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TMI Blog2017 (4) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Income Tax Appellate Tribunal. One is in favour of the assessee and the other is against the assessee. In view of the above mentioned case i.e. Serum International Ltd. Vs. Addl CIT and vice versa (2015 (6) TMI 794 - ITAT PUNE) the view which is in favour of the assessee is liable to be taken wherein held 'PMS' fees paid by the assessee is an allowable deduction from the capital gains. The finding of the said case is based upon the finding of Hon’ble Supreme Court of India in case [CIT Vs. Vegetable Products (1973 (1) TMI 1 - SUPREME Court)]. In view of the said circumstances we set aside the finding of the CIT(A) on this issue and Assessing Officer is directed to allow the appropriate relief of the assessee in terms of the above said decisions in accordance with law. Accordingly, these issues are decided in favour of the assessee against the revenue. Application of section 14A(2) read with Rule 8D - Held that:- In case titled as Godrej & Boyce Mfg. Co.[2010 (8) TMI 77 - BOMBAY HIGH COURT] Bombay High Court, it is specifically held that Rule 8D is not retrospective and it applied for the period w.e.f.2008-09 and disallowance has to be worked out on reasonable basis u/s.14A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 4 of the Act. Your appellant prays the amount claimed be allowed. 4. The findings of the CIT(Appeals); (a) that the fee is not expenditure incurred wholly and exclusively for the transfer of capital assets; and (b) that the real nature of the expenditure is personal, are erroneous, contrary to the record and ought to be set aside. 5. Without prejudice to the above the learned CIT(Appeals) ought to have in the alternative excluded the amount from the full value of the consideration received from the Portfolio Manager and taxed under section 45 of the Act and your appellant prays accordingly. 6. The learned CIT(Appeals) erred in applying the provisions of Rule 8D to your appellant s case. Your appellant submits that the rule cannot be applied to their case for the said assessment year. 7. The learned CIT(Appeals) erred in invoking and applying the provisions of section 14A(2) read with Rule 8D without specifying and satisfying the preconditions therein and your appellant prays that the application of Rule 8D to their case be set aside. 8. The learned CIT(Appeals) erred in applying the provisions of section 14A(2) read with Rule 8D without i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant is an advocate and professional. Appellant is in active practice of his profession. Appellant is also bound by the regulations of the Bar Council of India. Every advocate practicing in India is restricted from advertising himself, in the sense of advertising for seeking more clients or more business for himself. Therefore, by virtue of membership of the club, by going to the clubs, appellant is taking steps for propagating his business cannot be an argument. Further, the profession of an advocate, its actual practice, can not be undertaken even in the remotest sense, from sitting in clubs. Every discussion and analysis of any mater necessarily takes place in chambers or in and around the courtrooms. Therefore, to my mind, membership of clubs is not going to augment the business of appellant of the profession of the appellant. And if it does, by the fact of getting more clients, more cases, it would amount to violation of the norms prescribed by Bar Council of India and consequently such expenditure which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession. Therefore, if gatherings meetings and social obligations undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee has argued that the portfolio management fees to the tune of ₹ 25,86,320/- paid for portfolio management scheme rendered is allowable as deduction while computing the deduction under the head capital gains and specifically in view of the law settled in DCIT Vs. KRA Holding and Trading (P.) Ltd. and vice versa 46 SOT 19 (Pune) and Serum International Ltd. Vs. Addl CIT and vice versa (ITA No.1576/PN/2012 and 1617/PN/2012) dated 18th February, 2015 and RDA Holding Trading Pvt. Ltd. Vs. Addl. CIT ITA No.2166/PN/2013 dated 29th October, 2014. 7. However it is also argued that there are some contrary decision of the Tribunal such as Devendra Motial Kothari 136 TTJ 188 (Mum) and Pradeep Kumar Harlalka Vs. ACIT 143 TTJ 446 (Mum.) and Homi K. Bhabha Vs. ITO 48 SOT 102 (Mum.). It is also argued that where two views are possible then the view in favour of the assessee is liable to be considered in accordance with law. However, on the other hand the learned departmental representative has placed reliance on the order passed by the CIT(A) in question. On appraisal of the above mentioned law it is not in dispute that the Tribunal has taken the two views to dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d keep track on the market conditions and the fees paid by the assessee to such professional managers could not be said to have been incurred wholly and exclusively for the purpose of transfer of the asset. Holding so, the PMS fees claimed by the assessee at ₹ 34,63,969/- from the cost of investment was disallowed by him while computing the capital gains. 