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TMI Blog2024 (4) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices India Pvt. Ltd. - Rs. 1,71,028/- (ii) Disallowance of Rs. 5,32,123/- u/s. 14A of the Income Tax Act, 1961 [in short 'the Act'] r.w. Rule 8D(2). 3. Shri Miteshkumar Gupta appearing on behalf of the assessee submitted that during the period relevant to Assessment Year under appeal, the assessee has earned short term capital gain of Rs. 10,04,322/- on sale of Securities. The assessee paid Rs. 1,71,028/- to M/s. BNP Paribas Investment Services India Pvt. Ltd. ( in short 'BNP Paribas') as management fees for sale of securities. The management fee paid to BNP Paribas is inextricably linked to earning of short term capital gain. The payment of management fee is not disputed by the Revenue. The Assessing Officer disallowed payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defended the impugned order. The ld. Departmental Representative submitted that the management fee paid to BNP Paribas by the assessee is not allowable u/s. 48 of the Act. Section 48 allows deduction of expenditure incurred wholly and exclusively in connection with the transfer of capital asset or the cost of acquisition of asset. The management fee paid by the assessee neither relates to the expenditure in connection with the transfer nor acquisition of capital asset. Hence, the Assessing Officer and the CIT(A) have rightly disallowed assessee's claim of management fee. In respect of disallowance u/s. 14A of the Act, the ld. Departmental Representative submits that a perusal of the assessment order would show that the Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred wholly and exclusively in connection with transfer of capital asset and the cost of acquisition and cost of improvement, if any. The contention of the assessee is that the management fee paid by the assessee to BNP Paribhas is linked to earning of short term capital gain arising from transfer of securities. We find that similar issue had come up before the Co-ordinate Bench in the case of KRA Holdings & Trading Investments Pvt. Ltd. (supra). The Revenue rejected assessee's claim of deduction of Portfolio Management Fee for similar reasons as has been expressed in the instant impugned order. The Revenue in the said case had also placed reliance on the decision of Homi K. Bhabha vs. ITO in ITA No. 3287/Mum/2009 decided on 23/09/2011 [4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our notice by the learned DR wherein it was held that Portfolio Management Scheme fees is not deductible against capital gains. The decision of the Pune Bench of the Tribunal in the case of KRA Holding & Trading was not followed by the Mumbai Bench in the above cited decision. The Mumbai Bench following other decisions of the coordinate Benches of the Tribunal declined to follow the decision in the case of KRA Holding & Trading (supra). It is the settled proposition of law that when two view are possible on the same issue the view which is favourable to the assessee has to be followed. [CIT vs. Vegetable Products 88 ITR 192 (SC)]. Further, in the instant case the Tribunal in assessee's own case has already taken a view in favour of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,76,121.80 No suo-moto disallowance was made by the assessee for earning of exempt income. We have examined the assessment order. A perusal of same reveals that Assessing Officer has straight away invoked the provisions of Rule 8D without recording dissatisfaction with regard to assessee's claim of no disallowance of expenditure u/s. 14A of the Act. The provisions of section 14A(2) of the Act envisage that the Assessing Officer having regard to the accounts of assessee, if not satisfied with the correctness of the claim of assessee in respect of expenditure in relation to earning exempt income, then the Assessing Officer shall determine the amount of expenditure incurred in relation to exempt income in connection with Rule 8D(2). Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning of the expression 'prescribed' in section 2(33), must be prescribed by Rules made under the Act. What merits emphasis is that the jurisdiction of the Assessing Officer to determine the expenditure incurred in relation to such income which does not form part of the total income, in accordance with the prescribed method, arises if the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of the expenditure which the assessee claims to have incurred in relation to income which does not part of the total income. Moreover, the satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts of the assessee. Hence, sub-section (2) does not ipso facto enable the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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