9911796707
TMI Blog2025 (5) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in not allowing the set-off of brought forward short-term capital loss incurred on equity transaction (taxable at 15%) which are subjected to STT against short term capital gains income in the year under consideration on sale of right form (taxable at 30%) which are not subjected to STT of Rs. 3,16,31,410/-. 1.2. The learned DCIT erred in rejecting the manner of set-off of short-term capital losses as adopted by the Appellant, (i.e., set-off of brought forward short-term capital losses of earlier years from sale of equity shares subjected to STT, first against short-term capital gains eared on the sale of right form not subject to STT for the year under consideration and then the balance losses against the short-term capital gains earned on sale of equity shares subjected to STT for the year under consideration and thereby offering net short-term capital gains subjected to STT for the year under consideration), and thereby taxing the gross short-term capital gains in respect of the sale of right form not chargeable to STT for the year under consideration, earned by the Appellant. 1.3. The learned DCIT failed to appreciate that income under the head 'Capital gains' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me from Other Sources', despite this being classified as capital gains in the directions issued by DRP given that the appellant is a Foreign Portfolio Investor (FPI) and without appreciating the fact that the same has already been taxed under the head 'Capital Gains' in the return of income. 3.3. The learned DCIT has erred in taxing short term capital gains (taxable at 30%) of Rs. 3,16,31,410/- as 'Income from Other Sources', despite this being classified as capital gains in the directions issued by DRP given that the appellant is an FPI and without appreciating the fact that the same has already been taxed under the head 'Capital Gains' in the return of income. 3.4. The Appellant submits that considering the facts and circumstances of its case, the learned DCIT has failed to appreciate that altering the order of setting off losses would not impact the total income of the assessee. 3.5. The Appellant submits that the learned DCIT be directed to delete the erroneous addition to the total income of the appellant. 4. Re.: Erroneous computation of tax on erroneous addition in income from other sources 4.1. The learned DCIT has erred in computing ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (others) taxed @30% 3,16,31,410 4. Amount of STCL during the year (others) taxed @30% NIL 4. Thus, during the year under consideration, the assessee reported a net short-term capital gains of Rs. 175,26,00,094/- by setting off the amount of short-term capital loss [on which Securities Transaction Tax ("STT") was paid], which is taxable at 15% under section 111A of the Act, against the short-term capital gains (on which STT was not paid), which is taxable at 30% under section 115AD of the Act, and thereafter, set off the balance loss against the short-term capital gains earned on the transaction of sale of share subjected to STT. Accordingly, the assessee was asked to show cause as to why the set off of lower taxable loss should not be denied with the higher taxable gains. In its response, the assessee submitted that section 70 of the Act allows the assessee to set off the lower taxable losses against the higher taxable gains. 5. The AO, vide draft assessment order dated 20.03.2024 passed under section 144C(1) of the Act, disagreed with the submissions of the assessee and held that in the present case, the assessee has capital gains which are taxable at 15%, whereas the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, which deals with the set off of shortterm capital loss, and the same reads as follows: - "(2) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any short-term capital asset is a loss, the assessee shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of any other capital asset." 12. Thus, as per the provisions of section 70(2) of the Act, the short-term capital loss can be set off against gain from any other capital asset. Section 70(2) of the Act does not make any further classification between the transactions where STT was paid and the transactions where STT was not paid. The emphasis of the AO on the term "similar computation" also only refers to the computation as provided under sections 48 to 55 of the Act. 13. We find that while deciding a similar issue, the Co-ordinate Bench of the Tribunal in iShares MSCI EM UCITS ETF USD ACC vs. DCIT, reported in [2024] 164 taxmann.com 56 (Mum.-Trib.), following the decision of the Hon'ble Calcutta High Court in CIT vs. Rungamatee Trexim (P.) Ltd. [IT Appeal numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other source under the same had. Therefore, these provisions speaks about inter head adjustment other than the head of capital gains. For capital gains provisions of section 70 (2) of the act provides that where assessee suffers short-term capital loss, assessee shall be entitled to set off such losses against capital gain computed in a similar manner as under section 48 to 55 of the act. According to section 70 (3) of the act where assessee suffers long-term capital loss, assessee shall be entitled to set of such losses against long-term capital gains computed in similar manner as provided under section 48 to section 55 of the act. It is clear that section 48 to section 55 does not provide for rate of tax on capital gain. It specifically lays down the computation mechanism of capital gain and certainly not tax on such capital gains 019. Thus, it is clear that assessee has incurred short-term capital losses of Rs. 49,454,381/- (which is subject to securities transaction tax) and also earned short-term capital gain of Rs. 791,221/- (which is not subject to securities transaction tax and taxable as per section 115AD at the rate of 30%). Thus, assessee submits that that short-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
