Shri Suresh Parakh, Pune V. Dy. Comm. of Income-tax, Pune

CO 101/PUN/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8059 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 1378/PN/2011 (ASSESSMENT YEAR 2008-09) DY. COMMISSIONER OF INCOME TAX, CIRCLE-2, IST FLOOR, A-WING, PMT BUILDING, SHANKARSHETH ROAD, PUNE 411 037. .. APPELLANT VS. SURESH H. PARAKH, 584/1, SALISBURY PARK, GULTEKADI, PUNE 411037 .. RESPONDENT PAN NO.AAXPP 9220A CO NO. 101/PN/2011 (ASSESSMENT YEAR 2008-09) SURESH H. PARAKH, 584/1, SALISBURY PARK, GULTEKADI, PUNE 411037 .. APPELLANT PAN NO.AAXPP 9220A VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-2, IST FLOOR, A-WING, PMT BUILDING, SHANKARSHETH ROAD, PUNE 411 037. .. RESPONDENT ITA NO. 1379/PN/2011 (ASSESSMENT YEAR 2008-09) DY. COMMISSIONER OF INCOME TAX, CIRCLE-2, IST FLOOR, A-WING, PMT BUILDING, SHANKARSHETH ROAD, PUNE 411 037. .. APPELLANT VS. PRAKASH H. PARAKH, 584/1, SALISBURY PARK, GULTEKADI, PUNE 411037 .. RESPONDENT PAN NO.AAXPP 9219R CO NO. 102/PN/2011 (ASSESSMENT YEAR 2008-09) PRAKASH H. PARAKH, 584/1, SALISBURY PARK, GULTEKADI, PUNE 411037 .. APPELLANT PAN NO.AAXPP 9219R VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-2, IST FLOOR, A-WING, PMT BUILDING, SHANKARSHETH ROAD, PUNE 411 037. .. RESPONDENT ASSESSEE BY : SRI NIKHIL PATHAK DEPARTMENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 15-11-2012 DATE OF PRONOUNCEMENT : 21-11-2012 2 ORDER PER BENCH : THE ABOVE TWO APPEALS FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE O RDERS OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2008-09. SINCE IDENTIC AL GROUNDS HAVE BEEN TAKEN IN THE APPEALS FILED BY THE REVENUE AND THE CROSS OBJE CTIONS FILED BY THE ASSESSEE, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1378/PN/2011 (BY REVENUE) (SURESH H. PARAKH) : 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE ASSESSEES APPEAL INSTEAD OF CONFIRMING THE ASSESSI NG OFFICERS ORDER. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN NOT APPRECIATING THAT THE GAINS OF RS.64,15,181/- SHOWN AS SHORT TERM CAPITAL GAIN AND RS.1,30,64,003/- SHOWN AS LONG TERM CAPITAL GAI N WAS EARNED FROM TRADING IN SHARES, AND, THEREFORE, SUCH GAINS HAD BEEN RIGH TLY ASSESSED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN ALLOWING THE ASSESSEES APPEAL MERELY BY RELYING ON THE DECISION OF THE EARLIER ASSESSMENT YEAR AND WITHOUT, IN ANY MANNER, APPRECIATING THE FACTS OF THE PRESENT CASE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN NOT APPRECIATING THAT THE ASSESSEE HAD CARRIED OUT TRAN SACTIONS IN HIGH VOLUMES, FREQUENCY AND IN AN ORGANISED MANNER WHICH WOULD CL EARLY ESTABLISH THAT THE IMPUGNED ACTIVITY WAS IN THE NATURE OF BUSINESS A ND NOT INVESTMENT AS CLAIMED BY THE ASSESSEE; AND, THEREFORE, THE PROFIT S DERIVED FROM SUCH TRANSACTIONS WERE TAXABLE UNDER THE HEAD INCOME FROM BUSINESS. