ACIT, New Delhi V. M/s Ascot Investments, New Delhi

ITA 657/DEL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2975 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 04-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN; S L ANURAGI
• Assessee Lawyers: SHRI VED JAIN
• Keywords: Business income; Business expenditure
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA: JUDICIAL MEMBER ITA NOS. 657 & 658/DEL/2013 ASSTT. YRS: 2008-09 & 2010-11 ACIT, CENTRAL CIRCLE-25, VS. M/S ASCORT INVESTMEN TS, NEW DELHI. 102, RATAN JYOTI, 18, RAJENDRA PLACE, NEW DELHI-8. PAN: AAMFA 6159 Q AND ITA NOS. 384 & 385/DEL/2013 ASSTT. YRS: 2008-09 & 2010-11 M/S ASCORT INVESTMENTS, VS. ACIT, CENTRAL CIRCLE-2 5, 102, RATAN JYOTI, NEW DELHI. 18, RAJENDRA PLACE, NEW DELHI-8. ( APPELLANT ) (RESPONDENT) DEPARTMENT BY : SHRI RAVI JAIN CIT(DR) & SHRI S.L. ANURAGI DR ASSESSEE BY : SHRIVED JAIN ADV. DATE OF HEARING : 16/02/2016. DATE OF ORDER : 03/03/2016. O R D E R PER S.V. MEHROTRA, A.M: THESE ARE CROSS APPEALS PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE, RELATING TO A.Y. 2008-09 AND 2010-11. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A COMMO N ORDER FOR THE SAKE OF CONVENIENCE. 2 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH OPERAT ION WAS CONDUCTED ON 10.2.2010 IN JAKSONS GROUP OF CASES. IN RESPONSE TO NOTICE U/S 153C THE ASSESSEE FILED RETURN DECLARING INCOME OF RS. 4,88, 38,540/-. THE AO NOTICED THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE C OMPANY WAS ENGAGED IN THE BUSINESS OF TRADING/ INVESTMENT IN SHARES AND M UTUAL FUNDS UNDER THE NAME AND STYLE OF M/S ASCOT INVESTMENTS AND THE ASS ESSEE HAD DECLARED INCOME FROM BUSINESS AND PROFESSION, INCOME FROM CA PITAL GAINS AND DIVIDEND INCOME AND INTEREST INCOME. THE AO, AFTER EXAMINING THE ASSESSEES SALES AND PURCHASE AND THE TRANSACTIONS BEING DONE THROUGH PMS FINALLY DETERMINED THE INCOME DECLARED UNDER THE HE AD SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN BY ASSESSEE AS INCOME FROM BUSINESS OR PROFESSION. THE AO FURTHER OBSERVED THAT DURING TH E YEAR UNDER CONSIDERATION THE ASSESSEE HAD CLAIMED PORTFOLIO MA NAGEMENT FEE AS EXPENSES FROM CAPITAL GAIN AMOUNTING TO RS. 69,29,8 08/-, WHICH WAS NOT ALLOWABLE U/S 48 OF THE INCOME-TAX ACT. HOWEVER, HE OBSERVED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON PMS BECOMES ALLOWABLE ONCE THE INCOME ON SALE OF SHARES AND UNITS OF MUTUAL FUNDS WAS HELD TO BE BUSINESS INCOME AS AGAINST THE CAPITAL GAIN CLAIMED BY THE A SSESSEE. HE, ACCORDINGLY, ALLOWED THIS SUM AGAINST THE BUSINESS INCOME. LD. C IT(A) HELD THAT SHORT TERM CAPITAL GAIN OF RS. 69,71,802/- AND LONG TERM CAPITAL GAIN OF RS. 1,84,51,846/- RETURNED BY THE ASSESSEE UNDER THE HE AD CAPITAL GAINS COULD NOT BE TAXED UNDER THE HEAD INCOME FROM BUSINESS OR PRO FESSION. HOWEVER, AS REGARDS PMS CHARGES LD. CIT(A) HELD THAT ANY EXPEN DITURE ON PMS WAS NOT ALLOWABLE WHILE COMPUTING INCOME UNDER THE HEAD CA PITAL GAINS. SINE AO HAD ALLOWED THIS EXPENDITURE AGAINST THE BUSINESS I NCOME, THEREFORE, HE DIRECTED THE AO TO ADD BACK THIS AMOUNT. 