TMI Blog2022 (4) TMI 1502X X X X Extracts X X X X X X X X Extracts X X X X ..... o allow carry forward of the b/forward STCL to the subsequent years. Assessee is duly entitled for carry forward of its brought forward Long term capital losses to the subsequent years. Further, in terms of our observations and reasoning adopted for concluding that the brought forward STCL of the earlier years are not to be adjusted against the Short term capital gain earned by the assessee during the year in question, we herein direct that on the same basis the brought forward Long term capital losses of the earlier years shall not be set off against the Long term capital gain earned by the assessee from transfer of securities during the year in question i.e A.Y 2013-14. Appeal of revenue dismissed. - ITA No.1370/Mum/2021, ITA No.1369/Mum/2021 - - - Dated:- 29-4-2022 - SHRI M.BALAGANESH, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For the Revenue by Shri Rajneesh Yadav For the Assessee by Shri Anish Thacker / Shri Hemen Chandariya ORDER PER M. BALAGANESH (A.M): These appeals in ITA Nos.1370/Mum/2021 1369/Mum/2021 for A.Yrs.2014-15 2013-14 respectively arise out of the order by the ld. Commissioner of Income Tax (Appeals)-55, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the above grounds and that of the Assessing Officer be restored. 6. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 3. We have heard rival submissions and perused the materials available on record. We find that assessee is a tax resident of Mauritius registered with Securities and Exchange Board of India (SEBI) as a Foreign Institutional Investor (FII) for carrying out investment activity in Indian capital markets. The return of income for the A.Y.2013-14 was filed by the assessee on 29/11/2013 declaring Nil income. During the year under consideration, the assessee earned a net short term capital gain of Rs.6,33,62,195/- on sale of securities. The gains earned by assessee were claimed as exempt from tax under Article 13 of India Mauritius treaty. The assessee also had brought forward capital losses amounting to Rs.32,17,33,024/- incurred in previous year. This loss was sought to be carried forward to subsequent year for set off against taxable capital gains that could be earned in subsequent years. The assessee also received dividend income of Rs.91,00,000/- which was claimed as exempt u/s.10(34) of the Act. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee from the earlier years, and thus, only the balance amount of STCL was to be carried forward to the subsequent years. At this stage, we may herein observe that the assessee had claimed the short term and long term capital gains arising in its hands from transfer of securities during the year under consideration i.e A.Y. 2013-14, as exempt, under Article 13 of the India-Mauritius Tax Treaty. As regards the claim of the assessee that the capital gains on transfer of securities in India was not exigible to tax in India as per Article 13 of the India-Mauritius tax treaty, we find, that the same is not in dispute. On a careful perusal of the observations of the DRP, we find that a direction has been given by the panel for adjustment of the brought forward STCL against the short term and long term capital gains earned by the assessee during the year under consideration. We are thus confronted with a direction of the DRP, wherein despite accepting that the short term and long term capital gains earned by the assessee from transfer of securities during the year under consideration were exempt from tax in India under Article 13 of the India-Mauritius tax treaty, the panel had directe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years. As regards the reliance placed by the ld. D.R on the observations of the lower authorities that as the words income or profits and gains were to include losses also, therefore, now when Sec. 45 of the Act, by virtue of the India-Mauritius tax treaty was rendered unworkable in respect of capital gains derived by the assessee from transfer transactions carried out in India, the capital losses would also not form part of its total income , and thus, were not required to be computed under the Act, we are afraid the same does not find favour with us. Before adverting any further, we may herein reiterate that the DRP vide its order passed u/s 144C(5), dated 21-11- 2016, had concluded, that now when the capital loss was allowed to be carried forward by the A.O, vide his order passed under sec. 143(3), dated 19-3-2015 for A.Y 2012-13, the same could not have thereafter been reviewed in the assessment proceedings of any subsequent year. As the said observation of the DRP has not been assailed any further by the revenue in appeal before us, the same thus had attained finality. Now coming to the claim of the revenue that as Sec. 45 of the Act, by virtue of India-Mauritius ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e preceding years Long term capital losses aggregating to Rs. 7,63,95,386/- [B/forward LTCL from A.Y 2009-10: Rs. 1,09,800/- (+) B/forward LTCL from A.Y 2012-13 : Rs. 7,62,85,586/-]. Admittedly, the aforesaid Long term capital loss of Rs. 7,63,95,386/- was determined and allowed to be carried forward by the A.O while framing the assessment in the case of the assessee for A.Y 2012- 13, vide his order passed u/s 143(3), dated 19-3-2015. In fact, the aforesaid factual position had duly been taken cognizance of by the DRP at Para 2.3 of its order passed u/s 144C(5), dated 21-11-2016. As observed by us hereinabove, the DRP had observed that once the STCL was allowed to be carried forward by the A.O in a scrutiny assessment order passed u/s 143(3) for a particular assessment year, the same cannot be reviewed in the assessment proceedings of any subsequent assessment year. In our considered view, now when the DRP had directed the A.O to allow carry forward of the STCL brought forward from the preceding years, there can be no justification for denial of carry forward of similarly placed Long term capital losses brought forward by the assessee from the preceding years. We thus are of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Long term capital losses of Rs. 7,63,95,386/- to the subsequent years. Further, in terms of our observations and reasoning adopted for concluding that the brought forward STCL of the earlier years are not to be adjusted against the Short term capital gain earned by the assessee during the year in question, we herein direct that on the same basis the brought forward Long term capital losses of the earlier years shall not be set off against the Long term capital gain earned by the assessee from transfer of securities during the year in question i.e A.Y 2013-14. The Ground of appeal No. 3 is allowed in terms of our aforesaid observations. 3.4. Respectfully following the aforesaid decision, we do not find any infirmity in the order of ld. CIT(A) granting relief to the assessee. Accordingly, the grounds raised by the Revenue are dismissed for A.Y.2013-14. 4. We find that the Revenue has raised similar grounds before us for A.Y.2014-15. We find there is a small change in the facts in A.Y.2014-15 when compared to A.Y.2013-14. In A.Y.2014-15, the ld. AO in the order passed u/s.143(3) of the Act had indeed accepted to the entire contentions of the assessee by not disturbing the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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