TARUN P. GUPTA, MUMBAI V. DCIT CIR 19(3), MUMBAI

ITA 383/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7973 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 19-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 17-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MEENA JAIN SHRI A K NAYAK
• Keywords: Salary income
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , , , BEFORE SHRI G. S. PANNU , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 383 / MUM/ 201 2 ( / ASSESSMENT YEAR: 200 5 - 06 ) SHRI TARUN P. GUPTA B - 102, JAGAT VIDYA, KALANAGAR ROAD, BANDRA EAST, MUMBAI - 400051 / VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 19(3) 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012 ./ ./ PAN/GIR NO. : AASPG 7375 C ( / APPELLANT ) .. ( / RESPOND ENT ) / DATE OF HEARING : 27.10 .2017 / DATE OF PRONOUNCEMENT : 20.12 .2017 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSE E HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 24.10.2011 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 30 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 200 5 - 06 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - ASSESSEE BY : MS. MEENA JAIN REVENUE BY: SHRI A.K.NAYAK ITA NO. 383 /M/201 2 A.Y. 2005 - 06 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 30 (HEREIN AFTER REFERRED TO AS LEARNED AUTHORITY) ERRED IN DISMISSING THE GROUNDS OF APPEAL PERTAINS TO RS.9,006/ - BEING INCURRED AS AN EXPENDITURE TO WARDS DEMAT CHARGES, BANK CHARGES ETC. BY THE ASSESSEE. THE SAID EXPENDITURE BE ALLOWED TO BE DEDUCTED OUT OF SHORT TERM CAPITAL GAIN EARNED BY THE ASSESSEE. 2. THE LEARNED AUTHORITY HAS ERRED IN DISMISSING THE GROUNDS OF APPEAL PERTAINS TO RS.2,90,353/ - BEING PORTFOLIO MANAGEMENT FEES (PMSFEES) PAID BY THE ASSESSEE TO ASK RJ INVESTMENTS P. LTD. (PORTFOLIO MANAGER) BY MERE STATING THAT IT IS NOT ALLOWABLE EITHER U/S.48(I) OR 48(II) OF THE INCOME TAX ACT, 1961. THE SAID PMS FEES OF RS.2,90,353/ - BE ING PAID FOR ACQUISITION, TRANSFER OF SHARES AND GENERATING TAXABLE REVENUE FOR THE ASSESSEE DURING THE YEAR, THEREFORE THE DEDUCTION BE ALLOWED TO BE DEDUCTED OUT OF THE SHORT TERM CAPITAL GAIN EARNED BY THE ASSESSEE ON CONSIDERATION OF THE FACTS OF THE T RANSACTION THAT THE SAID EXPENSES WERE DIRECTLY, DISTINCTLY, GENUINELY INCURRED FOR GENERATING TAXABLE REVENUE OF THE ASSESSEE AND BONAFIDE PAYMENTS WERE MADE TO UNRELATED PARTY IN THE NORMAL COURSE OF INVESTMENT ACTIVITY. 3. THEREFORE, THE ORDER OF THE L EARNED AUTHORITY IS BAD IN LAW AND ON FACTS. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DELETE THE FOREGOING GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL INCOME TO THE TUNE OF RS.12,96,605/ - . THE ASSESSEE ALSO FILED THE AUDITED STATEMENT OF ACCOUNTS AND TAX AUDIT REPORT IN FORM NO.3CB AND 3CD. THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) . SUBSEQUENTLY, THE CASE WAS SELE CTED FOR SCRUTINY AND NOTICES U/S.143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPO N THE ASSESSEE. THE ASSESSEE WAS ENGAGED IN THE PROFESSION OF MANAGEMENT CONSULTANT UNDER THE NAME AND STYLE OF M/S.TARUN GUPTA ASSOCIATES, A PROPRIETARY CONCERN. AP ART FROM ITA NO. 383 /M/201 