ISHARES CORE MSCI EM IMI UCITS ETF,MUMBAI V. DCIT (INT)-2(2)(2), MUMBAI

ITA 2152/MUM/2025

AI Insights

The case involves multiple appeals by various entities against the orders of the Deputy Commissioner of Income Tax (International Taxation), challenging the assessment of income for the Assessment Year 2022-23. The primary issues revolved around the rejection of the hierarchy of set-off of short-term capital losses against short-term capital gains and the treatment of long-term capital gains from grandfathered transactions. The Tribunal examined the provisions of the Income Tax Act, particularly sections 70(2), 111A, and 115AD, in conjunction with the India-Mauritius DTAA, to determine the correct application of tax rates and the set-off of losses and gains.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633526 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2022-2023
• Other Referred Cases: iShares MSCI EM UCITS ETF USD DIST vs. DCIT, Emerging Markets Index Non-Lendable Fund vs. DCIT, Vanguard Total International Stock Index Fund vs. ACIT (IT) \\u2013 4(3)(1), JS Capital LLC vs. ACIT (International Taxation), Dy.DIT vs. M/s. DWS India Equity Fund, Bay Capital India Fund Limited vs. ACIT, Matrix Partners India Investment Holdings, LLC vs DCIT, Goldman Sachs Investments (Mauritius) Ltd. vs. ACIT, Flagship Indian Investment Co (Mauritius) Ltd. vs. ACIT, Swiss Finance Corporation (Mauritius) Ltd. vs. ACIT, CIT vs. Rungamatee Trexim (P .) Ltd., CIT vs. M. N. Raigi, CIT vs. Western India Oil Distributing Co. Ltd., CIT vs. Manmohan Das
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: SATYAPAL KUMAR
• Assessee Lawyers: ANISH THACKER; VARIOUS
• Keywords: Set aside; Capital asset; Capital Gains; TDS; Search and seizure; Source of fund; Earning of tax free income; Initiation of penalty proceedings; Double taxation relief; Benefit of exemption
• Section: 143(3); 142(1); 90; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.2134/MUM/2025 (Assessment Year : 2022-23) Schwab Emerging Markets Equity ETF, C/o Ernst & Young LLP , 14th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400025 PAN : AAITS7338F ............... Appellant v/s DCIT (International Taxation) – 4(2)(1), Kautilya Bhavan, Bandra Kurla Complex, Mumbai - 400051 ……………… Respondent ITA No.2147/MUM/2025 (Assessment Year : 2022-23) iShares MSCI India UCITS ETF, C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AAECI8727K ............... Appellant v/s DCIT (International Taxation) – 2(2)(2), Kautilya Bhavan, Bandra Kurla Complex, Mumbai - 400051 ……………… Respondent ITA No.2148/MUM/2025 (Assessment Year : 2022-23) iShares MSCI EM UCITS ETF, USD DIST C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AADCI3487K ............... Appellant ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 2 v/s DCIT (International Taxation) – 2(2)(2), Room No.606, 6th Floor, Kautilya Bhavan, C-41 to C-43, G-Block, Bandra Kurla Complex, Bandra Mumbai - 400051 ……………… Respondent ITA No.2152/MUM/2025 (Assessment Year : 2022-23) iShares Core MSCI EM IMI UCITS ETF, C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AADCI7836E ............... Appellant v/s DCIT (International Taxation) – 2(2)(2), Room No.606, 6th Floor, Kautilya Bhavan, C-41 to C-43, G-Block, Bandra Kurla Complex, Bandra Mumbai - 400051 ……………… Respondent ITA No.2149/MUM/2025 (Assessment Year : 2022-23) iShares India 50 ETF (as a successor to iShares India Mauritius Co. (liquidated), C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AABTI9409C ............... Appellant v/s DCIT (International Taxation) – 2(2)(2), Room No.606, 6th Floor, Kautilya Bhavan, C-41 to C-43, G-Block, Bandra Kurla Complex, Bandra (East) Mumbai - 400051 ……………… Respondent ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 3 ITA No.2151/MUM/2025 (Assessment Year : 2022-23) iShares Core MSCI Total International Stock ETF (as as successor to Ishares Core Total International Stock Mauritius Co. (liquidated), C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AABTI9328N ............... Appellant v/s DCIT (International Taxation) – 2(2)(2), Room No.606, 6th Floor, Kautilya Bhavan, C-41 to C-43, G-Block, Bandra Kurla Complex, Bandra (East) Mumbai - 400051 ……………… Respondent ITA No.2150/MUM/2025 (Assessment Year : 2022-23) iShares MSCI Emerging Markets ETF (as a successor to iShares Emerging Markets Index Mauritius Co. (liquidated), C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AAFCI3336P ............... Appellant v/s DCIT (International Taxation) – 2(2)(2), Room No.606, 6th Floor, Kautilya Bhavan, C-41 to C-43, G-Block, Bandra Kurla Complex, Bandra Mumbai - 400051 ……………… Respondent ITA No.2085/MUM/2025 (Assessment Year : 2022-23) iShares Core MSCI Emerging Markets ETF (as a successor to Ishares Core Emerging Markets, Mauritius Company) ............... Appellant ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 4 C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AAFCI3337N v/s DCIT (International Taxation) – 2(2)(2), Room No.606, 6th