Sh. Amit Jai Bhalla, New Delhi V. Addl.CIT, New Delhi

ITA 3006/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2761 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 15-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : A : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3006/DEL/2014 ASSESSMENT YEAR : 2007-08 AMIT JAI BHALLA, 116, BHALLA HOUSE, JORBAGH, NEW DELHI. PAN: AHLPB3132C VS. ADDL.CIT, RANGE-43, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HIREN MEHTA, CA DEPARTMENT BY : SHRI RAVI JAIN, CIT, DR & SHRI RAJIV KUMAR, SR. DR DATE OF HEARING : 05.07.2017 DATE OF PRONOUNCEMENT : 06.07.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE CIT(A) ON 13.02.2014 IN RELATION TO THE ASSE SSMENT YEAR 2007-08. ITA NO.3006/DEL/2014 2 2. THE FIRST ISSUE IS AGAINST THE SUSTENANCE OF DIS ALLOWANCE OF PMS EXPENDITURE AMOUNTING TO RS.5,60,174/- WHILE CALCUL ATING SHORT-TERM CAPITAL GAIN CHARGEABLE TO TAX. 3. BRIEFLY STATED, THE FACTS OF THIS GROUND ARE THA T THE ASSESSEE DEDUCTED EXPENSES OF RS.5.60 LAC WHILE COMPUTING SHORT-TERM CAPITAL GAIN AT RS.11,15,986/-. ON BEING CALLED UPON TO EXPLAIN THE NATURE OF SUCH DEDUCTION, THE ASSESSEE STATED THAT THESE EXPENSES WERE INCURRED TOWARDS MANAGEMENT FEES AND OTHER EXPENSES DEBITED BY PMS, RELIANCE PORTFOLIO MANAGEMENT. THE ASSESSING OFFICER REFUSED SUCH DED UCTION, WHICH ACTION CAME TO BE APPROVED IN THE FIRST APPEAL. THE ASSES SEE IS AGGRIEVED AGAINST SUCH CONFIRMATION OF DISALLOWANCE. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. IT IS NOTICED THAT SIMILAR ISSUE CAME UP F OR CONSIDERATION BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN HOMI K. BHABHA VS. ITO (2011) 48 SOT 102 (MUM) , IN WHICH IT HAS BEEN HELD THAT PROFESSIONAL FEES AND PROFIT SHARING FEES PAID FOR AVAILING PORTFOLIO MANAGEMENT SERVICES ARE NOT DEDUCTIBLE U/S 48 IN COMPUTING CAPITAL GAINS. THE RELIANCE OF THE LD. AR ITA NO.3006/DEL/2014 3 ON ANOTHER DECISION IN DCIT VS. KRA HOLDING & TRADING (P) LTD. (2012) 26 TAXMANN.COM 48 (PUNE) CANNOT BE COUNTENANCED BECAUSE SUCH DECISION WAS ALSO CONSIDERED BY THE MUMBAI BENCH OF THE TRIB UNAL IN HOMI K. BHABHA (SUPRA) . SIMILAR VIEW AGAINST THE ASSESSEE HAS BEEN TAKEN BY ANOTHER BENCH OF MUMBAI TRIBUNAL IN ACIT VS. SMT. VIBHA S. PODDAR (ITA NO.6578/MUM/2011) VIDE ITS ORDER DATED 20.03.2013 . THE MUMBAI BENCH IN SMT. VIBHA S. PODDAR DISTINGUISHED THE CASE OF K RA HOLDING & TRADING PVT. LTD., BY NOTICING THAT SUCH DECISION I S BASED ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS. SMT. SHAKUNTLA KANTILAL, 190 ITR 56, WHICH HAS SUBSEQUENTLY BEEN HELD TO BE NOT A GOOD LAW BY THE HON'BLE BOMBAY HIGH COURT IN ROSHANBAU MOHAMMED HUSSEIN (2005) 275 ITR 231 (BOM) . IN VIEW OF THE FOREGOING DISCUSSION, IT IS CLEAR THAT THE PMS EXPENSES CANNOT BE ALLOWED AS DEDUCTION IN COMP UTING INCOME UNDER THE HEAD `CAPITAL GAINS. WE HOLD THAT THE LD. CIT( A) HAS TAKEN AN UNIMPEACHABLE VIEW. THE SAME IS UPHELD AND THIS GR OUND IS DISMISSED. 5. THE ONLY OTHER GROUND WHICH SURVIVES IN THIS APP EAL IS AGAINST CONFIRMATION OF DISALLOWANCE OF RS.1,25,000/- BY TR EATING THE SAME AS PERQUISITE IN THE HANDS OF THE ASSESSEE. ITA NO.3006/DEL/2014 4 6. THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESS EE IS A DIRECTOR OF M/S BHALLA TECHTRAN INDUSTRIES LTD. THE COMPANY PAID A SUM OF RS.1,25,000/- IN CONNECTION WITH THE TRAVEL OF THE ASSESSEE TO HO NG KONG. A SUM OF RS.97,000/- WAS INCURRED BY THE FAMILY MEMBERS FOR THE SAME PURPOSE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE GO T A SALARY OF RS.2,18,994/- WHICH WAS VERY LOW. A TOTAL OF RS.2. 22 LAC (RS.1.25 LAC PLUS RS.97,000) WAS TREATED AS PERQUISITE IN THE HANDS O F THE ASSESSEE. THE LD. CIT(A) DELETED THE ADDITION OF RS.97,000/-. AS REGA RDS THE REMAINING DISALLOWANCE OF RS.1,25,000/-, THE ASSESSEE WAS ASK ED TO GIVE EVIDENCE TO CORRELATE HIS HONG KONG VISIT WITH BUSINESS PURPOSE . THE ASSESSEE COULD NOT PRODUCE ANY SATISFACTORY EXPLANATION. AS SUCH, THE SUM OF RS.1,25,000/- WAS TREATED AS PERQUISITE. THE ASSES SEE IS AGGRIEVED AGAINST THE SAME. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE FAILE D TO LINK HIS VISIT TO HONG KONG WITH ANY BUSINESS PURPOSE OF THE COMPANY. IN SUCH CIRCUMSTANCES, THE PERSONAL VISIT OF THE ASSESSEE, WHOSE EXPENSES WERE BORNE BY THE ITA NO.3006/DEL/2014 5 COMPANY, HAVE RIGHTLY BEEN TREATED AS PERQUISITE IN THE HANDS OF THE ASSESSEE. THE IMPUGNED ORDER IS UPHELD ON THIS SCO RE AS WELL. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 06.07.201 7. SD/- SD/- [KULDIP SINGH] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 06 TH JULY, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.