3 3. BEING AGGRIEVED, BOTH THE ASSESSEE AND THE DEPAR TMENT ARE IN APPEAL BEFORE US. 4. FIRST WE TAKE UP THE DEPARTMENTS APPEALS. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: AY: 2008-09 : ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN DIRECTING TO CHARGE SHORT TERM CAPITAL GAI N OF RS. 69,71,802/- AND LONG TERM CAPITAL GAIN OF RS. 1,84, 51,846/- UNDER THE HEAD CAPITAL GAIN INSTEAD OF UNDER THE HEAD INCOME FROM BUSINESS/ PROFESSION AS TAKEN BY AO I N THE ASSESSMENT ORDER BASED ON AY 2007-08. AY: 2010-11 : ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN DIRECTING TO CHARGE SHORT TERM CAPITAL GAI N OF RS. 6,29,50,516/- AND LONG TERM CAPITAL GAIN OF RS. 32, 91,467/- UNDER THE HEAD CAPITAL GAIN INSTEAD OF UNDER THE HEAD INCOME FROM BUSINESS/ PROFESSION AS TAKEN BY AO I N THE ASSESSMENT ORDER BASED ON AY 2007-08. 5. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE GROUND RAISED BY THE DEPARTMENT IS SQUARELY COVERED BY THE TRIBUNALS ORDER DATED 27.1.2016 IN ASSESSEES OWN CASE FOR AY 2009-10, RE NDERED IN ITA NO. 4645/DEL/2013, WHEREIN CONSIDERING THE FACTS OF THE CASE AND, THEREAFTER, RELYING UPON THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR AY 2007- 08 IN ITA NO. 4691/DEL/2011 DATED 27.4.2015, IT HAS BEEN HELD AS UNDER: 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE M ATERIAL ON RECORD. WE FIND THAT THIS ISSUE IS COVERED BY THE A FORESAID DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR AY 2007-08, IN WHICH ONE OF US IS A ME MBER TO THE SAID DECISION. THE RELEVANT PARAS OF THE AFORES AID DECISION ARE REPRODUCED BELOW :- 4 '18. WE FIND THAT IN THE PRESENT CASE, ALL THE TRANSACTIONS ARE DELIVERY BASED TRANSACTIONS ONLY. THE ASSESSEE ALSO EARNED DIVIDEND TO THE TUNE OF RS.42,77,597.73 THEREON. IT IS ALSO NOTED THAT THE APPELLANT HAD NOT CLAIMED THE AMOUNT OF SIT PAID BY IT AS BUSINESS EXPENDITURE. 19. FURTHER, THE COURTS HAVE DECIDED THAT A PERSON CAN BE A TRADER AS WELL AS AN INVESTOR FOR SAME TYP ES OF TRANSACTIONS DONE WITH DIFFERENT MOTIVES. (I) RAM NARAIN SONS (P) LTD. V CIT AS REPORTED IN 4 11 TR 534 (SC), (II) DWARKADAS KESARDEV MORARKA AS REPORTED IN 44 ITR 625 (SC), (III) CIT VS. MADAN GOPAL RADHEYLAL AS REPORTED IN 73 ITR 652 (SC) , (IV) CIT V. ASSOCIATED DEVELOPMENT CO. LTD. AS REPORTED IN 82 ITR 586 (SC). 20. THE ABOVE JUDGMENTS CLEARLY STATE THAT THE SAM E PERSON CAN BE A TRADER AS WELL AS INVESTOR IN SHARE S. 21. IN A RECENT DECISION OF LUCKNOW BENCH OF THE TRIBUN AL IN THE CASE OF SARMATH INFRASTRUCTURE (P) LTD. AS REPORTED IN 16 DTR (LUCKNOW) (TRIB) 97, A VIEW HAD BEEN TAKEN IN FAVOUR OF THE ASSESSEE AFTER FULLY 'CONSIDERING THE CBDT CIRCULAR AND THE FACTS & CIRCUMSTANCES OF THE CASE. THE FACTS OF THE PRESENT CASE ARE MORE OR LESS SAME AS IN THAT CASE, AND THEREFOR E, THE RATIO OF THAT DECISION IS SQUARELY APPLICABLE TO TH E PRESENT CASE. 22. IN VIEW OF THE ABOVE AND CONSIDERING THE INTENT ION OF THE PARTIES. THE FACT THAT THE MUTUAL FUNDS/SHAR ES HAVE BEEN SHOWN AS INVESTMENT AND NOT CLOSING STOCK THAT THE CLOSING BALANCE HAVE BEEN VALUED AT COST A ND NOT AT 'COST OR MARKET VALUE WHICHEVER IS LOWER', T HAT NO BORROWED FUNDS HAVE BEEN USED ETC. THE INCOME FROM INVESTMENT MAY BE TREATED AS INCOME FROM CAPIT AL GAINS AND NOT AS INCOME FROM BUSINESS. 