Floor, Kautilya Bhavan, C-41 to C-43, G-Block, Bandra Kurla Complex, Bandra (East) Mumbai - 400051 ……………… Respondent ITA No.2153/MUM/2025 (Assessment Year : 2022-23) iShares MSCI India ETF (as a successor to iShares India Index Mauritius Company) C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AABTI9298R ............... Appellant v/s DCIT (International Taxation) – 2(2)(2), Room No.606, 6th Floor, Kautilya Bhavan, C-41 to C-43, G-Block, Bandra Kurla Complex, Bandra (East) Mumbai - 400051 ……………… Respondent ITA No.2154/MUM/2025 (Assessment Year : 2022-23) iShares MSCI All Country Asia Ex Japan ETF, (As a successor to ishares MSCI All country Asia Ex Japan Mauritius Co.) C/o Ernst & Young LLP , 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra – 400028 PAN : AABTI7439L ............... Appellant ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 5 v/s DCIT (International Taxation) – 2(2)(2), Room No.606, 6th Floor, Kautilya Bhavan, C-41 to C-43, G-Block, Bandra Kurla Complex, Bandra (East) Mumbai - 400051 ……………… Respondent Assessee by : Shri Anish Thacker Shri Pranay Gandhi Revenue by : Shri Satya Pal Kumar, CIT-DR Shri Krishna Kumar, Sr.DR Date of Hearing – 05/06/2025 Date of Order - 11/06/2025 O R D E R PER BENCH The present appeals have been filed by separate assessees against the separate final assessment orders passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 (“the Act”), pursuant to the separate directions issued by the learned Dispute Resolution Panel, Mumbai (“learned DRP”) under section 144C(5) of the Act, for the assessment year 2022-23. 2. Since the issues that arise for our consideration are similar in all the appeals, these appeals were heard together as a matter of convenience and are being decided by way of this consolidated order. Further, as the basic facts in all the appeals are the same, we have elaborately mentioned only the facts in the appeal being ITA No.2147/Mum/2025 for the sake of brevity. However, ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 6 if any particular issue is arising in any other appeal for the first time, facts pertaining to the same are discussed accordingly. ITA No. 2147/Mum/2025 IShare MSCI India UCITS ETF – A.Y. 2022-23 3. In this appeal, the assessee has raised the following grounds: - “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2)(2), Mumbai ['the learned AO\"] in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble DRP - I, Mumbai dated 5 December 2024 on the following grounds, each of which is without prejudice to and independent of the others: On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant 1. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on the sale of shares not chargeable to Securities Transaction Tax (STT): 2. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act; 3. Failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off, the short-term capital loss arising from sale of shares subjected to Securities Transaction Tax ('STT) can first be set-off against the short-term capital gains arising from sale of securities not subjected to STT instead of short-term capital gains arising from sale of shares subjected to STT: 4. erred in not following the decisions of the Jurisdictional Tribunal in the Appellant's own case for AY 2021-22 as well as other binding decisions passed by the Jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal; Arithmetical errors in the computation sheet ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 7 5. Without prejudice to the above, erred in computing the gross total income chargeable to tax at Rs. 2,783,322,958 in the computation sheet, as against Rs. 2,707,567,910 determined in the impugned order; 6. erred in computing the income under the head business and profession at Rs. 7,56,55,050 as against Nil determined in the impugned order and consequently, computing higher tax liability at the rate of 40%; Levy of total interest and fees payable - Rs. 2,147,997 7. erred in levying total interest and fees payable amounting to Rs. 2,147,997 whereas there is NIL interest as per computation sheet under section 234A, 234B,234C and 234D of the Act. Short grant of TDS credit - Rs. 236,926 8. erred in granting TDS credit to Rs. 236,926. Initiation of penal proceedings under section 270A of the Act 9. erred in initiating penalty under section 270A of the Act alleging misreporting of income by the Appellant.” 2. The issue arising in grounds no.1 to 4, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which Securities Transaction Tax (“STT”) was paid. 3. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a company incorporated in Mauritius, and is registered with the Securities and Exchange Board of India as a Foreign Portfolio Investor. For the year under consideration, the assessee filed its return of income on 07/11/2022, declaring a total income of Rs. 270,76,67,910. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, it ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 8 was observed that the assessee computed the net short-term capital gains amounting to Rs. 7,56,55,050, which is chargeable to tax as follows: – Particulars Amounts (in INR) Short-Term Capital Gains taxed at 30% under section 115AD of the Act 4,60,58,240 Less: Short-Term Capital Loss taxed at 15% under section 111A of the Act (1,55,58,719) Net Short-Term Capital Gains taxed at 30% under section 115AD of the Act 3,04,99,521 Add: Short-Term Capital Gains taxed at 15% under section 115AD of the Act(C) 4,51,55,529 Net Short-Term Capital Gains chargeable to tax 7,56,55,050 4. Thus, it was observed that as per the methodology adopted by the assessee for computation of the capital gains, the assessee set off the short- term capital loss (on which 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 higher taxable gains, as the IT Rules have provided separate columns for set-off and carry-forward of losses. In response, the assessee submitted that section 70 of the Act allows the assessee to set off the losses of lower taxable gains with the gains of higher taxable gains. In support of its submission, the assessee placed reliance upon several judicial pronouncements, wherein a similar issue was decided in favour of the taxpayer. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 9 5. The Assessing Officer (“AO”), vide draft assessment order dated 24/03/2024 passed under section 144C(1) of the Act, disagreed with the submissions of the assessee and held that computation of the net short-term capital gains by the assessee is not in order. The AO further held that the IT Rules have clearly defined separate columns for set-off and carry forward of gains of having differential tax rates. Accordingly, the short-term capital gain was computed by first setting off 15% loss against 15% gains, as follows: – Particulars Amount (INR) (Taxable @ 15%) Amount (INR) (Taxable @ 30%) Short-term capital gains 4,51,55,529 4,60,58,240 Short-term capital loss other than those covered under section 111A of the Act NIL Short-term capital loss covered under section 111A of the Act (1,55,58,719) Net Short-term capital gains 2,95,96,810 4,60,58,240 6. Accordingly, the AO computed the net short-term capital gains amounting to Rs. 2,95,96,810 taxable at 15% under section 111A of the Act and the net short-term capital gains amounting to Rs. 4,60,58,240 taxable at 30% under section 115AD of the Act. 7. The assessee filed detailed objections, inter-alia, against the aforesaid addition made by the AO. Vide directions dated 05/12/2024, issued under section 144C(5) of the Act, the learned DRP rejected the objections filed by the assessee and upheld the computation of capital gains made by the AO vide draft assessment order. The learned DRP further noted that this issue is pending consideration before the Hon’ble Bombay High Court in the case of DIT vs. M/s. DWS India Equity Fund, in ITA No.1414 of 2012, and there is no judicial finality on this issue. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 10 8. In conformity with the directions issued by the learned DRP, the AO passed the impugned final assessment order under section 143(3) read with section 144C(13) of the Act computing the net short-term capital gains amounting to Rs. 2,95,96,810 taxable at 15% under section 111A of the Act and the net short-term capital gains amounting to Rs. 4,60,58,240 taxable at 30% under section 115AD of the Act. Being aggrieved, the assessee is in appeal before us. 9. During the hearing, the learned Authorized Representative (“learned AR”) submitted that this issue is covered in favour of the assessee by various decisions of the Co-ordinate Bench of the Tribunal. 10. On the other hand, the learned Departmental Representative (“learned DR”) vehemently relied upon the order passed by the lower authorities. 11. We have considered the submissions of both sides and perused the material available on record. The sole issue which arises for our consideration in the present appeal is whether the short-term capital loss (on which STT was paid) can be set off against short-term capital gains (on which STT was not paid). Before proceeding further, it is relevant to note the provisions of section 70(2) of the Act, which deals with the set off of short-term 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.\" ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 11 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, and therefore, does not support the case of the Revenue. 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 number 812 of 2008, dated 19.12.2008], allowed the set off of short-term capital loss (on which STT was paid) against the short-term capital gains (on which STT was not paid). The relevant findings of the Co-ordinate Bench, in the aforesaid decision, are as follows: - “016. This Leaves us with the only grounds relating to computation of short- term capital gain and set offof short-term capitalloss. The only issue in this appeal is that assessee has earned short-term capital gain of 7 791,221/- which is chargeable to tax at the rate of 30%. Assessee claims that it has short-term capital loss on which securities transaction taxes are paid, and therefore such loss should be set-off against the short-term capital gain irrespective of the tax bracket of such gain andlosses. 