THE COMMISSIONER OF INCOME TAX Vs. INVESTMENT MANAGEMENT (INDIA) PVT. LTD.
LAWS(BOM)-2017-7-383
HIGH COURT OF BOMBAY
Decided on July 12,2017

THE COMMISSIONER OF INCOME TAX Appellant
VERSUS
Investment Management (India) Pvt. Ltd. Respondents

JUDGEMENT

Mr. S.V. Gangapurwala, J. - (1.) The Revenue has filed the present Appeal. The Appeal pertains to assessment year 200607. The learned counsel for the Appellant submits that the Appellant is not pressing question No.6.1 as framed. The substantial question 6.2 and 6.3, as framed by the Appellant, reads as under : "6.2 Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was correct in allowing expenditure in excess of 6% of the liability of the Mutual Fund companies ignoring the fact that this liability was that of the individual companies and not of the holding company ? 6.3 Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was right in allowing expenditure relatable to IT Infrastructure expenses when evidence was provided and the said expenditure is of a capital nature inadmissible as per the provisions of the Act ?"
(2.) Mr. Pinto, the learned counsel for the Appellant contends that Tribunal was justified in allowing the expenses in excess of 6% of the liability of the Mutual Fund Company. The said liability was that of Respondent. As the Assessee was liable to bear the expenses, the same could have been allowed. According to the learned counsel even the Tribunal was in error in allowing expenses relating to IT infrastructure expenses when evidence was provided and the said expenses is capital in nature.
(3.) Mr. Jasani, the learned counsel for the Assessee submits that as per Regulation 52(5) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as it stood clearly, states that any expense other than those specified in Sub-regulations (2) and (4) shall be borne by the Asset Management Company. Respondent is the Asset Management Company. As such, it is statutorily liable to meet the said expenses. The learned counsel states that this Court in Income Tax Appeal No.1286 of 2008 decided on December 10, 2008 has considered the same issue. The learned counsel further submits that as far as IT infrastructure expenses is concerned, in the first assessment year no such disallowance was made by the Assessing Officer in the order and had accepted the case of the Assessee.;


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