TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal upholds assessee's method for PMS Charges allocation, overturning revenue authorities.</h1> <h3>Smt. Sudha Narayanamurthy Versus The Deputy Commissioner of Income Tax, Circle 7 (2) (1 [formerly 4 (1) ], Bangalore.</h3> Smt. Sudha Narayanamurthy Versus The Deputy Commissioner of Income Tax, Circle 7 (2) (1 [formerly 4 (1) ], Bangalore. - TMI Issues Involved:Allocation of Portfolio Management Services (PMS) Charges while computing income under the head Short Term Capital Gain (STCG).Issue-wise Detailed Analysis:1. Allocation of PMS Charges:The primary issue in this appeal is whether the revenue authorities were justified in allocating PMS Charges while computing income under the head STCG, which is taxed at 15%, at Rs. 37,71,050 instead of the assessee's claim of Rs. 6,63,040.2. Assessee's Income and PMS Charges:The assessee, an individual, filed a return of income for AY 2011-12 declaring a total income of Rs. 24,60,50,090, which included income from house property, STCG, and income from other sources. The assessee paid PMS Charges of Rs. 72,94,053 to HDFC Real Estate PMS and Morgan Stanley PMS. The assessee claimed a deduction of PMS Charges against STCG and interest income, with no deduction claimed for dividend income, which is tax-exempt.3. AO's Allocation of PMS Charges:The AO did not accept the assessee's bifurcation of PMS Charges and instead allocated Rs. 41,67,502 based on the income under the head 'Capital Gain' and interest income. This resulted in PMS charges being apportioned at Rs. 6,63,040 against STCG and Rs. 37,71,050 against interest income. The AO's observations highlighted that the assessee's AR was unable to bifurcate exact interest referable to STCG and interest received, leading to a proportionate allocation of PMS Charges.4. CIT(A)'s Confirmation:The CIT(A) confirmed the AO's action, stating that the appellant did not provide documentary evidence to substantiate the basis of allocation of PMS fee to selective PMS providers. The CIT(A) emphasized that allocation should be done on the total income earned through PMS under the head STCG and interest income, and the appellant's method was not maintainable.5. Tribunal's Analysis and Decision:The Tribunal found that the assessee had apportioned PMS Charges based on the income earned from dividend, interest on debentures, and STCG. The Tribunal noted that the revenue authorities' allocation included STCG earned by the assessee on their own without PMS providers' services. The Tribunal concluded that the correct basis of apportionment should be on the income earned through the respective PMS providers. The Tribunal accepted the assessee's allocation method as correct, based on the documentary evidence provided.Conclusion:The appeal by the assessee was allowed, and the Tribunal directed that the allocation of PMS Charges as done by the assessee be accepted. The Tribunal found that the CIT(A) was not justified in holding that the assessee did not provide documentary evidence to substantiate the allocation basis. The Tribunal was satisfied with the assessee's basis of allocation of PMS Charges and allowed the appeal.
TaxTMI 