Income Tax Appellate Tribunal - Pune
Mrs. Sadhana Ashokkumar Patni,, vs Department Of Income Tax on 12 February, 2016
आयकर अपील य अ धकरण, पुणे यायपीठ "बी" पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
ी आर. के. पांडा, लेखा सद य
एवं ी !वकास अव थी, या#यक सद य के सम$
BEFORE SHRI R.K. PANDA, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.1508/PN/2014
#नधा&रण वष& / Assessment Year : 2010-11
DCIT, Circle-2, Pune .......... अपीलाथ /
Appellant
बनाम v/s
Shri Arihant Gajendrakumar Patni, ..........
S.No.1A, Irani Market Compound, यथ /
Yerawada, Pune 411006 Respondent
PAN No.AGUPP5917H
आयकर अपील सं. / ITA No.1509/PN/2014
#नधा&रण वष& / Assessment Year : 2010-11
DCIT, Circle-2, Pune .......... अपीलाथ /
Appellant
बनाम v/s
Mrs. Sadhana Ashokkumar Patni, ..........
S.No.1A, Irani Market Compound, यथ /
Yerawada, Pune 411006 Respondent
PAN No.AAUPP2868H
आयकर अपील सं. / ITA No.1510/PN/2014
#नधा&रण वष& / Assessment Year : 2010-11
DCIT, Circle-2, Pune .......... अपीलाथ /
Appellant
बनाम v/s
Mrs. Shruti Arihant Patni, ..........
S.No.1A, Irani Market Compound, यथ /
Yerawada, Pune 411006 Respondent
PAN No.ALSPS5573R
2
ITA Nos.1508 to 1510/PN/2014
अपीलाथ क ओर से / Assessee by : Shri C.H. Naniwadekar
यथ क ओर से / Revenue by : Shri Hitendra Ninawe
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing :08.02.2016 Date of Pronouncement:12.02.2016
आदे श / ORDER
PER R.K. PANDA, AM :
The above 3 appeals filed by the Revenue are directed against the separate orders dated 30-04-2014 of the CIT(A)-II, Pune relating to Assessment Year 2010-11. Since identical grounds have been taken by the revenue in the above appeals, therefore, these were heard together and are being disposed of by this common order.
2. First we take up ITA No.1508/PN/2014 as the lead case. In grounds of appeal No.1 to 4 the revenue has challenged the order of the CIT(A) in holding that the activity of transaction in shares/mutual fund by engaging PMS was an investment activity and resultant gain/loss was assessable under the head capital gain.
3. Facts of the case, in brief, are that the assessee is an individual and has returned income of Rs.88,39,449/- which also comprised of income earned on sale of shares and the same had been shown as capital gains/loss in the return of income filed. During the year, the assessee had entered into Portfolio Management Services (PMS in short) agreement with HDFCPMS, DSPMerrilLynchPMS and EnamPMS to whom the assessee had entrusted certain funds. As per the PMS agreement, the funds of the assessee were invested in stock market by the above party and the assessee had earned short-term capital gains/loss and long 3 ITA Nos.1508 to 1510/PN/2014 term capital gains on sale of shares. The A.O. following the stand taken and the reasoning given in this regard in assessee's case for A.Y. 2006-07, A.Y. 2007-08 and A.Y. 2008-09, held the gains/loss in respect of investments through PMS taxable as business income and allowed the related expenditure, viz PMS fees as deduction for the year under consideration.
4. In appeal the Ld.CIT(A) following the decision of the Tribunal in assessee's own case for A.Y.2008-09 vide ITA No.1569/PN/2011 and other connected appeals order dated 27-09-2012 held that the activity of transactions in shares/mutual funds by engaging PMS was an investment activity and the resultant gain is assessable under the head capital gains.
5. Aggrieved with such order of the CIT(A) the revenue is in appeal before us.
6. After hearing both the sides, we find the issue stands decided in favour of the assessee and against the revenue by the decision of the Tribunal in assessee's own case for A.Y.2008-09 which has been followed by the CIT(A). We find following the above decision the Tribunal in the case of Smt. Sadhana Ashok Kumar Patni and other connected appeals vide ITA No.1835 to 1837/PN/2013 and ITA No.1847/PN/2013 order dated 24-09-2014 for A.Y. 2009-10 has held that activity of transaction in shares/mutual funds by engaging PMS was an investment activity and therefore the resultant gain was assessable under the head capital gains. Accordingly, the appeals filed by the revenue were dismissed. Since the CIT(A) following the decision of the Tribunal in assessee's own case for A.Y.2008-09 has decided the issue in favour of the assessee 4 ITA Nos.1508 to 1510/PN/2014 and in the subsequent year the Tribunal in the case of other related parties has also decided the issue in favour of the assessee and against the revenue, therefore, in absence of any contrary material brought to our notice by the Ld. Departmental Representative against the order of the Tribunal, we find no infirmity in the order of the CIT(A) deleting the disallowance made by the AO. Accordingly, the same is upheld and the grounds of appeal No.1 to 4 by the revenue are dismissed.
7. In grounds of appeal No.5 the revenue has challenged the order of the CIT(A) in deleting the disallowance of Rs.10,95,983/- u/s.14A of the I.T. Act.
8. Facts of the case, in brief, are that the assessee while disclosing the income under capital gains in the return of income filed has not claimed any such expenses which were incurred by him and which were arising out of PMS activity. The AO held the capital gain as business income and thereafter disallowed the total expenses on account of PMS and other charges at Rs.10,95,983/- under Rule 8D of the I.T. Rules.
