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2017 (10) TMI 1239 - AT - Income TaxTreating the income on account of gain on foreign exchange transaction under the head income from capital gains as per Article 14(6) of the India Spain tax treaty - Held that:- Loss accrued/arose on account of cancellation of foreign exchange forward contract is capital loss having direct nexus with the investment of the assessee and hence the assessee is entitled to set off the same. So far as the reference u/s. 115 AD is concerned, in our opinion, the said section decide the quantum of the tax payable by the FIIS on the income from securities or capital gains and it has nothing to do with the determination of the nature of gain or loss, whether same is on account of capital or revenue account. Accordingly, grounds taken by the assessee are allowed. Treating gain on sale of shares of companies, engaged in the real estate development, as eligible to benefit of exemption under Article 14 (6) of the India Spain treaty - Held that:- We find that the assessee had invested in certain companies that were in the business of developing properties, that it was not holding any property directly or indirectly, that the provisions of Article 14(5)were applicable for the properties held by a Spanish Company. The FAA had given a categorical finding of fact that assessee was not holding any property in India. In our opinion, the order of the FAA does not suffer from any legal or factual infirmity. So, confirming his order, we decide the effective GOA against the AO.
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