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2016 (1) TMI 1121 - ITAT MUMBAI

2016 (1) TMI 1121 - ITAT MUMBAI - TMI - Disallowance u/s 14A - Held that:- We find that the AO made the disallowance u/s 14A r.w.r. 8D(2)(iii) @1/2% of the average investments taking into account all the investments at the beginning and at close of the year which was also upheld by the CIT(A). In the case of ACB India Ltd Vs ACIT (2015 (4) TMI 224 - DELHI HIGH COURT ) the hon’ble Delhi High Court has held that the disallowance u/s rule 8D(2)(iii) can not be made on the basis of entire investment .....

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tly in favour of assessee. - Allowance being PMS fee paid to Enam Securities Direct Pvt Ltd for sale and purchase of shares as part of short term capital loss and allow carry forward of the same - whether the expenses incurred in connection with PMS fee to portfolio manager is an expense which is incurred in connection with the share transfer or relates to dividend income which is exempt? - Held that:- The provisions of section 48(i) of the Act provides that the expenditure incurred wholly a .....

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. The case of assessee also find support from the decision referred to above namely KRA holdings & Tradings (P) Ltd Vs DCIT (2011 (5) TMI 498 - ITAT PUNE ) in which the same issue came up for adjudication of the tribunal and the tribunal also held that the PMS fee is deductible while computing the capital gain. We, therefore, respectfully following the above decision and in view of the provisions of the Act, allow the appeal of the assessee. - ITA NO 2642/Mum/2013 - Dated:- 15-1-2016 - SHRI, SHA .....

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w.r. 8-0 - ₹ 6,20,6711- (Net disallowance ₹ 3, 19 ,081/-) 1. Since the Dividend Tax is paid by the Company, the said Dividend Income has suffered the tax and unlike other Exemptions, Dividend Income is not exempt but its there to avoid double taxation and hence sec.14A is not applicable and no disallowance is called for, therefore, ₹ 3, 19,081/- (proposed ₹ 6,20,6711- ) be deleted in full. 2. Without prejudice to above, your appellant submits as unde .....

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the fact that no interest has been paid and there are no loans and hence there can be no disallowance u/s.14-A at all. d) The learned CIT(A) erred in following certain decisions which are not relevant and confirming the disallowance inspite of the fact that there is no loan at the beginning and at the end of the year and no interest paid or payable. e) Without prejudice to above, %% of the average investments should be worked out on only those investments which have earned dividend. T .....

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ort Term loss to be carried forward. a) The learned CIT(A) though appreciated that the PMS fees is in respect of share transactions, he erred in not accepting the consequent fact of the allocation of the PMS fees between Long Term Capital Gain (Loss) and Short Term Capital Gain (Loss). He erred in confirming the Assessment Order treating the entire said expenses of ₹ 2,92,156/- against the Dividend Income and not allowing the allocation thereof to the Long Term Capital Gain (Los .....

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Term Capital Loss should be inclusive of the relevant PMS fees of ₹ 1,54,806/- and the total amount of ₹ 32,35,358/- be allowed to be carried forward. 2. The issued raised in the first ground of appeal is against the confirmation of additions of ₹ 3,19,081/- by the CIT(A) on account of disallowance u/s 14A r.w.r. 80D of the Act. 3. The brief facts of the case are that the assessee company was engaged in the business of providing services like hiring of l .....

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ued show cause notice to the assessee as to why the provisions of section 14A r.w.r. 8D of the Act should not be applied in view of the assessee not disallowing any expenses in relation to the exempt income. The AO thereafter framed the assessment at ₹ 39,50,670/- vide order dated 7.12.2011 by making a disallowance of ₹ 6,20,671/- consisting of ₹ 301590 as direct expenses (bank charges ₹ 9,434/- and portfolio management fee ₹ 2,92,156/- and ₹ 3,19,081/- @ &fra .....

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9,081/- made by the AO and confirmed by CIT(A) was totally wrong and excessive. The ld counsel for the assessee submitted that the assessee suo motto disallowed ₹ 9,434/- on account of bank charges which were only incurred in relation to the exempt income while calculating the total income. This being the expense only qua exempt income and therefore no disallowance was warranted u/s 14A r.w.r 8D of the Act. The ld. Counsel for the assessee made alternative submissions that if at all the di .....

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. 8. We have heard the rival submissions and perused the materials on records. We find that the AO made the disallowance u/s 14A r.w.r. 8D(2)(iii) @1/2% of the average investments taking into account all the investments at the beginning and at close of the year which was also upheld by the CIT(A). In the case of ACB India Ltd Vs ACIT (supra)the hon ble Delhi High Court has held that the disallowance u/s rule 8D(2)(iii) can not be made on the basis of entire investments but .....

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ssue raised in the second ground is against not allowing ₹ 1,54,806/- being PMS fee paid to Enam Securities Direct Pvt Ltd for sale and purchase of shares as part of short term capital loss and allow carry forward of the same. 10. The facts in briefs are that the assessee paid PMS fee of ₹ 2,92,156/- to Enam Securities Direct Pvt Ltd for port folio management and apportioned the said fee between long term and short term loss in the proportion of the said losses. ₹ 1, .....

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was a loss or profit and the said fee was directly relatable to the dividend income earned. 12. The ld AR submitted that the PMS fee was paid to Enam Securities Direct Pvt Ltd for managing the portfolio of the assessee i.e sale and purchase of shares and was a direct expenditure incurred in connection with the sale and purchase of shares and had nothing to do with the exempt income earned by the assessee by way of divided. The ld. Counsel further referred to the provisions of section .....

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