5 23. LD. CIT(A) HAS OBSERVED THAT THE AO HAS WRONGLY STATED THAT THE ASSESSEE HAS TRADED IN DERIVATIVES WHICH CANNOT BE TREATED AS INVESTMENT. ON PERUSAL OF THE RECORDS, IT IS NOTICED THAT THE TRANSACTIONS IN RES PECT OF DERIVATIVES ARE NOT PART OF THE SHORT TERM CAPITAL GAIN. THESE HAVE BEEN SEPARATELY QUANTIFIED AS BUSINESS TRANSACTIONS AND ON THIS ASPECT A LETTER DATED 4TH DECEMBER, 2009, HAS ALSO BEEN FILED WITH THE ASSESS ING OFFICER CLARIFYING THIS POSITION. 24. THE ASSESSING OFFICER HAS REASONED THAT THE ASSESSEE FIRM HAS EARNED INCENTIVE INCOME AND THIS INCENTIVE INCOME HAS TO BE ASSESSED AS BUSINESS INCOME AND THE OTHER INCOME SHALL ALSO BECOME BUSINESS INCOME. WE CONCUR WITH THE LD CIT(A) THAT THIS INTERPRETATION OF THE ASSESSING OFFICER IS INC ORRECT. THE ASSESSEE HAVING MADE INVESTMENTS AND CONSEQUENT TO SUCH INVESTMENTS SOME INCENTIVE IS RECEIVED. TREATMENT OF THAT INCENTIVE INCOME WILL NOT CHANGE THE NATURE OF THE INVESTMENTS. ON THE CONTRARY, THIS RE CEIPT OF INCENTIVE ITSELF CONFIRMS THE FACT THAT THIS ASS ESSEE HAS EARNED INCENTIVE CONSEQUENT TO INVESTMENTS BEIN G MADE, WHICH IS NORMALLY GIVEN TO THE INVESTOR. 25. AS REGARDS THE PORTFOLIO MANAGEMENT, IT IS OBSERVED ON EXAMINATION OF THE FACTS AND RECORDS AN D AS EXPLAINED ABOVE, THAT THE ASSESSEE HAS MADE INVESTMENTS THROUGH PORTFOLIO MANAGEMENT IN FIVE CASES, AND OUT OF THESE FIVE CASES, THE ASSESSEE HA S SUFFERED LOSSES IN TWO CASES TO THE EXTENT OF RS.21,65,5511- AND HAS MADE GAIN IN THREE CASES OF RS.36,04,177/- WITH THE RESULT THAT THE NET GAIN ON ACCOUNT OF PORTFOLIO MANAGEMENT IS ONLY RS.14,38,626/- OUT OF THE TOTAL CAPITAL GAIN OF RS.L,76,03,5801-. THE INVESTMENT IN PORTFOLIO MANAGEMENT IS A CORRUNON FEATURE AND CANNOT BE HELD TO BE A BUSINESS. 26. ANOTHER REASON OF THE ASSESSING OFFICER IS THAT ASSESSEE HAS' PREPARED BOOKS OF ACCOUNT, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AND HAS GOT THE SAME AUDITED. THERE IS NOTHING WRONG IN THIS. THE ASSESS EE BEING A LEGAL ENTITY IS REQUIRED TO MAINTAIN ITS BO OKS OF ACCOUNT AND GET THE SAME AUDITED. THIS CANNOT BE A 6 GROUND FOR THE ASSESSING OFFICER TO HOLD THAT THE ASSESSEE IS CARRYING ON BUSINESS. THE LD CIT(A) HAS RIGHTLY OBSERVED THAT IF THE CONTENTION OF THE ASSE SSING OFFICER IS ACCEPTED THEN PROBABLY IN EACH AND EVERY CASE WILL BE COVERED UNDER THE BUSINESS INCOME AND THERE WILL BE NO I CASE FOR INVESTMENT. THE ASSESSI NG OFFICER IS WRONG IN ASSUMING THAT FOR THE PURPOSE O F INVESTMENT, THE BOOKS OF ACCOUNT ARE NOT REQUIRED T O BE MAINTAINED OR ARE NOT REQUIRED TO BE AUDITED. 