TaxTMI 
TaxTMI 
2026 (8) TMI 1250
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....1-12, date of order 28.08.2025. The impugned order emanated from the order of the Ld. Deputy Commissioner of Income Tax 12(1), Mumbai (for brevity 'Ld. AO'), order passed under Section 143(3) of the Act, date of order 24.03.2014. 2. The brief facts of the case are that the assessee filed its return by declaring total income Rs. 72,26,297/- derived from various sources of income that is income from salary, short term capital gain and income from other sources. The assessee's return was processed and expenses amounting to Rs. 8,42,360/- claimed on account of fees and charges under the head "income from capital gains" was disallowed by the Ld. AO in order passed u/s. 143(3) of the Act. The Ld. AO observed that the charges claimed as deducti....
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....s to whether Portfolio Management Service (PMS) expenditure is allowable as a deduction under section 48 of the Act is not settled, as divergent views have been expressed by different Coordinate Benches of the Tribunal. The Ld. AR further submitted that in KRA Holding and Trading Pvt. Ltd. (supra), the revenue had challenged the order of the Coordinate Bench before the Hon'ble Bombay High Court. However, the only substantial question of law raised before the Hon'ble High Court was as follows: "Whether on facts and circumstances of the case, the ITAT was justified in holding that the income earned by assessee by the portfolio management scheme was liable to be assessed under the head "capital gains" instead of being assessed....
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....23,693/- and at the same time, has not allowed Rs 1,84,696/- and that too, without issuing any show-cause to the assessee. It was submitted that the assessee has availed the services of Marcellus Investment Managers Limited for purchasing and selling the shares at best possible price and as part of the agreement, PMS expenses are deducted and net sale proceeds have only been remitted in the assessee's bank account and these expenses are thus incurred wholly and exclusively towards the sale/transfer of shares and eligible for allowance. The Id DR has been heard who has relied on the order of the AO and the directions of the Id DRP. We find that where part of the PMS expenses have been allowed while computing short term capital gains, on ....
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....efore, on the similar facts on record, the ITAT Pune has considered the same and allowed such expenses. After careful consideration of findings of Id CIT(A), he has decided the issue in favour of the assessee and he has also considered the conflicting decisions and came to conclusion based on the Hon'ble Supreme Court decision of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) of Ld CIT(A) is reasonable findings on the issue of allowability of PMS expenses. Therefore, we are not inclined to disturb the same." 5. The Ld. DR argued and contended that the Coordinate Bench of ITAT, Mumbai has already considered the alleged issue whether the PMS charges are allowable u/s. 48 of the Act with the capital gain income. The Ld. DR highly....
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....urther argued and contended that the Coordinate Bench of ITAT, Mumbai in case of ACIT v. Apurva Mahesh Shah reported in (2018) 96 taxmann.com 202 (Mumbai Trib.) where the bench has decided the issue against the assessee. The observation of the Coordinate Bench in para no. 8 is reproduced as below: "8. We have deliberated at length on the aforesaid order of the Tribunal and find ourselves to be in agreement with the view therein taken. We are of the considered view that as the Portfolio Management Fees and Performance Linked Fees were paid by the assessee to his portfolio manager de. M/s Enam Assets Management Company (P) Ltd. towards service charges for making investments of his funds and managing the portfolio of securities, there....