Income from Portfolio Management Services (PMS) is assessable under capital gains, so was held by Income Tax Appellate Tribunal (ITAT), Pune.
The assessee, Arihant Patni is an individual deriving income from house property. The return of income for the assessment year 2016-17 was filed on 29.07.2016 declaring total income of Rs.1,85,63,510/- and the said return of income was revised on 27.03.2018 at total income of Rs.1,85,63,510/-. Against the said return of income, the assessment was completed by the Income Tax Officer, vide order dated 19.11.2018 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at total income of Rs.5,72,16,757/-.
While doing so, the Assessing Officer had brought to tax a sum of Rs.1,14,31,733/- under the head “income from house property”, which was vacant during the whole of year under consideration. The Assessing Officer also made addition of Rs.3,68,69,651/- on account of income earned from Portfolio Management Services (PMS) as business income as against the claim of the assessee that it should be assessed under the head “capital gains”.
The Assessing Officer also made addition of Rs.20,49,446/- u/s 14A of the Act. Being aggrieved by the above disallowances, an appeal was preferred before the CIT(A), who vide impugned order confirmed the addition made under the head “income from house property”. However, the CIT(A) held that the income earned under the head “PMS” should be assessed under the head “capital gains” Being aggrieved by that part of the order of the CIT(A), which is against the Revenue, the Revenue is in appeal before the Tribunal.
The Bench consisting of Inturi Rama Rao, Accountant Member and S S Vishwanetra Ravi, Judicial Member observed that “the Co-ordinate Bench of this Tribunal has held that earning under PMS should be assessable under the head “capital gains”. Accordingly, we do not find any illegality in the order of the CIT(A).”
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