One time payment capital expenditure or revenue expenditure

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CA Shraddha Vora (Querist)
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16 December 2013 Upfront fees (Initial expenditure) paid to Asset Management Company (AMC) and also paid management fees every year to the AMC for managing the funds on behalf of the assessee{Individual making an investment to portfolio management}.
AMC will manage the portfolio of the assessee, as per the agreement AMC will make decision of investment on behalf of the assessee and commitment period is 6 years.
My query about the treatment of the above expenditure, whether above expenditure i.e. Upfront fees and management fees is Capital expenditure or revenue expenditure for taxability purpose.
If any further clarification require please let me know

Ankit

Ankit (Expert)
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17 December 2013 Dear Shraddha,

The Upfront fees paid to an AMC is similar to the initial joining fees or the entry load in case of a normal Mutual fund.

This will be a revenue expenditure for the investor.

But just to inform you, since the income from the PMS will be chargeable as Capital Gains, why is there a question of it being Revenue or Capital Expenditure????? It will be added to the cost of investment as Cost of Acquisition…..

If you have any further doubts..pl ask