Assessee's Challenge Dismissed: Deduction Allowed for PMS Fees from Capital Gains

The Tribunal dismissed the assessee's challenge against the disallowance of provision for Leave Encashment and upheld the decision of the CIT(A) allowing the deduction of Portfolio Management Services (PMS) fees as an allowable expenditure from capital gains. The Tribunal relied on a precedent set by the Pune Bench of the Tribunal in a related case. Both the assessee and the Revenue's appeals were dismissed, affirming the decision in favor of the assessee. The judgment was pronounced on 13-06-2014.

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Issues:
1. Disallowance of provision for Leave Encashment
2. Disallowance of expenses under Portfolio Management Services (PMS) fees

Issue 1: Disallowance of provision for Leave Encashment
The assessee challenged the disallowance of Rs. 2,29,750 on account of provision made for Leave Encashment on accrual basis. The Counsel for the assessee argued that this ground is covered against the assessee by a decision of the Pune Bench of the Tribunal in a related case. As a result, the first ground by the assessee was dismissed.

Issue 2: Disallowance of expenses under Portfolio Management Services (PMS) fees
The Revenue disallowed the claim of deduction of PMS fees from the capital gain, as the assessee had claimed the PMS fees as expenditure under the head "Capital Gains" instead of "Income from Business." The CIT(A) allowed the claim of the assessee based on a precedent set by the Pune Bench of the Tribunal in a related case. The Revenue appealed this decision, arguing that the CIT(A) erred in allowing the claim of PMS fees as an allowable expenditure. However, both the Counsel for the assessee and the Departmental Representative agreed that the issue was decided in favor of the assessee by the Tribunal in a related case. The Tribunal, following the precedent set in the related case, allowed the claim of the assessee for the PMS fees as an allowable expenditure from the capital gain. Consequently, the grounds raised by the Revenue were dismissed, and the appeal filed by both the assessee and the Revenue was also dismissed.

In conclusion, the Tribunal upheld the decision of the CIT(A) regarding the disallowance of expenses under the Portfolio Management Services (PMS) fees, based on the precedent set in a related case by the Pune Bench of the Tribunal. The judgment was pronounced on 13-06-2014.

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