27. IN VIEW OF THE ABOVE DISCUSSION, AND AFTER CARE FUL CONSIDERATION OF VARIOUS CASE LAWS AND THE BOARD'S CIRCULAR ON THE SUBJECT REFERRED ABOVE, LD. CIT(A) HAS RIGHTLY HELD THAT THE ASSESSING OFFICER WAS NOT JUS TIFIED IN CHANGING THE TREATMENT OF INCOME OF APPELLANT FR OM SHORT TERM' CAPITAL GAINS TO INCOME FROM BUSINESS. THE ASSESSING OFFICER WAS ACCORDINGLY, DIRECTED TO TREA T THE INCOME OF RS.L, 76,03,581/- DECLARED BY THE ASSESSEE AS SHORT TERM CAPITAL GAINS ONLY AND NOT A S BUSINESS INCOME. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD. CIT(A), HENCE, WE UPHOLD THE SAME AND DISMISS THE ISSUE IN DISPUTE RAISED BY THE REVENUE. ' IN THE LIGHT OF THE CO-ORDINATE BENCH DECISION AND THE FACT THAT THE LD. DR COULD NOT CONTROVERT THE FACTS OF THE EA RLIER YEAR VIS- A-VIS THE RELEVANT YEAR UNDER CONSIDERATION; AND SI NCE THE ISSUES ARE IDENTICAL AND THERE IS NO CHANGE IN THE FACTS, WE, RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE EARLIER YEAR I N ASSESSEE'S OWN CASE, AND DISMISS THE APPEAL OF THE REVENUE. 6. LD. DR HAS NOT POINTED OUT ANY DISTINGUISHING FE ATURE IN THE YEAR UNDER CONSIDERATION AND SINCE IN PRECEDING YEAR AS WELL AS IN SUBSEQUENT YEAR THE ASSESSEES STAND HAS BEEN CONFIRMED BY LD. CIT(A), THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT IN ASSESEES OWN CASE FOR AY 2007-08 AND 2009-10, WE CONFIRM THE FINDINGS OF LD. CIT(A). 7. IN THE RESULT, REVENUES APPEALS FOR BOTH THE AS SESSMENT YEARS I.E. 2008-09 AND 2010-11 STAND DISMISSED. 7 8. NOW WE TAKE UP THE ASSESSEES APPEALS, WHEREIN F OLLOWING GROUNDS ARE RAISED: AY 2008-09 : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW, IN REJEC TING THE CONTENTION OF THE ASSESSEE THAT THE PROCEEDINGS INI TIATED UNDER SECTION 153C AND ORDER PASSED BY THE LEARNED ASSESS ING OFFICER (AO) UNDER SECTION 153C/143(3) IS WITHOUT JURISDICT ION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW, IN REJEC TING THE CONTENTION OF THE ASSESSEE THAT THE PROCEEDINGS INI TIATED UNDER SECTION 153C ARE BAD IN LAW IN THE ABSENCE OF ANY I NCRIMINATING MATERIAL BELONGING TO THE ASSESSEE BEING FOUND DURI NG THE COURSE OF THE SEARCH. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW, IN REJEC TING THE CONTENTION OF THE ASSESSEE THAT THE PROCEEDINGS INI TIATED UNDER SECTION 153C AND THE ASSESSMENT FRAMED UNDER SECTIO N 153C IS BAD AND LIABLE TO BE QUASHED IN THE ABSENCE OF ANY SATISFACTION BEING RECORDED BY THE AO OF THE SEARCHED PERSON THA T THE INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE WA S FOUND DURING THE COURSE OF THE SEARCH. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW, IN REJEC TING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSMENT FRAM ED UNDER SECTION 153C IS BAD AND LIABLE TO BE QUASHED AS NO VALID NOTICE UNDER SECTION 153C AS REQUIRED UNDER THE LAW HAS BE EN ISSUED AND SERVED ON THE ASSESSEE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW, IN REJEC TING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSMENT FRAM ED UNDER SECTION 143(3) READ WITH SECTION 153C OF THE ACT W ITHOUT THE 8 ISSUE OF VALID NOTICE UNDER SECTION 143(2) IS BAD I N LAW AND LIABLE TO BE QUASHED. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED BOTH ON THE FACTS AND IN LAW IN HO LDING THAT THE PMS AMOUNTING TO RS. 69,29,808/- BEING NOT ELIG IBLE WHILE COMPUTING CAPITAL GAIN HAS TO BE ADDED TO THE, BUSI NESS INCOME OF THE ASSESSEE. 8. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. AY 2010-11: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED BOTH ON THE FACTS AND IN LAW IN HO LDING THAT THE PMS CHARGES AMOUNTING TO RS. 18,09,782/-/- BEIN G NOT ELIGIBLE WHILE COMPUTING CAPITAL GAIN HAS TO BE ADD ED TO THE BUSINESS INCOME OF THE ASSESSEE. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. 9. VIDE GROUND NOS. 1 TO 6 THE ASSESSEE HAS CHALLEN GED THE INITIATION OF PROCEEDINGS U/S 153C. THE MAIN CONTENTION OF ASSESS EE IS THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND IN COURSE OF SEARC H, THEREFORE, IN VIEW OF THE DECISION IN THE CASE OF KABUL CHAWLA, PROCEEDI NGS U/S 153C COULD NOT BE TAKEN. 10. THE SEARCH IN THE CASE WAS CONDUCTED ON 10.2.20 10 AND IN COURSE OF SEARCH UNDISCLOSED INCOME OF RS. 19.94 CRORES WAS S URRENDERED BY SHRI S.K. GUPTA WHO HEADED THE JAKSON GROUP. ONCE THE ASSESSE E HAD SURRENDERED SUCH HUGE UNDISCLOSED INCOME, THAT ITSELF IS AN IND ICATOR OF THE FACT THAT IT WAS ONLY AFTER THE ASSESSEE WAS CORNERED WITH THE I NCRIMINATING MATERIAL 9 FOUND DURING THE COURSE OF SEARCH THAT IT SURRENDE RED AMOUNT. AS THE ASSESSMENT FOR ALL THE ASSESSMENT YEARS HAVE BEEN C OMPLETED AND THE FACTS FOR EARLIER YEARS AS WELL AS IN SUBSEQUENT YEARS AR E IDENTICAL AND THE INCOME HAS BEEN DETERMINED FOR ALL THE YEARS COVERED BY SE ARCH OPERATION, THEREFORE, THIS PLEA OF ASSESSEE FOR THE INTERVENING ASSESSMEN T YEARS, IN ANY VIEW OF THE MATTER, CANNOT BE ACCEPTED. WE, THEREFORE, DISMISS GROUND NOS. 1 TO 6 RAISED BY ASSESSEE. 11. NOW COMING TO GROUND NO. 7 WE FIND THAT PARTNER S HAD PUT IN THEIR OWN CAPITAL RS. 52.5 CRORES FOR INVESTMENT PURPOSE S OUT OF THEIR SURPLUS FUNDS. INVESTMENT HAD BEEN BASICALLY MADE IN MUTUAL FUNDS AND PORTFOLIO MANAGEMENT SCHEME (PMS). TRADING IN DERIVATIVES WAS DONE BY PMS MANAGERS AND NOT BY PARTNERS. THE ASSESSEE HAD PAID MANAGEMENT FEES FOR MANAGING PMS. IN COURSE OF SEARCH THE ASSESSEE HAD SURRENDERED THIS AMOUNT AS IT HAS RETURNED ITS INCOME UNDER THE HEAD SHORT TERM AND LONG TERM CAPITAL GAINS. THEREFORE, ONCE LD. CIT(A) HAS UPHELD THIS CONTENTION OF ASSESSEE REGARDING TAXABILITY OF THE INCOME FROM SA LE AND PURCHASE OF SHARES UNDER THE HEAD SHORT TERM AND LONG TERM CAPITAL GAIN. THEREFORE, THE SURRENDER MADE BY ASSESSEE GETS REVIVED. THE DEDUCT ION COULD BE ALLOWED ONLY IF THE INCOME WAS ASSESSED UNDER THE HEAD INCO ME FROM BUSINESS OR PROFESSION AND NOT UNDER THE HEAD CAPITAL GAINS. TH ESE OBSERVATIONS WERE MADE BY AO AS WELL AS BY LD. CIT(A) IN THEIR ORDERS . LD. COUNSEL HAS RELIED ON THE DECISION IN ASSESSEES OWN CASE FOR AY 2007- 08 VIDE ITA NO. 4691/DEL/2011 DATED 27.4.2015. IN THE SAID DECISION IN PARA 28 & 29 THE TRIBUNAL HAS OBSERVED AS UNDER: 28. WITH REGARD TO ISSUE INVOLVED IN GROUND NO. 3 IS CONCERNED, WE FIND THAT LD. CIT(A) HAS OBSERVED THAT DURING TH E ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD SURRENDERE D AND OFFERED FOR TAXATION AN AMOUNT OF