PMS fees is deductible against capital gains

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 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 assessee. Since the AO & CIT(A) have followed the order for earlier year in case of the assessee and since the order of CIT(A) for earlier year has been reversed by the Tribunal, therefore, unless and until the decision of the Tribunal is reversed by a higher court, the same in our opinion should be followed. In this view of the matter, we, respectfully following the order of the Tribunal in assessee’ s own case for A.Y. 2004-05 allow the claim of the Portfolio Management fees as an allowable expenditure. The ground raised by the assessee is accordingly allowed.

INCOME TAX APPELLATE TRIBUNAL, PUNE

ITA NO. 356/PN/2011 – (Assessment Year 2007-08)

DCIT Vs. KRA Holding & Trading Pvt. Ltd.

ITA NO. 240/PN/2011 – (Assessment Year 2007-08)

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