2012 (7) TMI 243

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....ement advisory services for all schemes of Zurich Mutual Fund, subsequently merged with HDFC Asset Management Co. Services Pvt. Ltd. (HDFC AMC Services Pvt. Ltd.). w.e.f. assessment year 2004-05, consequent to Zurich Mutual Fund Scheme being taken over by HDFC Mutual Fund. During the assessment proceedings for assessment year 2002-03, the AO noted that the assessee had shown a balance of sales load of Rs.5,27,98/- details of which were given by the assessee as under :- Details of Sales Load Rs.527798/- Amount (in Rs.) Closing Load balance as on 31st March 2001 120,730,510 Load Paid back to the fund 76,110,482 Load adjusted against brokerage 44,092,230 Load Balance as on 31st March 2002 527,798 2.1 The AO thereafter asked the asse....

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....between the assessee company and Mutual fund in which it was stated that in all schemes launched on a no Load basis, the AMC shall be entitled to collect additional management fees. The AO therefore concluded from the reading of clause that the Load was in lieu of the management fees receivable by the asset management company. Therefore, he observed that there was no liability to pay back when the payment is actually for the promotion of the scheme. The AO also observed that Load was neither credited in the account of Mutual fund or Account of AMC. The AO also referred to the prospectus of the Mutual fund in which it was mentioned that AMC reserved the right to modify or change the load structure if deemed fit for the smooth functioning of ....

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....he AO in the assessment order mentioned that earlier assessments were to be reopened but he had not made any addition on this account in the earlier years. CIT(A) therefore deleted the addition made by the AO aggrieved by which revenue is in appeal before the Tribunal . 4. Before us, the ld. AR that the assessee reiterated the submissions before the lower authorities that the assessee as an asset management company was only entitled for management fees and reimbursement of certain expenses as per guidelines. The load charged at the time of purchase and sale and collected by the assessee was on the behalf of the Mutual Fund and had to be paid to them after adjusting certain expenses. The load was therefore, not an income belonging to the as....

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....es on load account which was debited in current account of the assessee, a copy of which was also placed on account. Similarly a sum of Rs.1.68 crores had been paid on 6.6. 2002 and Rs.1,66,627/- on 7.3.2002 and Rs.8,97,024/- on 19.7.2001. It was accordingly urged that any addition in case of the assessee was not justified. The ld. AR further submitted that CIT had initiated proceedings under section 264(3) in assessment year 2001-02 on this account which was subsequently dropped by him vide letter dated 6.8.2001, copy of which was placed on record. 4.2 The ld. DR on the other hand placed reliance on the orders of AO. 5. We have perused the records and considered the rival contentions carefully. The dispute is regarding addition made by A....