2 A.Y. 2005 - 06 3 PROFESSIONAL INCOME, THE ASSESSEES TOTAL INCOME CONSISTS OF SALARY INCOME, INCOME UNDER THE HEAD CAPITAL GAIN AND UNDER THE HEAD INCOME FROM OTHER SOURCES AND UNDER HEAD INCOME FROM OTHER SOURCES. THE INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.16,90,320/ - AFTER CERTAIN DISALLOWANCE. AFTER FILING AN APPEAL BEFORE THE CIT(A), THE CIT(A) ALLOWED THE APPEAL PARTLY BUT DID NOT ALLOW THE EXPENDITURE TOWARDS DEMAT CHARGES, BANK CHARGES ETC. TO THE TUNE OF RS.9,006/ - AND PORTFOLIO MANAG EMENT FEES TO THE TUNE OF RS.2,90,353/ - THEREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1: - 4. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF THE EXPENDITURE INCURRED TOWARDS DEMAT CHARGES, BANK CHARGES ETC. TO THE TUNE OF RS.9,006/ - . T HE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS.9,006/ - AS EXPENDITURE INCURRED TOWARDS DEMAT CHARGES, BANK CHARGES ETC. WHICH ARE ALLOWABLE IN NATURE. IT IS ALSO ARGUED THAT NO PLAUSIBLE REASONS HAVE BEEN GIVEN BY THE ASSESSING OFFICER AS WELL AS THE CIT(A) TO DISALLOW THE SAID EXPENDITURE, THEREFORE IN THE SAID CIRCUMSTANCES THE FINDING OF THE CIT(A) IN THIS REGARD IS LIABLE TO BE SET ASIDE. ON THE OTHER HAND, LEARNED REPRE SENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS . BEFORE GOING FURTHER WE DEEM IT PROPER TO ADVERT THE FINDING OF THE CIT(A) IN THIS REGARD WHICH IS HEREBY MENTIONED BELOW: - I HAVE CONSIDERED THE ARGUMENTS OF THE LEARNED AR AND THE FACTS OF TH E CASE. IN MY VIEW, THE A.O. IS QUITE JUSTIFIED IN NOT ITA NO. 383 /M/201 2 A.Y. 2005 - 06 4 ALLOWING THE DEDUCTION OF RS.9,006/ - , PAID AS BANK CHARGES, CUSTODY AND DEMAT CHARGES AGAINST SHORT TERM CAPITAL GAIN. THEREFORE, THE ACTION OF THE A.O. IN MAKING THE AFORESAID DISALLOWANCE IS CONFIR MED AND THE GROUND OF APPEAL OF THE APPELLANT IS DISMISSED. 5. ON APPRAISAL OF THE ABOVE MENTIONED FINDING , WE FIND THAT NO PLAUSIBLE REASON HAVE BEEN GIVEN TO DECLINE THE SAID EXPENSES ON ACCOUNT OF DEMAT CHARGES, BANK CHARGES ETC. BUT IT IS TO BE SEEN W HETHER THE CLAIM OF THE ASSESSEE HAS RIGHTLY BEEN REJECTED OR NOT . THE DEMAT AND BANK CHARGES ETC., WERE INCURRED BY THE ASSESSEE IN MAINTAINING THE SHORT TERM CAPITAL GAIN. IT IS NOT A TRANSFER SHARES . IT HAS BEEN PAID FOR PRESERVATION OF ASSETS I.E., SH ARE AND SECURITIES. THE SAID EXPENSES ARE NOT ALLOWABLE IN VIEW OF THE DECISION OF ITAT KOLKATA BENCH IN CASE ITA. NO. 1761 - 1763 /KOL/2010 TITLED AS ACIT VS. RAJUPATI SINGANHIA . IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIG HTLY DISALLOWED THE EXPENSES . ACCORDINGLY , WE AFFIRM THE FINDING OF THE CIT(A) ON THIS ISSUE AND DECIDE THIS IS SUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.2: - 6. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE DISALLOWA NCE OF RS.2,90,353/ - BEING PORTFOLIO MANAGEMENT FEES PAID BY THE ASSESSEE TO ASK RJ INVESTMENTS PVT. LTD. THE AUTHORITY BELOW DID NOT ALLOW THE SAID EXPENSES IN VIEW OF THE PROVISION U/S.48(I) AND (II) OF THE ACT. THE CONTENTION OF THE ASSESSEE IS THAT TH E PORTFOLIO MANAGEMENT FEES IS ALLOWABLE IN VIEW OF THE LAW SETTLED BY HONBLE INCOME TAX APPELLATE ITA NO. 383 /M/201 2 A.Y. 2005 - 06 5 TRIBUNAL, PUNE BENCH IN CASE TITLED AS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), PUNE VS. KRA HOLDING AND TRADING (P.) LTD. [2012] 26 TAXMANN.COM 48 (PUNE) AND DECISION OF HONBLE INCOME TAX APPELLATE TRIBUNAL, PUNE BENCH IN CASE TITLED AS SERUM INSTITUTE OF INDIA LTD. (ERSTWHILE SERUM INTERNATIONAL LTD.) VS. ADDL. CIT RANGE 6 ORDER DATED 18.02.2015 IN ITA NO.1576/PN/2012 . IT IS ALSO CONTENDED THAT TH E ORDER OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL ON THIS ISSUE IS HAVING DIFFERENT VIEWS , THEREFORE, THE ORDER IN FAVOUR OF THE ASSESSEE IS LIABLE TO BE CONSIDERED IN VIEW OF THE LAW SETTLED IN DECISION OF HONBLE SUPREME COURT OF INDIA IN CASE TITLED AS COMMISSIONER OF INCOME TAX VS. VEGETABLE PRODUCTS LTD. [1973] 88 ITR 192 (SC). ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED THAT TH E SAID EXPENDITURE IS NOT ALLOWABLE IN VIEW OF THE LAW SETTLED IN DECISION OF HONBLE INCOME TAX APPE LLATE TRIBUNAL, MUMBAI BENCH IN CASE TITLED AS CAPT. AVINASH CHANDER BATRA VS. DEPUTY COMMISSIONER OF INCOME - TAX, RANGE 2(3), MUMBAI [2016] 68 TAXMANN.COM 366. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND PERUSED TH E RECORD. THE ASSESSEE HAS PAID THE PORTFOLIO MANAGEMENT FEES TO THE TUNE OF RS.2,90,353/ - TO ASK RJ INVESTMENTS P. LTD . THIS ISSUE HAS BEEN DEALT WITH BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL, PUNE BENCH IN CASE TITLED AS DEPUTY COMMISSIONER OF INCO ME TAX, CIRCLE 11(1), PUNE VS. KRA HOLDING AND TRADING (P.) LTD. [2012] 26 TAXMANN.COM 48 (PUNE) AND DECISION OF HONBLE INCOME TAX APPELLATE TRIBUNAL, PUNE BENCH IN CASE TITLED AS SERUM INSTITUTE OF INDIA LTD. (ERSTWHILE SERUM INTERNATIONAL LTD.) VS. ADDL . CIT RANGE 6 ORDER DATED 18.02.2015 IN ITA NO.1576/PN/2012 . I N THE SAID CASES THE CLAIM OF THE PORTFOLIO MANAGEMENT FEES WAS ALLOWED AS THE ITA NO. 383 /M/201 2 A.Y. 2005 - 06 6 EXPENDITURE. THE REVENUE HAS ALSO RELIED UPON THE DECISION OF HONBLE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH IN CASE TITLED AS CAPT. AVINASH CHANDER BATRA VS. DEPUTY COMMISSIONER OF INCOME - TAX, RANGE 2(3), MUMBAI [2016] 68 TAXMANN.COM 366 IN WHICH THE CONTRARY VIEW WAS TAKEN BY THE MUMBAI TRIBUNAL. IN VIEW OF THE ABOVE SAID LAW , IT IS QUITE CLEAR THAT THE TWO VI EWS HAVE BEEN TAKEN BY THE TRIBUNAL . I N VIEW OF THE SAID CIRCUMSTANCES WHERE TWO VIEWS HAVE BEEN TAKEN THEN THE LAW WHICH IS IN FAVOUR OF ASSESSEE IS LIABLE TO BE TAKEN INTO CONSIDERATION IN VIEW OF LAW SETTLED IN THE DECISION OF HONBLE SUPREME COURT O F INDIA IN CASE TITLED AS COMMISSIONER OF INCOME TAX VS. VEGETABLE PRODUCTS LTD. [1973] 88 ITR 192 (SC). T HEREFORE, IN THE SAID CIRCUMSTANCES WE ALLOWED THE CLAIM OF THE ASSESSEE IN CONNECTION WITH THE PORTFOLIO MANAGEMENT FEES TO THE TUNE OF RS.2,90,353/ - PAID BY THE ASSESSEE TO THE ASK RJ INVESTMENTS P. LTD. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY A LLOWED . ORDER PRONOUNCED IN THE O PEN COURT ON 20.12 . 2017 . SD/ - SD/ - ( G.S.PANNU ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 20.12. 2017 MP / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NO. 383 /M/201 2 A.Y. 2005 - 06 7 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY ./ASSTT. REGISTRAR) , / ITAT, MUMBAI