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TMI Blog2014 (7) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,77,03,093/- and claimed as deduction from the capital gains being expenses incurred wholly and exclusively in connection with the purchase and sale of securities managed under the portfolio by the PMS Manager. It is prayed that the disallowance of PMS fees be deleted. 2. On the facts and circumstances of the case and in law the learned CIT(A) further erred in disallowing the said PMS fees claimed deductible from the capital gains without considering the decision in favour of the appellant given by the Honourable Pune Tribunal in appellant's own case on the backdrop of the same set of facts for the preceding A.Y. 2005-06 and 2006-07 and which squarely covered the issue involved. 3. The learned CITA erred in not confronting the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost 95% of its investments made during the year were through the said agency. It was contended that the objective of the agreement entered into was to provide the company with a structure that can achieve preservation and long term growth of its capital by bringing into play professional expertise in the field. Elaborating the various aspects of the services rendered by the agency in managing the investment portfolio of the assessee company, it was stated on behalf of assessee that the fees paid to them were wholly and exclusively for earning the income offered to tax under the head capital gains and it was asserted that such fees paid had direct, proximate and one to one nexus with the earning of capital gains and that the said fees paid i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red while transferring the assets such as demat account charges paid directly to a Depository participant could be claimed as expenditure wholly and exclusively incurred in connection with the transfer of shares and securities but payments made to a Portfolio manager could not be said to be on a similar footing. The Assessing Officer stressed upon that a portfolio management Service acts as a service intermediary and the fees paid to them could not be termed as an expenditure incurred wholly and exclusively in connection with the transfer of capital assets because there was no direct correlation between the services of a Portfolio Manager and the actual transfer of capital assets represented by the listed securities of corporate bodies. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection with the purchase and sale of securities managed under the portfolio by the PMS Manager. Accordingly, the disallowance of PMS fee be deleted. The learned Authorized Representative has argued that the CIT(A) further erred in disallowing the said PMS fees claimed deductible from the capital gains without considering the decision in favour of the assessee decided by ITAT Pune Bench in the backdrop of the same set of facts as discussed below which squarely covered the issue involved. Accordingly, the claim of the assessee be allowed. On the other hand, the learned Departmental Representative has supported the order of authorities below and submitted that the decision of authorities are fortified by the ratio of Jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement Company Pvt. Ltd. while computing the income under the head 'Capital Gains'. After noticing the aforesaid the Tribunal concluded as under in para 11 of its order dated 25.07.2012 :- "11. The decision of the Mumbai Bench of the Tribunal in the case of Homi K. Bhabha vs. ITO was brought to our notice by the learned DR wherein it was held that Portfolio Management Scheme fees is not deductible against capital gains. The decision of the Pune Bench of the Tribunal in the case of KRA Holding & Trading was not followed by the Mumbai Bench in the above cited decision. The Mumbai Bench following other decisions of the coordinate Benches of the Tribunal declined to follow the decision in the case of KRA Holding & Trading (supra). It is the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while adjudicating the issue. We find the revenue has gone on appeal against the order of the Tribunal on the issue of treatment of income from Portfolio Management Scheme as "Capital gain" or "Business income". The relevant order of the Hon'ble High court in ITA No.3482 of 2010 dated 19-07-2011 reads as under: "Heard. Admit on the following question of law:- "Whether on the facts and circumstances of the case, the ITAT was justified in holding that the income earned by the assessee by the portfolio management scheme was liable to be assessed under the head "capital gains" instead of being assessed under the head "profit & gains of business or profession"? Nothing was filed before us to substantiate that the Revenue has gone on appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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