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TMI Blog2012 (7) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to advisory fees at a specific rate and reimbursement of certain expenses as specified in regulation 52(4). The assessee is not entitled to any other benefit. Under these circumstances, making any addition on account of load is not justified - Decided in favor of assessee. - ITA No.3635/M/2011 - - - Dated:- 30-5-2012 - SHRI N.V. VASUDEVAN, SHRI RAJENDRA SINGH, JJ. Appellant by : Shri V.V. Shastri Respondent by : Shri D.V. Lakhani O R D E R PER RAJENDRA SINGH, AM: This appeal by the revenue is directed against the order dated 17.2.2011 of CIT(A) for the assessment year 2002-03. The only dispute raised by the revenue in this appeal is regarding deletion of addition of Rs.1,43,74,590/- made by the AO on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of Mutual Fund. The assessee was maintaining complete account of the Load from which as per SEBI Regulations, expenses such as expenditure on brokerage to the investor and brokers were adjusted. The brokerage of Rs.4,40,92,230/- was therefore, not debited to the P L Account. The balance in the Load Account was paid to the Mutual fund. The assessee submitted a fresh reconciliation of the Load as per details given below:- Opening balance as on 1st April,2001 Rs.12,07,30,511/- Load received Rs.1,43,74,590/- Load paid back to Mutual fund Rs.7,70,07,507/- Load adjusted against brokerage/trail/advertisement Rs.5,75,69,795/- Load balance as on 31st March 2002 Rs.5,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee disputed the decision of AO and submitted before CIT(A) that the load amount had been collected by the assessee on behalf of Mutual fund. The assessee had only right to manage the schemes of the funds for which it was being paid fees at a fixed percentage. Under the scheme the assessee could adjust the expenditure incurred on account of brokeage etc. against Load and balance was required to be paid to the Mutual fund. The Load collected was therefore, not income of the assessee . CIT(A) was satisfied by the explanation given that the Load belonged to the Mutual fund and as per SEBI regulations /guidelines it had to be spent on brokerage, training and advertisement and balance amount was required to be transferred to the Mutual fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to charge certain expenses such as marketing and selling expenses, brokerage and other expenses specified therein. The regulation 52 (5) clearly provided that expenses other than expenses mentioned above will be borne by asset management co or the trustee or sponsors. Thus the assessee could not claim any other benefit such as load charges. 4.1 The ld. AR also referred to agreement between AMC and the mutual fund a copy of which was placed on record to point out as per clause 6.2 the asset management company was entitled to only initial expenses of launching the scheme, advisory fees and certain specified expenses which are same as listed in SEBI guidelines. The assessee was thus not entitled to any portion of the load. It was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been collected on behalf of the mutual fund and does not belong to the assessee. The assessee is an asset management company and had only received load which had been accounted separately. Assessee adjusted various expenses of the scheme to which it was entitled and balance amount had been transferred to the mutual fund, from time to time. The assessee has also produced evidence regarding payment of balance load amount to the mutual fund details of which have been given. The assessee has also placed before us a copy of SEBI Regulations and as per regulation 52(2), the assessee as an asset management company is entitled to advisory fees at a specific rate. It is also entitled to reimbursement of certain expenses as specified in regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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