Case Law Details
Mateen Pyarali Dholkia Vs Dy. CIT (ITAT Mumbai)
The AO observed that the PMS and Profit sharing fees (hereinafter collectively called as ‘fees’) paid to portfolio manager was unrelated to any profit or loss under the head ‘Capital gains‘. There is no dispute on the fact that the assessee claimed long term capital gain as exempt, which was duly accepted. The A.O. did not allow deduction for fees of Rs. 17,95,185 claimed by the assessee against the short term capital gain, as it was, in his opinion, not related to the transactions resulting in to capital gain. It was argued before the learned CIT(A) that the assessee was entitled to deduction on account of fees against the short term capital gain, as it was directly related to sale of shares and hence should be taken as expenditure incurred wholly and exclusively in connection with transfer of shares. An alternative argument for considering it as diversion of income by overriding title, was also raised. The learned CIT(A) was unconvinced with the assessee’s submissions. He echoed the assessment order on this point by holding that such charges could not be allowed as deduction u/s 48.
ITAT held that While computing capital gain on sale of shares kept under Portfolio Management Scheme (PMS), assessee could not claim deduction of PMS fee as the same neither fell under the category of transfer fee, nor under the category of cost of acquisition/improvement.
FULL TEXT OF THE ITAT JUDGMENT
This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-33, Mumbai [in short ‘CIT(A)’Ȑ and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’).
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