017. The only dispute between the assessee and revenue is as under:- Sr. No. Assessee’s version Revenue’s Version 1. Short-term capital loss was set off against the net short- term capital gain on which no securities transaction taxes paid Short-term capital loss should be first set of against short-term capital gain on which securities transaction tax is paid ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 12 2. Balance short-term capital loss shall be first set of against short-term capital gain on which securities transaction taxes paid If short-term capital loss still remains it is to be carried forward and not that of against short-term capital gain on which no securities transaction tax is paid and consequently short- term capital gain on which no securities transaction tax is paid is to be taxed at the rate of 30% 3. If short-term capital gain on which securities transaction tax is paid still remains, such gains are set of against available brought forward short-term capital loss One short-term capital gain on which no securities transaction tax is paid is proposed to be taxed at the rate of 30% the brought forward short-term capital loss allowed to be carried forward without utilizing such brought forward short-term capital loss was set off 018. Provisions of section 70 of the income tax act provides for the set off of losses from one source against income from another source under the same head of income. According to section 70 (1) where assessee suffers loss in respect of any source under any head of income other than capital gain, assessee is entitled to have the amount of such loss set of against his income from 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-term capital loss on which securities transaction taxes paid, can be set of against the short-term capital gain which is not subject to securities transaction tax. Further such capital gain is also computed as per section 115AD of the act. 020. It is not the case before us that either in the computation of short-term capital gains or short-term capital loss there is any difference in the manner of computation. Therefore, short-term capital gain arising during the year and short-term capital loss arising during the year are computed in a similar manner as provided under section 48 to section 55 of the income tax act. Further as we have already stated that section 48 to section 55 of the income tax act does not lay down any rate of tax payable on short-term capital gain. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 13 021. Therefore, we do not find any reason to deprive the assessee from set- off of short-term capital losses suffered by the assessee for the same year against the short-term capital gains earned by the assessee. Such claim is in accordance with the provisions of section 70 (2) of the act. 022. We find that several judicial precedents relied upon by the assessee also supports the case of the assessee. The honourable Calcutta High Court in Rungamatee Trexim ITA number 812 of 2008 dated 19 December 2008 held that there is no provision nor the act compels the assessee to lstset of short- term capital gain which STT against short-term capital loss with STT and then allows set of against short-term capital gain without STT. Therefore, without multiplying judicial precedents, following the decision of the honourable Calcutta High Court, and several other judicial precedents of the coordinate benches relied upon before us, we allow ground number 4 - 10 of the appeal of the assessee and direct the assessing officer to allow set-off of short-term capital loss suffered by the assessee against short-term capital gain of Rs. 791,221/-.” 14. We find that similar findings have been rendered by the Co-ordinate Benches of the Tribunal in favour of the taxpayer in the following decisions: - 1. Emerging Markets Index Non-Lendable Fund vs. DCIT, Mumbai, in ITA No. 4589/Mum/2023, order dated 05.08.2024. 2. Vanguard Total International Stock Index Fund vs. ACIT (IT) – 4(3)(1), in ITA No.4656/Mum/2023, order dated 13.12.2024. 3. JS Capital LLC vs. ACIT (International Taxation), reported in (2024) 160 taxmann.com 286 4. Dy.DIT vs. M/s. DWS India Equity Fund, in ITA No.5055/Mum/2010, order dated 11.04.2012. 15. The learned DR could not show us any cogent reason to deviate from the aforesaid judicial precedents. Therefore, respectfully following the aforesaid decisions, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.1 to 4 raised in assessee’s appeal are allowed. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 14 16. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 07/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, grounds no.5 and 6 raised in assessee’s appeal are allowed for statistical purposes. 