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2020 (2) TMI 708 - AT - Income TaxComputation short term capital gain (STCG) - allocation of Portfolio Management Services (PMS Charges) towards Dividend and interest income - revenue authorities allocating Portfolio Management Services (PMS) Charges while computing income under the head short term capital gain (STCG) which suffers tax @ 15% as against the claim of assessee that the deduction on account of PMS Charges while computing income under the head STCG should be only ₹ 6,63,040 - HELD THAT:- Difference in apportionment between the Assessee and the revenue is because of inclusion of STCG earned by the Assessee on his own without the services of the PMS provider has also been included by the revenue in the income generated through the services of PMS providers. The Chart annexed to this order as Annexure-II will show that the STCG earned by the Assessee of ₹ 10,17,38,369 comprises of STCG earned by the Assessee on her own without the services of PMS provider as well as through services provided by the PMS provider. STCG earned by the Assessee through the services of the Two PMS providers is reflected in the Chart given as Annexure-II to this order. Therefore, the apportionment of PMS charges paid by the Assessee of ₹ 41,67,502/- has to be apportioned only on the basis of income earned through the respective PMS providers to the total PMS charges. This basis of apportionment as given in the chart given as Annexure-I to this order, in our view appears to be correct. This Chart was however not filed before the revenue authorities but Chart given as Annexure-II to this order was filed before the CIT(A) and there is no difference in the chart given as Annexure- I and II in principle except the manner of presentation. In our view, the CIT(A) was not justified in holding that the Assessee has not brought any documentary evidence to substantiate the basis of allocation of PMS fee to selective PMS providers. The documents in the form of statement of the PMS providers viz., HDFC Asset Management Company Ltd. and that of Morgan Stanley AMC (Empower fund) clearly show the income earned from the two PMS providers. CIT(A) accepts that allocation of expenses should have been done on the total income through earned through PMS under the head STCG and interest income. He has however overlooked that this is the basis of allocation by the Assessee. On the facts and circumstances of the present case, we are satisfied that the basis of allocation of PMS charges as done by the Assessee is correct and deserves to be accepted. We therefore direct that the allocation of PMS charges as done by the Assessee be accepted. - Decided in favour of assessee
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