TaxTMI 
TaxTMI 
TaxTMI 
2011 (9) TMI 104
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....reciating that the full value of consideration received had to be computed after deducting the fees which had been incurred and paid. 4. in not adjudicating that the fees paid were to be added to the cost of acquisition / improvement of assets." 3. The learned A.R. submitted that the ground taken in the original memo of appeal has been repeated as such as revised ground no.1 and the ground nos. 2 to 4 are additional grounds which arise out of an articulation of ground no.1. No serious objection was raised by the learned Departmental Representative against the admission of additional grounds. We, therefore, admit these grounds and take up the appeal for hearing. 4. Briefly stated the facts of the case are that the assessee declared gross long term capital gain of Rs. 67,32,921 and short term capital gain of Rs. 91,87,735. Thereafter a deduction was claimed in respect of professional fees / profit sharing fees paid to ENAM Asset Management Co. Ltd. for rendering portfolio management services and the net income from capital gains was determined as under:- Rs. 67,32,921 Long term capital gain Less: Professional Ma....
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....which the Revenue relied on the Mumbai Bench order in Devendra Motilal Kothari's case (supra). Vide its order dated May 2011 and after considering the case of Devendra Motilal Kothari (supra), the Pune Bench recorded a contrary view in assessee's favour. In so deciding, the Pune Bench, inter alia, relied on the judgement of the Hon'ble Bombay High Court in CIT v. Smt. Shakuntala Kantilal [1991] 190 ITR 56/58 Taxman 106. Once again similar issue came up before the Mumbai Bench of the Tribunal in Pradeep Kumar Harlalka v. Asstt. CIT [IT Appeal No. 4501 (Mum.) of 2010. Vide its order dated 10.08.2011, the Mumbai Bench considered both the earlier decisions on the point, viz., Devendra Motilal Kothari's case (supra) and KRA Holding & Trading (P.) Ltd.'s case (supra). Through an elaborate order, the Mumbai Bench in latter case followed the decision in the case of Devendra Motilal Kothari (supra) in priority over that of KRA Holding & Trading (P.) Ltd.'s case (supra). In deciding so, the latter Bench observed that the decision of the Pune Bench in KRA Holding & Trading (P.) Ltd.'s case (supra) is primarily based on the judgement of the Hon'ble Bombay High Court in the case of ....
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....its incurring, except in connection with the purchase and sale of shares. Referring to agreement of the assessee with the portfolio manager, ENAM Asset Management Co. Ltd., the learned A.R. explained that the assessee agreed to place a sum of Rs. 2.25 crore at the discretion of his portfolio manager, which was to be used for purchase and sale of securities etc. Referring to various clauses about the consideration payable to the portfolio manager, he stated that it was at half percent of the net asset value (market value of assets inclusive of all Securities and cash balances) under management at the beginning of each quarter and further the portfolio managers were entitled to a return based fee calculated at the rate of 20% per annum of the profits in excess of 15% of the profits after deducting all the expenses. The sum and substance of his submissions was that such fees paid by the assessee has direct relation with the income arising from the transfer of shares and hence the same should be allowed as deduction, either by considering it as diversion of income by overriding title from the sale proceeds; or as part of the cost of acquisition of the shares; or alternatively as an exp....
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....merits are an attempt to persuade us for not following the aforenoted view taken against the assessee. We are not impressed with this argument. Judicial discipline requires that when a particular issue has been decided by a bench, then the subsequent co-ordinate benches should normally follow the same. At the same time, we want to clarify that there are no fetters on the powers of the subsequent benches to doubt the correctness of the earlier order, if they are not convinced with it. Whereas following the earlier decision is a rule, calling into question its correctness is only an exception. Unless there are compelling reasons for not following the earlier view, such as, if it is inconsistent with judgment of the Hon'ble Supreme Court or that of the jurisdictional High Court or earlier decisions of the same rank; or if it is sub silentio; or if it is rendered per incuriam in the sense that it is patently inconsistent with the statutory or settled legal position, the same should be respected and adhered to by the subsequent benches so that consistency in the approach of the tribunal is achieved. The above referred exceptions can be classified into two categories. First, when the....