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TMI Blog2015 (11) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : Shri Nitesh Joshi For the Respondent : Shri Deep Kant Prasad ORDER Per Amit Shukla, JM The aforesaid appeal has been filed by the assessee against impugned order dated 30.09.2011 passed by CIT(A)-25, Mumbai, for the quantum of assessment passed u/s 143(3) for the assessment year 2008-09, on the following grounds :- 1. On the facts circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition Capital Gains (arising out of sale of Shares, Units and Securities through Portfolio Management Services) of ₹ 34,27,306/0 as Profit and Gains of Business or Profession . Under the facts and circumstances of the case the Learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in issue is squarely covered by the earlier years precedence. 3. On the other hand, the Ld. DR has strongly relied upon the order of the CIT(A), wherein after details analysis, the Ld. CIT(A) held that the transaction of shares through PMS is to be treated as business income. 4. We have heard the rival contention and also perused the relevant finding given in the impugned orders and material on record. During the year, the assessee had invested a portion of his capital in Portfolio Management Scheme of Kotak Securities, who were appointed as Portfolio Managers PMS by the assessee. During the year, the assessee has earned following gain from the investment made through PMS:- (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct and has been rightly taxed as business income . 6. We find that, exactly similar issue had come-up for consideration in the case of Manan Nalin Shah and also in the case of the assessee for the assessment years 2005-06 to 2007-08, wherein the Tribunal after detailed discussion came to the conclusion that the investments made through PMS and gain arising out of such transactions of shares and stocks and mutual funds is to be assessed under head capital gains and not as business income . In the case of the assessee, the Tribunal has relied upon the decision of Manan Nalin Shah (supra). The relevant observation of the Tribunal in the case of Manan Nalin Shah, wherein PMS itself was Kotak Securities, were as under :- 15. We o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has shown particular income under a particular head. It is a legal ground and the same could be considered by ld CIT(A) on the basis of the facts and as per provisions of law. The Hon ble P H High Court in the case of Ramco International(supra) has held that non-filing of the revised return of income should not come in the way if all the relevant facts are available on record. Considering the above decision, we decide the issue before us on merits on the basis of facts placed before us. 16. We observe that assessee entered into a PMS agreement with Kotak Securities in A.Y. 2003-04 and as per clause 2, PMS is authorized to purchase, acquire, obtain, take, hold, sell, transfer, substitute or change all or any of the investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hereinabove. We observe that Portfolio Manager is appointed in pursuance of an agreement, therefore, the management of Portfolio is an independent activity and not governed by client i.e. assessee. The relevant clauses of the agreement, extract of which we have mentioned above, clearly establish that the purpose is to take decision to make investment and to provide statement to the assessee on quarterly basis. In the PMS, there is no assured guarantee against loss or degeneration of capital. As per SEBI guidelines, the Portfolio Manager is authorized to purchase and sale of shares on behalf of the client against securities after obtaining written permission. They are not authorized to undertake purchase and sale of securities which are se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) is not applicable to the facts of the case of the assessee as in that case, the Hon ble High Court considered the relevant factors, which are mentioned in para 15 of the said order and on that basis, the Hon ble High Court confirmed the order of the Tribunal that the volume of share transactions were in the ordinary line of business of purchase and sale of shares and not for the purpose of investments. In the case before us, the said facts are not borne out as the average period of holding was varying for more than two months. Similarly, we agree that the decision of ITAT Mumbai in the case of Mafatlal Holdings Ltd (supra) is not applicable to the facts of the case of the assessee as in that case, the Board of Directors specifically pas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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