11.2 In appeal the Ld. CIT(A) upheld the action of the AO by holding that the expenditure on account of PMS fees is neither cost of acquisition of the shares in question nor cost of improvement there of nor incurred wholly and exclusively in connection with the transfer of assets and therefore the AO is justified in rejecting the claim of deduction of the fees of ₹ 34,63,969/- while computing the capital gain. 11.3 Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 12. After hearing both the sides we find an identical issue had come up before the coordinate Bench of the Tribunal in the case of KRA Holding and Trading Investment Pvt. Ltd. Vs. DCIT. We find the Tribunal vide ITA No.703/PN/2012 order dated 19-9-2013 for A.Y.2008-09 while deciding an identical issue has observed as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asset Management Company Pvt. Ltd. in terms of the investment agreement dated 01.01.2005, which is precisely the issue before us also. The Tribunal referred to its earlier decision in the assessee s own case for assessment year 2004-05 vide order dated 31st May, 2011 (supra) and noticed that the issue has been decided in favour of the assessee. Thereafter, the Tribunal noted that against the decision of the Tribunal dated 31st May, 2011 (supra), revenue preferred an appeal before the Hon ble Supreme Court only on the issue treatment of income from the sale of shares as capital gain or business income and that the revenue had not preferred any appeal against the order of the Tribunal allowing the claim of deduction of expenditure by way of Portfolio Management Fee representing payments to ENAM Asset Management Company Pvt. Ltd. while computing the income under the head capital gains. After noticing the aforesaid the Tribunal concluded as under in para 11 of its order dated 25.07.2012:- 11. The decision of the Mumbai Bench of the Tribunal in the case of Homi K. Bhabha Vs. ITO was brought to our notice by the learned DR wherein it was held that Portfolio Management Scheme fees is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to be taken. The finding of the said case is based upon the finding of Hon ble Supreme Court of India in case [CIT Vs. Vegetable Products 88 ITR192(SC)]. In view of the said circumstances we set aside the finding of the CIT(A) on this issue and Assessing Officer is directed to allow the appropriate relief of the assessee in terms of the above said decisions in accordance with law. Accordingly, these issues are decided in favour of the assessee against the revenue. ISSUE NO.6 TO 9:- 9. Issue no.6 to 9 are interconnected, therefore, are being taken up together. In fact all these issues lead to the controversy with regard to the application of section 14A(2) read with Rule 8D of the Act. It is not in doubt that the assessee received the dividend to the tune of ₹ 53,74,195/- and also claimed as exempt u/s.10(34) of the Act. The assessee disallowed the expenditure incurred the exempt income to the tune of ₹ 4,56,234/-. The Assessing Officer applied the provision u/s.14A of the Act and assessed the expenditure to earn the exempt income to the tune of ₹ 18,96,224/-. Further, in appeal the CIT(A) was of the view that the provision of section 14A(2) re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The impugned order of the learned Dy. Commissioner of Income Tax (Appeals) is technically perverse in as much as it is an order which not reasonable person aware of the facts of the case and familiar with the application law could be possibly arrive at. 8. In any event, the penalty levied is highly excessive and arbitrary and requires to be reduced substantially. 11. The facts of the present case are the same as mentioned in the above mentioned appeal no 2996/M/2010, however, the figures are different and in this appeal the assessee challenged the confirmation of the penalty levied u/s.271(1)(c) of the Act to the tune of ₹ 7,75,896/-. All the issues raised by the assessee are in connection with the set aside the penalty amounting to ₹ 7,75,896/-. The learned representative of the assessee has argued that the appellant paid a sum of ₹ 25,86,320/- as Portfolio Management Fees on which the Assessing Officer was of the view that the TDS was required to be deducted and the claim of the assessee was declined, hence the Assessing Officer levied the penalty wrongly and illegally which is not liable to be sustainable in the eyes of law in view of the la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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