TaxTMI 
TaxTMI 
TaxTMI 
2011 (9) TMI 39
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....g the addition made by the Assessing Officer being the difference between the amount of investment advisory fees computed at the maximum rates specified in Regulation 52(2) of the Securities and Exchange Board of India (Mutual Fund) Regulation, 1996 (SEBI Regulations) and actually charged by the Assessee? b) Whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal, in law, was justified in upholding the order of the learned CIT (A) in not sustaining the addition made by the Assessing Officer relating to the recurring and marketing expenses without appreciating the fact that this amount of expenditure the AMC was empowered to charge under SEBI Regulations to the Mutual Fund, but it has charged the same to its ....
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....ted company engaged in the business of Asset Management of Mutual Funds. In the Assessment Year in question, the Assessing Officer on noticing that the Assessee has claimed investment advisory fees, less than the ceiling prescribed under Regulation 52 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 added the differential amount to the income of the Assessee. 4 The CIT (A) as also the ITAT have held that the SEBI Regulation 52 provides for the maximum limit towards the fees that could be charged by an Asset Management Company from the Mutual Funds. Due to the business exigencies if the Assessee an Asset Management Company collects lesser amount of fees than the ceiling prescribed, it is not open to the ....
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....sessee to recover the marketing expenses up to the ceiling prescribed therein, the Assessee was not justified in charging part of the marketing expenses to its own account, thereby reducing its taxable income. Accordingly, the Assessing Officer added the differential amount to the income of the Assessee. The CIT (A) as also the ITAT have deleted the addition 6 In the present case, it is not in dispute that though the Assessee was entitled to recover entire marketing expenses incurred on behalf of the Mutual Funds, the Assessee has in fact claimed part of the expenses from the Mutual Funds and absorbed the balance expenditure as a matter of commercial prudence. The Assessing Officer has not disbelieved the case of the Assessee that o....
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....claimed deduction of the entire expenditure incurred on behalf of the mutual funds instead of recovering 2/3rd of the expenditure from the Trustee/Sponsors, the Assessing Officer disallowed 2/3rd of the expenses and added the same to the income of the Assessee. Similarly, initial issue expenses incurred on behalf of the Mutual Funds were disallowed on the ground that the Assessee was entitled to recover the same from the Mutual Funds. The ITAT deleted additions on the ground that merely because, the SEBI Regulation empowers the Assessee to recover the above expenditure, disallowance of the expenditure cannot be made if the Assessee decides not to recover part of said expenditure from the Mutual Funds/Trustees/Sponsors. The restrictions unde....