2016 (2) TMI 1356 - AT - Income Tax

Disallowance being fees paid under Portfolio Management Scheme(PMS) as not deductible expenditure u/s 48(1) against Short Term Capital Gain (STCG) computed by the Appellant during the year under consideration - HELD THAT - It is noticed that this is issue recurring from the earlier assessment years. It is further observed that the Tribunal while deciding the issue in assessee s own case for the assessment year 2008 09 in the order referred to above followed its earlier order in assessee s own case for the assessment year 2006 07 and held that PMS expenditure is not allowable while computing income from short term capital gain. Respectfully following the consistent view of the Tribunal in assessee s own case we decide the issue against the assessee by dismissing ground raised. Disallowance of depreciation and society charges - HELD THAT - It is observed while deciding similar issue in assessee s own case 2015 (9) TMI 1104 - ITAT MUMBAI claim of the assessee was denied by the authorities below in the absence of the particulars of the person having not been provided by the assessee. In all fairness we are of the view that the matter needs to be looked into by the AO in order to verify claims of the assessee. Following the principles of natural justice we may it fit deem to the restore this issue back to the file of the AO to verify the names of the employees to whom the premises have been allotted and in whose hands the perk has been offered. Reasonable opportunity of hearing shall be afforded to the assessee. The ground of appeal no. 4 raised by the assessee is thus allowed for statistical purposes. As there is no material difference in facts respectfully following the aforesaid view of the Tribunal we restore the matter back to the file of the Assessing Officer with similar direction. This ground is allowed for statistical purposes. Ad hoc disallowance being 5% of various expenses - HELD THAT - On a perusal of the order of the Tribunal assessment year 2008 09 2015 (9) TMI 1104 - ITAT MUMBAI it is noticed that while deciding the issue of ad hoc disallowance of 5% out of various expenses the Tribunal did not interfere in the matter and upheld the disallowance. Following the order of the Tribunal we uphold the disallowance by dismissing the ground raised by the assessee.

Summary

Issues involved:
1. Disallowance of fees paid under Portfolio Management Scheme (PMS) as not deductible expenditure against Short Term Capital Gain (STCG).
2. Disallowance of depreciation and society charges on residential premises used for business purpose.
3. Ad-hoc disallowance of expenses aggregating to a certain amount.

Issue 1: Disallowance of fees under PMS against STCG:
The assessee contested the disallowance of Rs.9,48,785 paid under PMS as non-deductible expenditure for STCG. The Assessing Officer disallowed the claim, stating it was not wholly and exclusively for the transfer of capital asset. The Tribunal upheld this decision based on previous rulings for similar cases. The issue was decided against the assessee by dismissing the appeal.

Issue 2: Disallowance of depreciation and society charges on residential premises:
The Assessing Officer disallowed depreciation of Rs.9,49,005 and society charges of Rs.1,62,567 on premises other than the office, as they were not allowed in previous years. The Tribunal referred to a similar case for the assessment year 2008-09 and decided to restore the matter back to the Assessing Officer for fresh consideration. The Tribunal allowed the ground for statistical purposes, following the principle of natural justice.

Issue 3: Ad-hoc disallowance of expenses:
An ad-hoc disallowance of 5% on various expenses totaling to Rs.20,91,282 was made by the Assessing Officer due to lack of supporting details and vouchers. The Tribunal, based on a previous ruling for the assessment year 2008-09, upheld the disallowance. The appeal was partly allowed, confirming the disallowance of expenses.

In summary, the judgment addressed three main issues: disallowance of PMS fees against STCG, disallowance of depreciation and society charges on residential premises, and ad-hoc disallowance of expenses. The Tribunal upheld the disallowances based on previous rulings and directed the restoration of one issue back to the Assessing Officer for reevaluation. The appeal was partly allowed, with the disallowances being upheld for the most part.