17. The issue arising in ground no.7, raised in assessee’s appeal, pertains to the levy of interest under section 234A, 234B, 234C and 234D of the Act, which is consequential in nature. Therefore, the same needs no separate adjudication. 18. The issue arising in ground no.8, raised in assessee’s appeal, pertains to the short grant of TDS credit. During the hearing, the learned AR submitted that the assessee has also filed a rectification application before the AO on 07/02/2025 in this regard, which is still pending consideration. Accordingly, we deem it appropriate to restore this issue to the file of the AO with the direction to grant the credit of taxes deducted at source, in accordance with the law, after conducting the necessary verification. We order accordingly. As a result, ground no.8 raised in assessee’s appeal is allowed for statistical purposes. 19. Ground no.9, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 15 20. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA No. 2148/Mum/2025 IShare MSCI EM UCITS ETF USD DIST – A.Y. 2022-23 21. In this appeal, the assessee has raised the following grounds: - “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2)(2), Mumbai ['the learned AO'] in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble DRP - I, Mumbai dated 4 December 2024 on the following grounds, each of which is without prejudice to and independent of the others. On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: General 1. Erred in assessing the total income of the Appellant at Rs. 445,861,930 instead of the returned income of Rs. 427,995,040. Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant 2. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on the sale of shares not chargeable to STI; 3. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act; 4. failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off, the short-term capital loss arising from sale of shares subjected to Securities Transaction Tax ('STT) can first be set-off against the short-term capital gains arising from sale of securities not subjected to STT instead of short-term capital gains arising from sale of shares subjected to STT; 5. erred in not setting-off the net short-term capital gains arising from sale of share not subjected to STT and short -term capital gains arising from sale of shares subject to STT against brought forward unabsorbed short-term capital loss subjected to STT, contrary to the provisions of section 74 of the Act; ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 16 6. erred in not following the decisions of the Jurisdictional Tribunal in the Appellant's own case for AY 2021-22 as well as other binding decisions passed by the Jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal; Arithmetical errors in the computation sheet 7. Without prejudice to above, erred in computing the gross total income chargeable to tax at Rs. 1,05,38,06,590 in the computation sheet, as against Rs. 445,861,930 determined in the impugned order; 8. Without prejudice to above, erred in computing short term capital gains u/s 111A amounting to Rs. 88,08,601 twice and taxed at 15% with surcharge and cess in the computation sheet. 9. Without prejudice to above, erred in not setting off the net long term capital gains chargeable to tax against brought forward long term capital loss in the computation sheet as done so in the impugned order. 10. Without prejudice to above, erred in computing the income taxable at special rate at Rs. 1,062,615,191 as against Rs. 445,861,930 determined in the impugned order respectively and consequently, computing higher tax liability; Levy of interest under section 234B of the Act – Rs. 6,983,158 11. erred in levying interest under Section 234B of the Act amounting to Rs. 6,983,158. Levy of total interest and fees payable Rs; 12,799,030 12. erred in levying total interest and fees payable has been computed amounting to Rs.12,799,030. Initiation of penal proceedings under section 270A of the Act 13. erred in initiating penalty under section 274 r.w.s. 270A of the Act alleging underreporting of income by the Appellant.” 22. Ground no.1 is general in nature. Therefore, the same needs no specific adjudication. 23. The issue arising in grounds no.2 to 6, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 17 we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.2 to 6 raised in assessee’s appeal are allowed. 24. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 07/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, grounds no.7-10 raised in assessee’s appeal are allowed for statistical purposes. 25. The issue arising in grounds no.11 and 12, raised in assessee’s appeal, pertains to the levy of interests, which is consequential in nature. Therefore, the same needs no separate adjudication. 26. Ground no.13, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. 27. