AO has not recorded any satisfaction for making disallowance under Sec. 14A of the Act, in this regard, we have noticed that AO at Page 5 of the assessment order has clearly stated that assessee has not maintained any record to demonstrate that no administrative expenditure has been incurred for the purpose of earning exempt income. It is also stated that some administrative expenditure such as the review of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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