9. In appeal the Ld.CIT(A) following the decision of the Tribunal in assessee's own case for A.Y.2008-09 deleted the disallowance by observing as under :
"4.2 The A.O. has applied the Rule 8D to arrive at the disallowance of Rs.10,95,983/-. However, disallowance u/s.14A requires finding of incurring of expenditure and where it is found that for earning exempted income no expenditure has incurred or claimed, disallowance u/s.14A cannot stand. The expenditure on PMS has not been claimed by the assessee and, therefore, there does not remain any other expenditure other than this expenditure which is otherwise liable to be disallowed under Rule 8D of the I.T. Rules.
4.3 This has also been elaborately discussed in the appellate order passed by the undersigned vide order dated 06-09-2011 and upheld by the Hon'ble ITAT Pune, vide combined order dated 27-09-2012 passed 5 ITA Nos.1508 to 1510/PN/2014 in the case of the appellant and other related cases in ITA Nos. 1534, 1535, 1568, 1569, 1570 and 1571/PN/11. The Hon'ble ITAT held as under :
"10. After hearing both the sides, we find no infirmity in the order of the CIT(A). The learned CIT(A) has given a categorical finding that expenditure on PMS has not been claimed by the assessee and there does not remain any other expenditure other than this expenditure, therefore, no disallowance u/s.14A r.w. Rule 8D can be made. The above factual finding given by the learned CIT(A) could not be controverted by the learned DR. Under these circumstances, we hold that the learned CIT(A) was justified in deleting the disallowance made by the AO. Grounds raised by the revenue are accordingly dismissed. In view of the above facts, the disallowance made of Rs.10,95,983/- is directed to be deleted."
10. Aggrieved with such order of the CIT(A) the revenue is in appeal before us.
11. After hearing both the sides we find the issue stands decided in favour of the assessee by the decision of the Tribunal in assessee's own case for A.Y.2008-09 vide ITA No.1569/PN/2011 and other connected appeals order dated 27-09-2012 wherein the Tribunal at Para 9 and 10 of the order has discussed the issue and dismissed the ground raised by the revenue. The relevant observation of the Tribunal reads as under :
"9. After hearing both the sides, we find the AO disallowed an amount of Rs.5,57,396/- being 0.5% of the average investment of the funds deployed as expenditure incurred for earning tax free dividend income. In appeal the learned CIT(A) deleted such disallowance on the ground that disallowance u/s.14A requires finding of incurring of expenditure and where it is found that for earning exempted income no expenditure has been incurred or claimed disallowance u/s.14A cannot stand. He observed that the expenditure on PMS has not been claimed by the assessee and therefore there does not remain any other expenditure other than this expenditure which otherwise is liable to be disallowed under Rule8D of the Income Tax Rules. He accordingly directed the AO to delete the disallowance made at Rs.5,57,396/-. Aggrieved with such order of the CIT(A) the revenue is in appeal before us.
10. After hearing both the sides, we find no infirmity in the order of the CIT(A). The learned CIT(A) has given a categorical finding that expenditure on PMS has not been claimed by the assessee and there 6 ITA Nos.1508 to 1510/PN/2014 does not remain any other expenditure other than this expenditure, therefore, no disallowance u/s.14A r.w. Rule8D can be made. The above factual finding given by the learned CIT(A) could not be controverted by the learned DR. Under these circumstances, we hold that the learned CIT(A) was justified in deleting the disallowance made by the AO. Grounds raised by the revenue are accordingly dismissed."
12. Since the Ld.CIT(A) while deciding the issue has followed the decision of the Tribunal in assessee's own case which has been followed by the Tribunal in A.Y. 2009-10 in the case of other related parties, i.e. Smt. Sadhana Ashokkumar Patni and other connected appeals vide ITA No.1835/PN/2013 to 1837/PN/2013 and ITA No.1847/PN/2013 order dated 24-09-2014, therefore, in absence of any contrary material brought to our notice, we find no infirmity in the order of the CIT(A) allowing the claim of the assessee and deleting the disallowance made by the AO. Ground raised by the revenue is accordingly dismissed.
ITA Nos. 1509 and 1510/PN/2014 :
13. After hearing both the sides, we find the grounds raised by the revenue in the above appeals are identical to the grounds raised in ITA No.1508/PN/2014. We have already decided the grounds in the preceding paragraphs and the appeal filed by the revenue has been dismissed. Following the same reasonings the grounds raised by the revenue in the above appeals are dismissed.
14. In the result, all the 3 appeals filed by the revenue are dismissed.
Order pronounced in the open court on 12-02-2016.
Sd/- Sd/-
(VIKAS AWASTHY) (R.K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
पणु े Pune; दनांक Dated : 12 February, 2016.
th
सतीश
7
ITA Nos.1508 to 1510/PN/2014
आदे श क) *#त,ल!प अ-े!षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. The CIT(A)-II, Pune
4. The CIT-II, Pune
5.
$वभागीय 'त'न(ध, आयकर अपील य अ(धकरण, "बी" पण ु े/ DR, ITAT, "B" Pune;
6. गाड- फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, // True Copy // // True Copy // //स या$पत 'त //True C // व/र0ठ 'नजी स(चव / Sr. Private Secretary आयकर अपील य अ(धकरण, पुणे / ITAT, Pune