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2010 (3) TMI 794 - AT - Income TaxCapital Gains - claim for deduction on account of fees for Portfolio Management Services (PMS) while computing Long Term Capital Gain (STCG) and Short Term Capital Gain (STCG) arising from sale of shares and securities. - As provided in section 48, expenditure incurred wholly and exclusively in connection with transfer and the cost of acquisition of the asset and cost of any improvement thereto are deductible from the full value of the consideration received or accruing to the assessee as a result of transfer of the capital assets. - Held that:- Assessee failed to explain as to how the said fees could be considered as cost of acquisition of the shares and securities or the cost of any improvement thereto. He has also failed to explain as to how the said fees could be treated as expenditure incurred wholly and exclusively in connection with sale of shares and securities. - There is no direct nexus with the purchase of shares and - Decided against the assessee. Diversion of income - theory of real income and the rule of diversion of income by an overriding title. - Held that:- the payment of fees by the assessee for PMS did not amount to diversion of income by overriding title and the contentions raised by the assessee in this regard cannot be accepted being devoid of any merit. - the theory of real income cannot be applied to allow deduction to the assessee which is otherwise not permissible under the Income-tax Act. - Decision of Apex Court in CIT v. Udayan Chinubhai [1996 (8) TMI 3 - SUPREME Court] followed.
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