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA No. 2152/Mum/2025 IShares Core MSCI EM IMI UCITS ETF – A.Y. 2022-23 28. In this appeal, the assessee has raised the following grounds: - ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 18 “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2X2), Mumbai [the learned AO] in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble DRP - I, Mumbai dated 5 December 2024 on the following grounds, each of which is without prejudice to and independent of the others: On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: General 1. Erred in assessing the total income of the Appellant at Rs. 2,147,211,850 instead of the returned income of Rs. 2,072,904,040; Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant: 2. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on the sale of shares not chargeable to STT: 3. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act; 4. failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off. the short-term capital loss arising from sale of shares subjected to Securities Transaction Tax ('STT) can first be set-off against the short-term capital gains arising from sale of securities not subjected to STT instead of short-term capital gains arising from sale of shares subjected to STT; erred in not setting-off the net short-term capital gains arising from sale of share not subjected to STT against brought forward unabsorbed short-term capital loss subjected to STT, contrary to the provisions of section 74 of the Act. 6. erred in not following the decisions of the Jurisdictional Tribunal in the Appellant's own case for AY 2021-22 as well as other binding decisions passed by the Jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal; Arithmetical errors in the computation sheet ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 19 7. Without prejudice to the above, erred in computing the gross total income at Rs. 2,292,345,700 in the computation sheet, as against Rs. 2,147,211,850 determined in the impugned order; Levy of total interest and fees payable - Rs. 12,460,773; 8. erred in levying total interest and fees payable amounting to Rs.12,460,773 whereas there is NIL interest as per computation sheet under section 234A, 234B,234C and 234D of the Act. Short grant of TDS credit - Rs. 1,997,338 9. erred in granting total TDS credit to Rs. 1,997,338. Initiation of penal proceedings under section 270A of the Act 10. erred in initiating penalty under section 274 r.w.s. 270A of the Act alleging underreporting of income by the Appellant.” 29. Ground no.1 is general in nature. Therefore, the same needs no specific adjudication. 30. The issue arising in grounds no.2 to 6, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.2 to 6 raised in assessee’s appeal are allowed. 31. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 07/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 20 considering our aforesaid directions. As a result, ground no.7 raised in assessee’s appeal is allowed for statistical purposes. 32. The issue arising in ground no.8, raised in assessee’s appeal, pertains to the levy of interest, which is consequential in nature. Therefore, the same needs no separate adjudication. 33. The issue arising in ground no.9, raised in assessee’s appeal, pertains to the short grant of TDS credit. During the hearing, the learned AR submitted that the assessee has also filed a rectification application before the AO on 07/02/2025 in this regard, which is still pending consideration. Accordingly, we deem it appropriate to restore this issue to the file of the AO with the direction to grant the credit of taxes deducted at source, in accordance with the law, after conducting the necessary verification. We order accordingly. As a result, ground no.9 raised in assessee’s appeal is allowed for statistical purposes. 34. Ground no.10, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. 35. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA No. 2134/Mum/2025 Schwab Emerging Markets Equity ETF – A.Y. 2022-23 36. In this appeal, the assessee has raised the following grounds: - ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 21 Based on the facts and circumstances of the case and in law, the Appellant craves leave to prefer an appeal against the order dated 28 January 2025, issued by the Deputy Commissioner of Income-tax (international Tax) - 4(2)(1), Mumbai [hereinafter referred to as 'the learned DCIT\"), under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (Act), in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble Dispute Resolution Panel - II, Mumbai (DRP-Il) dated 5 December 2024 on the following grounds, each of which is without prejudice to and independent of the others: Ground of Appeal No. 1: The learned DCIT erred in rejecting the manner in which the Appellant set off its short-term capital losses 1. The learned DCIT erred in not allowing the manner of set-off of short-term capital losses as adopted by the Appellant, i.e., set-off of short-term capital loss (incurred during the year and brought forward from earlier years) in respect of sale of shares subjected to Securities Transaction Tax (STT) first against short-term capital gains earned on the sale of shares not subject to STT, and thereby taxing gross short-term capital gains in respect of the sale of shares not chargeable to STT, earned by the Appellant. 