Nma/1099/2017 Of Commissioner Of Income Tax 10 v. Ing Investment Management (India) Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDITION INCOME TAX APPEAL NO.1499 OF 2014 The Commissioner of Income-Tax 10...Appellant V/s. ING Investment Management (India) Pvt. Ltd. ...Respondent WITH NOTICE OF MOTION NO.1099 OF 2017ININCOME TAX APPEAL NO.1499 OF 2014 ING Investment Management (India) Pvt. Ltd....Applicant In the Matter Between: The Commissioner of Income-Tax 10...Appellant V/s.ING Investment Management (India) Pvt. Ltd. ...Respondent ..... Mr.Arvind Pinto , Advocate for the Appellant inITXANo.1499/2014 Mr.Atul K. Jasani, Advocate for the Respondent inITXA/1499/2014 and for the Applicant in NMA/1099/2017. .... CORAM :S.V.GANGAPURWALA &A.M.BADAR JJ. DATED :12[th] July 2017. P.C. 1The Revenue has filed the present Appeal. The Appealpertains to assessment year 2006-07. The learned counsel for theAppellant submits that the Appellant is not pressing questionNo.6.1 as framed. The substantial question 6.2 and 6.3, as framedby the Appellant, reads as under : “6.2 Whether on the facts and in the circumstances ofthe case and in law, the Hon'ble Tribunal was correctin allowing expenditure in excess of 6% of the liabilityof the Mutual Fund companies ignoring the fact thatthis liability was that of the individual companies andnot of the holding company ? 6.3Whether on the facts and in the circumstances ofthe case and in law, the Hon'ble Tribunal was right inallowing expenditure relatable to IT Infrastructureexpenses when evidence was provided and the saidexpenditure is of a capital nature inadmissible as perthe provisions of the Act ?” 2Mr.Pinto, the learned counsel for the Appellantcontends that Tribunal was not justified in allowing the expensesin excess of 6% of the liability of the Mutual Fund Company. Thesaid liability was not that of Respondent. As the Assessee was not liable to bear the expenses, the same could not have been allowed.According to the learned counsel even the Tribunal was in error inallowing expenses relating to IT infrastructure expenses whenevidence was provided and the said expenses is capital in nature. 3Mr.Jasani, the learned counsel for the Assessee submitsthat as per Regulation 52(5) of the Securities and Exchange Boardof 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 ManagementCompany. Respondent is the Asset Management Company. Assuch, it is statutorily liable to meet the said expenses. The learnedcounsel states that this Court in Income-Tax Appeal No.1286 of2008 decided on December 10, 2008 has considered the sameissue. The learned counsel further submits that as far as ITinfrastructure expenses is concerned, in the first assessment yearno such dis-allowance was made by the Assessing Officer in theorder and had accepted the case of the Assessee. 4We have considered the arguments canvased by thelearned counsel for the respective parties. Section 52(5) with itsproviso reads as under : “52. Limitation on fees and expenses on issue of schemes.1..2.. 3.. 4.. 5.Any expenses other than those specified in Sub-Regulations (2) and (4) shall be borne by the assetmanagement company or trustee or sponsors. Provided that initial expenses of launching a close-endedscheme shall not exceed six per cent of initial resourcesraised under that scheme: Provided further that any excess over the 6 per centinitial issue expense shall be borne by the assetmanagement company.” 5Reading the said proviso, it is manifest that any excessover the 6% initial issue expense shall be borne by the AssetManagement Company. In the Assessment Order, the AssessingOfficer accepted that the Assessee is Asset Management Company.There is no dispute in this regard. The Respondent Assessee isstatutorily liable to bear the expenses over and above 6%. Thesame has been rightly considered by the Tribunal. Provided that initial expenses of launching a close-endedscheme shall not exceed six per cent of initial resourcesraised under that scheme: Provided further that any excess over the 6 per centinitial issue expense shall be borne by the assetmanagement company.” 5Reading the said proviso, it is manifest that any excessover the 6% initial issue expense shall be borne by the AssetManagement Company. In the Assessment Order, the AssessingOfficer accepted that the Assessee is Asset Management Company.There is no dispute in this regard. The Respondent Assessee isstatutorily liable to bear the expenses over and above 6%. Thesame has been rightly considered by the Tribunal. 6As far as allowing the expenses relating to ITinfrastructure is concerned, it would appear that in the subsequentassessment year 2009-10, the Assessing Officer has accepted theexpenditure on account of IT infrastructure as separate expensesand has allowed the same. There is no reason to take differentview for the present assessment year. 7In light of the above, the Appeal is bereft of anysubstantial question of law and stands dismissed, however, withno order as to costs. 8Mr.Jasani, the learned counsel states that in view ofdismissal of Appeal, he withdraws the Notice of Motion. Notice ofMotion is disposed of as withdrawn. ( A.M.BADAR J.) ( S.V.GANGAPURWALA J.)