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT THE ACTIVITIES OF THE ASSESSEE HAD ALL THE INGREDIENTS OF BUSINESS/TRADING TRANSACTIONS AS POINTED OUT BY THE ASSESSING OFFICER, SUCH AS THE REPETITIVE AND CALCULATED PURCHASES AND SALES OF SH ARES WITH A VIEW TO MAXIMISING PROFITS, SHORT TERM HOLDING OF MOST SUCH SHARES, UT ILISATION OF THE SALE PROCEEDS FOR PURCHASE OF FURTHER SHARES DEALING IN DELIVERY-LESS TRANSACTION, TRANSFER OF IDLE FUNDS TO LIQUID FUNDS SO THAT THE FUNDS COULD YIELD RETURNS ETC. AND, IN THE CIRCUMSTANCES, THE TRANSACTIONS IN QUESTION COULD B Y NO MEANS BE TREATED AS HAVING BEEN RESORTED TO FOR EARNING DIVIDENDS. . 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN HOLDING THAT THE TRANSACTIONS IN QUESTION WERE NOT IN THE NATURE OF THE ASSESSEES BUSINESS, MERELY FOR THE REASON THAT THE SAME HAD BEEN CARRIE D OUT THROUGH A DISCRETIONARY 3 PORTFOLIO MANAGEMENT SERVICE AND ALSO IN HOLDING TH AT, AT THE MOST, THE TRANSACTIONS COULD BE CONSIDERED AS THE BUSINESS OF THE PMS PROVIDER. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN COMING TO THE ABOVE ERRONEOUS CONCLUSION WITHOUT APPRECIATING THAT THE ASSESSEES AGREEMENT WITH THE PMS PROVIDED FOR PROFIT-SHARING BETWEEN THE ASSESSEE AND THE PMS PROVIDER IN ADDITION TO PAYMENT OF FEES. SUCH ARRANGEMENTS OF AGENCY AND PROFIT-SHARING ARE ALIEN TO A TRANSACTION IN THE NA TURE OF INVESTMENT. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT EVEN IF IT IS ASSUMED, WITHOUT CONC EDING, THAT THE ASSESSEE DID NOT PARTICIPATE IN THE DAY TO DAY AFFAIRS OF TRANSACTIO NS WHICH WERE ALLEGEDLY TAKEN CARE OF BY THE PMS PROVIDER, THE SAME BY ITSELF WOU LD NOT MAKE THE ASSESSEE AN INVESTOR VIS-A-VIS THE IMPUGNED TRANSACTIONS IN AS MUCH AS THE ASSESSEE HAD CONSCIOUSLY DEPLOYED FUNDS WITH THE PMS PROVIDER FO R MAXIMISING PROFIT AND HAD ALSO CONSCIOUSLY DELEGATED THE FUNCTION OF CHURNING THE SAID FUNDS TO THE PMS PROVIDER MUCH AS A CONTRACTOR DELEGATES A PART OF H IS WORK TO A SUB-CONTRACTOR. IN THE LATTER INSTANCE, IT CANNOT BE SAID THAT THE DELEGATOR CEASED TO BE IN BUSINESS VIS-A-VIS THE PORTION OF WORK SO DELEGATED. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) GROSSLY ERRED IN FAILING TO APPRECIATE THAT IF THE MOTIVE OF THE ASSESSEE WERE TO INVEST AND NOT TO TRADE IN SHARES, HE WOULD NOT HAVE GIVEN A BLANKET MANDATE T O THE PMS PROVIDER FOR BUYING AND SELLING SHARES AND, INSTEAD, WOULD HAVE RESERVED THE RIGHT OF DECISION IN RESPECT OF SUCH SHARES TO HIMSELF. THE ABSENCE OF SUCH RESERVATION OF RIGHT CLEARLY PROVES THE INTENT OF THE ASSESSEE TO TRANSA CT IN SHARES WITH A VIEW TO BOOKING PROFITS. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S.14A OF THE INCOME TAX ACT, 1961 R.W.R.8D OF THE INCOME TAX RULES, 1961 INSTEAD OF H OLDING THAT NO EXPENSES REMAINED TO BE DISALLOWED BY APPLYING AFORESAID SEC TIO/RULE. 12. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGE D AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT(APPEALS) MAY BE VACATED AN D THAT OF THE ASSESSING OFFICER BE RESTORED. 13. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OR ALL THE GROUNDS OF APPEAL. 3. SO FAR AS THE GROUNDS OF APPEAL NO. 1 TO 10 ARE CONCERNED THEY RELATE TO TREATMENT OF THE INCOME SHOWN FROM SHORT TERM CAPIT AL GAIN AT RS.64,15,181/- AND LONG TERM CAPITAL GAIN AT RS.1,30,64,003/- AS BUSIN ESS INCOME BY THE AO WHICH HAS BEEN REVERSED BY THE CIT(A). 4. AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08. WE FIND THE TRIBUNAL VIDE ITA NO. 629/PN/2011 ORDER DATED 27-09-2012 HAS DISCUSSE D THE ISSUE AND DISMISSED THE GROUNDS RAISED BY THE REVENUE BY HOLDING AS UND ER : 4 6. AFTER HEARING BOTH THE SIDES, WE FIND THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF THE BROTHER OF THE ASSESSEE SRI PRAKASH H. PARAKH. WE FIND THE TRIBUNAL VIDE ITA NO. 632/PN/2011 ORDER DATED 30-08-2012 HAS DECIDED THE ISSUE AND TH E GROUNDS RAISED BY THE REVENUE UNDER IDENTICAL CIRCUMSTANCES HAVE BEEN DISMISSED. THE RELEVANT ORDER OF THE TRIBUNAL AT PARA 6 AND 6.1 READS AS UNDER : 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER B OOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. WE FIND UNDER IDENTICAL FACTS & CIRCUMSTANCES THE PUNE BENC H OF THE TRIBUNAL IN THE CASE OF DCIT VS. KRA HOLDING AND TRADING PVT. LTD. (WHER EIN BOTH OF US ARE PARTIES) VIDE ITA NO. 356/PN/2011 ORDER DATED 25-07-2012 FOR ASSESSMENT YEAR 2007-08 HAS UPHELD THE ORDER OF THE CIT(A) WHEREIN GAIN ON SALE OF SHARES AND MUTUAL FUNDS WAS HELD AS SHORT TERM AND LONG TERM CAPITAL GAIN BY THE CIT(A). THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PARA 5 OF T HE ORDER READS AS UNDER : 5. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH THE PARTIES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED O N BEHALF OF THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE DECISION OF THE TRIBUNAL IN A SSESSEES OWN CASE. BOTH THE PARTIES FAIRLY CONCEDED THAT THE ISSUE STANDS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-0 5. WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 VIDE ITA NO. 500/PN/08 OR DER DATED 31-08-2009 ALLOWED THE CLAIM OF SHORT TERM CAPITAL GAIN AND LONG TERM CAPI TAL GAIN ON SALE OF SHARES AND REDEMPTION OF MUTUAL FUNDS. WE FIND FOLLOWING THE S AID DECISION THE TRIBUNAL VIDE ITA NO. 1320/2008 AND ITA NO. 434/2009 ALLOWED THE CLAI M OF SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN FOR A.Y. 2005-06 AND 2006-07 . ALTHOUGH THE DEPARTMENT HAS CHALLENGED THE ORDER OF THE TRIBUNAL BEFORE THE HON BLE HIGH COURT ON THIS ISSUE AND THE HONBLE HIGH COURT HAS ONLY ADMITTED THE APPEAL, HO WEVER NO DECISION REVERSING THE DECISION OF THE TRIBUNAL WAS FILED BEFORE US. THER EFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE AN D IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIB UNAL WE UPHOLD THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 6.1 DESPITE HIGH VOLUME, FREQUENCY AND ORGANISED AC TIVITY IN PURCHASE & SALE OF SHARES, PROFIT FROM SUCH PURCHASE & SALE OF SHAR ES IS BEING TREATED AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN AS THE CASE MAY BE BY THE COORDINATE BENCHES OF THE TRIBUNAL. RESPECTFULLY FOLLOWING TH E DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF KRA HOLDING AN D TRADING PVT. LTD. (SUPRA) AS WELL AS THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF GOPAL PUROHIT (SUPRA) WE UPHOLD THE ORDER OF THE CIT(A) I N TREATING SUCH PROFIT FROM PURCHASE AND SALE OF SHARES AS CAPITAL GAIN. THE G ROUNDS RAISED BY THE REVENUE ON THIS ISSUE ARE ACCORDINGLY DISMISSED. SINCE FACTS IN THE INSTANT CASE ARE IDENTICAL TO TH E FACTS IN THE CASE OF THE BROTHER OF THE ASSESSEE SRI PRAKASH H. PARAKH (ITA NO. 632/PN/2011 ) AND SINCE NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE AGAINST THE DECISION OF THE T RIBUNAL IN THE CASE OF SRI PRAKASH H. PARAKH, THEREFORE, RESPECTFULLY FOLLOWING THE DECI SION OF THE TRIBUNAL (WHEREIN BOTH OF US ARE PARTIES) WE UPHOLD THE ORDER OF THE CIT(A) IN T REATING SUCH PROFIT FROM PURCHASE AND SALE OF SHARES AS CAPITAL GAINS. THE GROUNDS RAISE D BY THE REVENUE ON THIS ISSUE ARE ACCORDINGLY DISMISSED. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW THAN THE VIEW TAKEN BY THE LEA RNED CIT(A). WE ACCORDINGLY 5 UPHOLD THE ORDER OF THE CIT(A) AND THE GROUNDS RAIS ED BY THE REVENUE ARE DISMISSED. 5. IN GROUNDS OF APPEAL NO. 11 & 12 THE REVENUE HAS CHALLENGED THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO U/S.14A OF THE INCOME TAX ACT. 6. AFTER HEARING BOTH THE SIDES, WE FIND THE AO DU RING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT ASSESSEE HAS EARN ED DIVIDEND FROM THE ACTIVITIES OF SHARE TRANSACTIONS IN PERSONAL ACCOUNT, FROM PMS AND FROM MUTUAL FUND INVESTMENTS. HE NOTED THAT THE TOTAL DIVIDEND RECE IVED THROUGH PMS DURING THE YEAR AND CLAIMED EXEMPT IS RS.3,32,979/-. APPLYING THE PROVISIONS OF SECTION 14A THE AO DISALLOWED AN AMOUNT OF RS.66,914/- OUT OF T HE FEES PAID TO PMS PROVIDERS AS INDIRECT EXPENDITURE INCURRED TOWARDS EARNING OF DIVIDEND INCOME. SIMILARLY HE DISALLOWED AN AMOUNT OF RS.15,54,246/- BEING 0.5% O F THE AVERAGE FUND INVESTED BY APPLYING THE PROVISIONS OF SECTION 14A R.W.R.8D. THUS, HE DISALLOWED A TOTAL AMOUNT OF RS.16,21,160/- U/S.14A. 7. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THERE WA S NO BORROWED FUNDS ON WHICH ANY INTEREST COULD HAVE BEEN PAID AND OTHERWI SE ALSO THERE WAS NO CLAIM OF ANY EXPENSES AND THEREFORE NO DISALLOWANCE U/S.14A COULD BE MADE. IT WAS SUBMITTED THAT ASSESSEE HAS RECEIVED TOTAL DIVIDEND OF RS.4,51,338/- WHICH HAS BEEN CLAIMED EXEMPT FROM TAX WHEREAS THE AO HAS DIS ALLOWED A SUM OF RS.15,54,246/- BEING 0.5% OF THE AVERAGE FUNDS INVE STED. FURTHER, THE AO HAS ALSO DISALLOWED AN AMOUNT OF RS.66,914/- BEING EXPENSES DIRECTLY ATTRIBUTABLE TO THE EARNING OF DIVIDEND OUT OF FEES PAID TO THE PMS PR OVIDER. 8. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LEARNED CIT(A) HELD THAT PMS FEES IS NOT DEDUCTIBLE U/S.48 FOR THE COMP UTATION OF CAPITAL GAINS IN VIEW 6 OF THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DEVENDRA M. KOTHARI VS. DCIT. SINCE THERE DOES NOT REMAIN ANY OTHER EXPENDITURE OVER THIS EXPENDITURE WHICH IS OTHERWISE LIABLE TO BE DISALLO WED UNDER RULE 8D HE DELETED THE DISALLOWANCE OF RS.15,54,246/- MADE BY THE AO B EING 0.5% OF THE AVERAGE FUNDS INVESTED. AGGRIEVED WITH SUCH ORDER OF THE C IT(A) DELETING THE DISALLOWANCE OF INTEREST U/S.14A R.W.R.8D THE REVEN UE IS IN APPEAL BEFORE US. 9. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PAGE NO.79 OF THE PAPER BOOK WHICH IS THE STATEMENT OF COMPUTATION OF TAXAB LE INCOME AND SUBMITTED THAT OUT OF THE TOTAL PMS FEES OF RS.39,63,080/- THE ASS ESSEE CLAIMED ONLY RS.10,41,624/- AND THE BALANCE AMOUNT OF FEES PAID TOWARDS PMS HAS NOT BEEN CLAIMED AS DEDUCTION. HE SUBMITTED THAT THE AO APP LYING THE PROVISIONS OF RULE 8D HAD CALCULATED AN AMOUNT OF RS.16,21,160/- AS DI SALLOWABLE ITEM U/S.14A. SINCE THE AO HAS DISALLOWED AN AMOUNT OF RS.16,21,1 60/- U/S.14A WHICH IS MUCH LESS THAN THE AMOUNT NOT CLAIMED BY THE ASSESSEE AS DEDUCTION AND SINCE THERE IS NO INTEREST EXPENDITURE ON BORROWED CAPITAL TOWARDS IN VESTMENT, THEREFORE, NO FURTHER DISALLOWANCE U/S.14A SHOULD BE MADE. 10. THE LEARNED DR ON THE OTHER HAND RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT DISALLOWANCE HAS TO BE MADE AS PER P ROVISIONS OF SECTION 14A R.W.R.8D. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IN THE INSTANT CASE THE AO DISALLOWED AN AMOUNT OF RS.15,54,246/- BEING 0.5% OF THE AVERAGE FUNDS INVESTED. HE FURTHER DIS ALLOWED AN AMOUNT OF RS.66,914/- OUT OF THE FEES PAID TO PMS PROVIDERS. THUS, IN EFFECT HE DISALLOWED AN AMOUNT OF RS.16,21,160/- U/S.14A. IT IS THE SUBMIS SION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT OUT OF FEES PAID TO THE PMS AT RS .39,63,080/- ONLY AN AMOUNT OF 7 RS.10,41,624/- HAS BEEN CLAIMED AS DEDUCTION AND TH E BALANCE AMOUNT HAS NOT BEEN CLAIMED BY THE ASSESSEE. THUS, THE BALANCE AMO UNT HAVING NOT BEEN CLAIMED BEING MORE THAN THE DISALLOWANCE MADE BY THE AO, TH EREFORE, NO FURTHER DISALLOWANCE U/S.14A IS CALLED FOR. IN OUR OPINION , THE DISALLOWANCE U/S.14A HAS TO BE MADE ACCORDING TO THE RULE 8D FROM A.Y. 2008-09 ONWARDS IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF GODREJ AND BOYCE MFG. CO. LTD. REPORTED IN 328 ITR 81. SINCE THE LEARNED CIT(A) HAS GIVEN A FINDING THAT THERE ARE NO BORROWED FUNDS ON WHICH ANY INTEREST C OULD HAVE BEEN PAID AND SINCE NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE AGAINST THE ABOVE FINDING AND SINCE THE ASSESSEE HAS NOT CLAIMED DEDUCTION OF ENTIRE AMOUNT OF RS.39,63,080/- BEING FEES PAID TO PMS PROVIDERS, THEREFORE, NO DISALLOWANCE U /S.14A R.W.R.8D CAN BE MADE ON ACCOUNT OF INVESTMENT IN SHARES. WE, THEREFORE, FIND MERIT IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT NO DISALL OWANCE IS CALLED FOR U/S.14A. ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE ARE D ISMISSED. CO NO. 101/PN/2011 (BY ASSESSEE) (SURESH H. PARAKH ) : 12. THE GROUNDS RAISED BY THE ASSESSEE IN THE CO AR E AS UNDER : 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE EX PENDITURE INCURRED IN THE FORM OF FEES AND OTHER PAYMENTS TO PORTFOLIO MANAGEMENT SER VICES (PMS) PROVIDERS WOULD NOT BE ALLOWED AS AN EXPENDITURE WHILE COMPUTING THE CAPIT AL GAINS. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PAYMENT MADE TO PMS PROVIDERS WAS EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER AND THEREFORE, THE CLAIM WAS ALLOWABLE. 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEAR NED CIT(A) ERRED IN NOT APPRECIATING THAT THE AMOUNT PAID TO PMS PROVIDERS OUGHT TO HAVE BEEN REDUCED FROM THE SALE CONSIDERATION WHILE COMPUTING CAPITAL GAINS. 13. AFTER HEARING BOTH THE SIDES, WE FIND THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08 VIDE CO NO. 12/PN2011 ORDER DATED 27-0 9-2012 HAS HELD THAT FEES PAID TO THE PMS PROVIDER IS AN ALLOWABLE EXPENDITUR E FROM THE CAPITAL GAINS DECLARED BY THE ASSESSEE. RESPECTFULLY FOLLOWING T HE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE 8 AGAINST THE ORDER OF THE TRIBUNAL THE GROUNDS RAISE D BY THE ASSESSEE IN THE CO HAVE TO BE ALLOWED. ACCORDINGLY THE GROUNDS IN THE CO F ILED BY THE ASSESSEE ARE ALLOWED. ITA NO. 1379/PN/2011 (BY REVENUE) AND CO. NO.102/PN /2011 (BY ASSESSEE) (PRAKASH H. PARAKH) : 14. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS RAISED BY THE REVENUE IN THE APPEAL AND THE GROUNDS RAISED BY THE ASSESSEE IN TH E CO ARE IDENTICAL TO THE GROUNDS OF APPEAL BY THE REVENUE IN ITA. NO.1378/PN /2011 AND GROUNDS OF APPEAL BY ASSESSEE IN CO NO.101/PN/2011. WE HAVE ALREADY DECIDED THE ISSUES AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN DISMISSED A ND THE GROUNDS RAISED BY THE ASSESSEE IN THE CO HAVE BEEN ALLOWED. FOLLOWING TH E SAME RATIO, THE GROUNDS RAISED BY THE REVENUE IN THE APPEAL ARE DISMISSED A ND THE GROUNDS RAISED BY THE ASSESSEE IN THE CO ARE ALLOWED. 15. IN THE RESULT, THE BOTH THE APPEALS FILED BY TH E REVENUE ARE DISMISSED AND THE COS FILED BY THE RESPECTIVE ASSESSEES ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF NOVEMBER 2012 SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: THE 21 ST NOVEMBER 2012 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, PUNE 4. THE D.R, A PUNE BENCH 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE