VIJAY MANSUKHANI, MUMBAI V. ADDL CIT RG 16(2), MUMBAI

ITA 5774/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5019 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 16-08-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 29-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SHRI R.S. PADVEKAR, JUDICIAL MEMBER. I.T.A. NO. 5774/MUM/2009 ASSESSMENT YEAR : 2005-06 VIJAY MANSUKHANI, ADDL. COMMISSIONER OF INCOME-TAX, C-11, SEA FACE PARK C.H.S. VS. RANGE-16(2), MUMBAI. BHULABHAI DESAI ROAD, MUMBAI 400026. PAN AACPM1611P (APPELLANT) (RESPONDE NT) APPELLANT BY : NONE. RESPONDENT BY : SHR I SANDEEP DAHIYA. O R D E R PER J. SUDHAKAR REDDY : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-XVI, MUMBAI DATED 25-08-2009 ON TH E FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(APPEALS) HAS ERRED IN LAW IN NOT ALLOWING THE PORTFOLIO MANA GEMENT FEES OF RS.12,04,286/- AND LEVYING THE TAX ON GROSS INCOME AND THE SAME BE ALLOWED. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(APPEALS) HAS ERRED IN LAW IN NOT ALLOWING PORTFOLIO MANAGEME NT FEES OF RS.12,04,286/- U/S 48 AGAINST THE INCOME FROM CAPIT AL GAINS AND THE SAME BE ALLOWED. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. THERE IS NO PETITION SEEKING ADJOURNMENT. UNDER THESE CIRCUMSTANCES, WE DISPOSE OF THE CASE EXPARTE ON MERITS AFTER HEARING THE LEARNED DR. 3. HEARD SHRI SANDEEP DAHIYA, LEARNED DR. 4. THE ASSESSEE IS AN INDIVIDUAL, HAVING INCOME FR OM SALARY, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. HE HAS INVESTE D FUNDS FOR PORTFOLIO MANAGEMENT SCHEME WITH ASK RAYMOND JAMES SECURITIES (I) PVT. LTD. UNDER THE SAID SCHEME THE ASSESSEES INVESTMENTS ARE MANA GED BY THE SAID COMPANY AND BASED ON THE FUNDS VALUE AND EARNINGS, AT THE END OF EACH QUARTER, THE ASSESSEE IS CHARGED PORTFOLIO MANAGEMENT FEES. THE ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE FEE PAID FOR THE PORTF OLIO MANAGEMENT IS EXPENDITURE INCURRED IN CONNECTION WITH TRANSFER, FOR THE PURPO SE OF COMPUTING INCOME FROM CAPITAL GAINS. THE CLAIM OF THE ASSESSEE IS THAT TH E EXPENDITURE IS INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF THE PROPERTY AND ALTERNATIVELY, THAT THIS PORTFOLIO MANAGEMENT FEE EXPENSES ARE ALLOWABL E U/S 48(1) AS COST INCURRED BY THE ASSESSEE FOR IMPROVEMENT OF THE ASSET. 5. ON A CAREFUL CONSIDERATION OF THESE SUBMISSIONS , WE ARE OF THE CONSIDERED OPINION THAT THE FEE PAID BY THE ASSESSE E UNDER THE PORTFOLIO MANAGEMENT SCHEME, CANNOT BE CONSIDERED AS EXPENDIT URE INCURRED IN CONNECTION WITH TRANSFER. UNDER PORTFOLIO MANAGEMEN T SCHEME, THE FEE CHARGED RANGES BETWEEN 2% AND 2.5% OF THE PORTFOLIO VALUE O R ON CERTAIN OTHER BASIS. THIS FEE IS FOR THE PURPOSE OF MANAGING THE FUND AN D IS IN THE NATURE OF ADMINISTRATIVE EXPENSES, WHICH ARE NOT AN ALLOWABLE DEDUCTION WHILE COMPUTING 3 CAPITAL GAINS. THUS WE UPHOLD THE ORDER OF THE FIRS T APPELLATE AUTHORITY AND DISMISS THIS APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 27 TH DAY OF AUGUST, 2010. SD/- SD/- (R.S.PADVEKAR) (J. SUDHAKAR RED DY) JUDICIAL MEMBER ACCOUNTA NT MEMBER MUMBAI, DT: 27 TH AUGUST, 2010. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, F-BENCH (TRUE COPY) BY ORDER ASSTT. R EGISTRAR, ITAT, MUMBAI BEN CHES, MU MBAI.