TaxTMI 
TaxTMI 
2011 (8) TMI 479
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....ssee had offered a sum of Rs. 3,27,687 arising out of F&O transactions under the head 'short term capital gains'. AO observed that as per the provisions of section 43(5)(d) profit from transaction in F&O was assessable under the head 'business' and not 'capital gains'. He further observed that a sum of Rs. 1,35,889 on account of loss related to the period before 25-1-2006 and the total gain after that date was Rs. 4,63,577. Therefore, AO subjected the amount of Rs. 4,63,577 under the head business income and the loss amounting to Rs. 1,35,889 was allowed to be carried forward as speculation loss. On appeal, action of the AO has been confirmed by the ld. CIT(A). 3. Before us Ld. Counsel of the assessee submitted that this issue is covered in favour of the assessee by the decision of the Tribunal in the case of Gajendra Kumar T. Agarwal v. ITO [2011] 45 SOT 156 (URO)/11 taxmann.com 231 (Mum.) wherein in the explanatory notes this provision was explained. 4. On the other hand, Ld. DR relied on the order of the CIT(A). 5. After considering the rival submissions, we find that the issue involved in the case of Gajendra Kumar T. Agarwal (supra) is totally differ....
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..... Dy. CIT [2011] 13 Taxmann.com 15 wherein it was held that portfolio management fee is not allowable expenditure u/s.48. This has been distinguished in the light of the decision of the Hon'ble Bombay High Court in the case of CIT v. Smt. Shakuntala Kantilal [1991] 190 ITR 56/58 Taxman 106. Therefore, the issue is covered by the latest decision of Pune Bench in the case of KRA Holding & Trading (P.) Ltd. (supra). 9. In the alternative the claim for advisory fee and share transaction should be allowed under section 37(1) while computing the profits and gains from the business and profession. He argued that portfolio advisory fee could also be appropriately apportioned like the shares transaction charges which have been apportioned by the AO @ 50% as pertaining to the F&O transactions. This fee should also be apportioned and allowed accordingly. 10. On the other hand, Ld. DR submitted that Pune Bench of the Tribunal in the case of KRA Holding & Trading (P.) Ltd. (supra) has used the expression "that expenditure incurred in connection with the transfer of capital assets/securities should be allowed notwithstanding inadequacy of the express provision of sec.48". This only shows....
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....med under the head capital gains. 12. We have considered the rival submissions carefully in the light of the material on record as well as decisions cited by the parties. The Ld. Counsel of the assessee has not rebutted the argument of the Ld. DR that portfolio advisory fee has been claimed under the head capital gains, therefore, the alternate contention cannot be entertained and further to examine the allowability we need to concentrate only on section 48 and the same cannot be allowed under section 37 because only expenditure incurred in relation to business and profession can be considered under section 37 section 48 which is the computing section for determination of capital gains reads as under: "Section 48. The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: From the above it is clear that while computing the ....
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....e assessee could not furnish such details nor could he give any definite basis on which such allocation was possible. The fees paid by the assessee for PMS was not inextricably linked with the particular instance of purchase and sale of shares and securities so as to treat the same as expenditure incurred wholly and exclusively in connection with such sale or the cost of acquisition/improvement of the shares and securities so as to be eligible for deduction in computing capital gains under section 48." 13. Coming to the decision of Pune Bench of the Tribunal in the case of KRA Holding & Trading (P.) Ltd. (supra), after perusing the judgment very carefully we find that in that decision the decision of co-ordinate Bench of Mumbai Tribunal in the case of Devendra Motilal Kothari (supra) was distinguished mainly on the basis of decision of Hon'ble Bombay High Court in the case of Smt. Shakuntala Kantilal (supra). The Pune Bench referred to various paras of Hon'ble Bombay High Court's decision in para-22 and ultimately concluded in para-23 that what was required was that the claim should be bona fide and claim for such genuine expenditure has to be allowed so long as incurr....
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....ovision under section 16(1)(a) for standard deduction and he could be allowed such standard deduction subject to limits prescribed. Now, that provision has been removed and thus whatsoever expenditure is incurred may be having close connection with his employment, but the same cannot be allowed in the absence of any such provision. The situation would be different if the same person was receiving the income as commission because in that case the income would be assessable under the head business income and purchase of books for rendering such services would constitute business expenditure. This means the allowability of expenditure is not dependant on the necessity of the expenditure but it is based on the provision of the Act under a particular head under which income has to be assessed. Another example is brokerage incurred by a person while giving his property on rent. Though this expenditure is necessary for earning rental income but in the absence of any provision, this expenditure is not allowable. See the decision of the Delhi High Court in the case of CIT v. H.G. Gupta & Sons [1984] 149 ITR 253/17 Taxman 287. Therefore, in case before us as observed earlier the allowability....
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....nsfer of land and building by the assessee to the purchaser. The expenditure incurred wholly and exclusively in connection with the transfer can be expenditure like commission paid to the broker and/or similar other expenditure. The retrenchment compensation paid by the assessee to its employees, in our opinion, has no connection whatsoever with the transaction of sale of the land and building. It is connected only with the closure of the business of the assessee in March, 1972. Such expenditure by no stretch of imagination can be regarded as expenditure incurred wholly and exclusively for the purpose of the transaction of sale of the property. The retrenchment compensation has no connection whatsoever with the transfer of property in question. The stipulation in the agreement merely requires the owner to clear all its liabilities on certain accounts and to keep the transferee indemnified. This stipulation cannot change the character of the retrenchment compensation from a liability arising out of the closure of the business to expenditure incurred wholly and exclusively in connection with the transfer of the asset in question." From the above it is clear that despite there being ....
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....firm the same. 15. However, as far as share transaction charges are concerned they would be allowable if they are in the nature of share brokerage or any other charges charged by the broker, but at the same time Ld. Counsel of the assessee could not give the exact nature of the charges and accordingly we set aside the order of the ld. CIT(A) and remit the matter to the file of the AO with a direction to examine the exact nature of the charges and then adjudicate this issue. 16. Issue No. 3: After hearing both the parties we find that assessee had invested a sum of Rs. 30,000 in tax saving scheme of mutual funds and deduction for the same u/s.80C was not claimed in the original return. In fact, it was submitted before us that the claim was made by way of a letter without revising the return. AO has not dealt with this issue. The ld. CIT(A) on appeal rejected the claim on the basis that the claim could not be allowed in the absence of revised return by following the decision of the Supreme Court in the case of Goetze (India) Ltd. v. CIT [2001] 284 ITR 323/157 Taxman 1. 17. Before us, Ld. Counsel of the assessee argued that assessee had made investment of Rs. 30,000 which was allow....