TMI Blog2014 (1) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... on, members of the DRP had stepped in to an exclusive discretionary zone of a businessman and it is not permissible - Any claim made by the assessee has to be proved by him and assessee cannot escape from the scrutiny by the AO – the AO had given sufficient opportunities to the assessee, but assessee did not furnish requisite information – the matter remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee. Disallowance of set-off of short term capital loss - Transaction Security Transaction Tax paid against short term capital gain arising from non STT transactions – Held that:- The decision in DEPUTY DIRECTOR OF INCOME TAX Versus M/s DWS INDIA EQUITY FUND [2012 (5) TMI 55 - ITAT MUMBAI] followed - Under the provisions of section 70(2), short term capital loss arising from any asset can be set off against short term capital gain arising from any other asset under a similar computation made - merely because the two set of transactions are liable for different rate of tax it cannot be said that income from these transactions does not arise from similar computation made as computation in both the cases has to be made in similar manner under the same pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not done in accordance with the Indian regulatory framework and have used "regulatory non-compliance" as a reasoning to deny the Appellant its tax claim of LTCL of Rs. 52,34,57,196. 5. Grounds 1 to 4 above, the learned members of the DRP have ruled that the valuation report that was furnished by the Appellant was issued by an Indian Firm of Chartered Accountants : M/s R.L. Rawani and Co, and such report was qualified by a number of limiting conditions; hence, the learned members of the DRP have erroneously rejected the tax claim of the Appellant of LTCL of Rs. 52,34,57,196. 6. Notwithstanding Grounds 1 to 5 above, the Appellant respectfully submits that the Honourable Income - tax Appellate Tribunal be pleased to direct that the Appellant is entitled to carry forward the LTCL accruing to it as was actually incurred by it on the transfer of shares of SET Singapore to SET India, which loss is computed at Rs. 56,23,51,295. 7. On the facts and circumstances of the case and in law, the learned Assessing Officer erred in disallowing the set off of short term capital loss (subject to Securities Transaction Tax) of Rs 539 against short term capital gains (not subject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing representative of the assessee filed a letter dated 1 November 2009 along with the same certain documents such as approval letters and report of R.L. Rawani Co. Chartered Accountants. However, as per the AO documentary evidences in respect of cost of acquisition were not filed by the assessee.AO gave two more chances to the assessee to produce the documentary evidences in respect of cost of acquisition, i.e. copy of all the share purchase agreement and agreement in respect of exchange of shares, etc. But, same were not produced before him till 18.12.2009.In these circumstances he held that the assessee had failed to file the documentary evidences in respect of cost of acquisition of shares of SET Singapore of USD 1,28,76,865 as claimed it in the computation of long term capital loss. AO disallowed the assessee's claim of long term capital loss, on swap transaction, of Rs. 52,34,57,196/-. 2.1 The matter was referred to Dispute Resolution Panel(DRP).After considering the draft order of the AO and the submissions of the assessee DRP held that no sound reason was furnished by the assessee to explain as to why it entered in an exchange transaction that resulted in huge loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had not furnished details called for by the AO. He has given a categorical finding that till the date of passing of assessment order, the assessee had not filed the evidences in respect of the claim made in the return of income. Any claim made by the assessee has to be proved by him and assessee cannot escape from the scrutiny by the AO. We find that AO had given sufficient opportunities to the assessee, but assessee did not furnish requisite information. Therefore, in the interest of justice, we are remitting back the matter to the file of the AO for fresh adjudication with a direction to afford a reasonable opportunity of hearing to the assessee. Here, we want to clarify that matter is sent back to the AO for limited purpose of verification of the documentary evidences in respect of cost of acquisition, i.e. copy of all the share purchase agreements and agreements in respect of exchange of shares, etc. As far as prudence of the transaction is concerned, as stated earlier, is not be decided by the AO. Grounds of appeal 1-6 are allowed in favour of the assessee ,in part. 3. Second effective ground (Ground no.7)of appeal is about disallowance of set-off of short term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in the case of DWS India Equity Fund (supra) in following manner : "5.We have perused the records and considered the rival contentions carefully. The dispute is regarding set off of short term capital loss arising from STT paid share transactions against short term capital gain arising from non STT transactions. The assessee had earned short term capital gain of Rs. 40,25,93,717/- from non STT transactions and it had incurred short term capital loss of Rs. 1,26,45,10,006/- from STT paid transactions. The issue is whether short term capital loss can be set off against short term capital gain mentioned above. Under the provisions of section 70(2), short term capital loss arising from any asset can be set off against Short term capital gain arising from any other asset under a similar computation made. The AO held that since gain was from shares on which no STT was paid and loss from STT paid transactions, these fell in different categories and could not be set off against each other. We find that this aspect has already been examined by the Mumbai bench of the Tribunal in the case of First State Investments (Hong Kong) Ltd. v. ADIT (supra), in which it has been he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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