RS.41,88,451 / - ON ACCOUNT OF 10 PORTFOLIO MANAGEMENT FEES BEING NOT ALLOWABLE U/S 4 8 OF THE ACT WHILE CALCULATING INCOME FROM CAPITAL GAINS AS PER FOLLOWING DETAILS:- I. KOTAK PMS FEES RS.5,84,124/- 2. HDFC PMS FEES RS.8,43,965/- 3. ICICI PMS FEES RS.27,60,362/- RS.41 ,88,451/- 29. LD. CIT(A) HAS FURTHER OBSERVED THAT THE ASSESS ING OFFICER HAS NOTED THAT ,THE ABOVE EXPENDITURE INCURRED BY T HE ASSESSEE ON PMS BECOMES ALLOWABLE ONCE THE INCOME ON SALE OF SHARES, MUTUAL FUNDS, UNITS WAS HELD TO BE BUSINESS INCOME AS AGAINST CAPITAL GAIN CLAIMED BY THE ASSESSEE. THEREFORE, TH E SUM OF RS. 41,88,451/- WAS ALLOWABLE AS DEDUCTION AGAINST BUSI NESS PROFITS AS ALREADY CLAIMED BY THE ASSESSEE IN RETURN OF INC OME AND WAS, THEREFORE, NOT ADDED BACK TO THE INCOME FROM BUSINE SS EVEN THOUGH SURRENDERED BY THE ASSESSEE BEFORE THE AO. I N VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AND AS THE IN COME IN QUESTION HAS BEEN HELD TO BE SHORT TERM CAPITAL GAI NS ONLY AND NOT AS BUSINESS INCOME, THE AFORESAID AMOUNT OF RS. 41,88,451/- HAS TO BE ADDED BACK ON ACCOUNT OF PORTFOLIO MANAGE MENT FEES WHILE CALCULATING THE INCOME FROM SHORT TERM CAPITA L GAINS. WE FIND THAT THE ID CIT(A) HAS RIGHTLY DIRECTED THAT R S.41,88,451 /- NEED TO BE ADDED BACK WHILE COMPUTING THE INCOME OF THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE SAID DECISION OF THE ID CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME. THEREFORE, THE ISSUE IN DISPUTE RAISED BY THE REVENUE IS REJECTED. 12. THESE FINDINGS ARE IN CONTEXT TO GROUND NO. 3, WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS IN FACTS IN IGNO RING THE FACT THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT P ROCEEDINGS VIDE HIS LETTER DATED 4.12.2009 HAS STATED THAT THE MANAGEMENT FEES OF RS. 41,88,451/- PAID FOR MANAGING PORTFOLIO MANAGEMENT SCHEME (PMS) HAS BEEN WRONGLY CLAIMED AN D OFFERED THE PORTFOLIO MANAGEMENT FEES (PMS) FOR TA XATION MEANING THEREBY THAT THE ASSESSEE HAS HIMSELF IMPLI EDLY 11 ADMITTED THAT HIS INCOME FROM THE SALE AND PURCHASE OF SHARES/ MUTUAL FUNDS IS BUSINESS INCOME THOUGH IN THE RETUR N OF INCOME THE SAME HAS BEEN SHOWN INCOME FROM SHORT TERM CAPI TAL GAINS. 13. THIS GROUND WAS TAKEN BY THE DEPARTMENT TO PLEA D ITS CLAIM THAT THE INCOME FROM SALE AND PURCHASE OF SHARES WAS ASSESSA BLE UNDER THE HEAD BUSINESS INCOME AND NOT UNDER THE HEAD CAPITAL GA INS. MOREOVER, TRIBUNAL HAS CONFIRMED THE FINDINGS OF LD. CIT(A) IN DIRECTI NG THAT RS. 41,88,451/- NEEDS TO BE ADDED BACK WHILE COMPUTING THE INCOME O F THE ASSESSEE. THESE FINDINGS ARE OF LITTLE ASSISTANCE IN THE PRESENT CA SE TO ASSESSEE. IN THE RESULT THIS GROUND IS DISMISSED. 14. ASSESSEES APPEALS FOR BOTH THE ASSESSMENT YEAR S IN QUESTION ARE DISMISSED, ACCORDINGLY. 15. IN THE RESULT, ALL THE APPEALS, PREFERRED BY TH E ASSESSEE AS WELL AS THE REVENUE ARE DISMISSED. ORDER PRONOUNCEMENT IN OPEN COURT ON 03/03/2016. SD/- SD/- (SUDHANSHU SRIVASTAVA) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 03/03/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.