2. The learned DCIT failed to appreciate that income under the head 'Capital gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act. 3. The learned DCIT failed to appreciate that section 70 of the Act does not provide any hierarchy for set-off of losses, the short-term capital loss arising from sale of shares subjected to STT can be first set-off against the short-term capital gains arising from sale of securities not subjected to STT instead of short-term capital gains arising from sale of shares subjected to STT. 4. The learned DCIT erred in not following the binding decisions of the jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the jurisdictional High Court against one of the orders of the jurisdictional Tribunal. Ground of Appeal No. 2: Errors in the computation sheet annexed to the assessment order 5. The learned DCIT erred in incorrectly computing gross total income (after set-off of brought forward and current year losses) in the computation sheet annexed to the order at INR 3,721,678,023 instead of INR 1,373,953,214. 6. Consequent to point 6, the learned DCIT erred in incorrectly computing taxes (plus applicable surcharge and cess) in the computation sheet annexed to the order at INR 613,273,760 instead of INR 326,281,494. 7. The learned DCIT erred in short grant of credit for taxes deducted at source (TDS) amounting to INR 1,486,507 due to mismatch of Tax Deduction Account Number (TAN) as indicated in the ROI vis-a-vis as indicated in Form 26 for the year under consideration. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 22 8. The learned DCIT erred in adjustment of refund against incorrect outstanding demand for the AY 2018-19 of INR 13,335. 9. The learned DCIT erred in levying interest under section 234D of the Act amounting to INR 2,584,952. Ground of Appeal No. 3: Initiating penalty proceedings under section 270A of the Act. 10. The learned DCIT erred in initiating penalty under section 270A of the Act alleging under reporting of income by the Appellant. 37. The issue arising in grounds no.1 to 4, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.1 to 4 raised in assessee’s appeal are allowed. 38. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application dated 16/12/2024, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, grounds no. 5 and 6 raised in assessee’s appeal is allowed for statistical purposes. 39. The issue arising in ground no.7, raised in assessee’s appeal, pertains to the short grant of TDS credit. During the hearing, the learned AR submitted that the assessee has also filed a rectification application before the AO in this ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 23 regard, which is still pending consideration. Accordingly, we deem it appropriate to restore this issue to the file of the AO with the direction to grant the credit of taxes deducted at source, in accordance with the law, after conducting the necessary verification. We order accordingly. As a result, ground no.7 raised in assessee’s appeal is allowed for statistical purposes. 40. The issue arising in grounds no.8 and 9, raised in assessee’s appeal, pertains to the adjustment of refund and levy of interest under section 234D of the Act. Since the assessee’s rectification application on these issues is pending before the AO, we direct the AO to rectify the mistakes in accordance with law. As a result, grounds no.8 and 9 raised in assessee’s appeal are allowed for statistical purposes. 41. Ground no.10, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. 42. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA No. 2085/Mum/2025 IShares Core MSCI Emerging Markets ETF – A.Y. 2022-23 43. In this appeal, the assessee has raised the following grounds: - “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2/2). Mumbai (the learned AO in pursuance of the directions under section 144C (5) of the Act issued by the Hon’ble DRP - 1, Mumbai dated 2 December 2024 on the following grounds, each of which is without prejudice to and independent of the others: ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 24 On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: General 1. Erred in assessing the total income of the Appellant at Rs. 9.01,44,57,820 instead of the returned income of Rs. 8,69,44,46,360; Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant 2. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains (STCG) in respect of transactions on the sale of shares not chargeable to Securities Transaction Tax (STT): 3. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act: 4. failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off, the short-term capital loss arising from sale of shares subjected to STT can first be set-off against the STCG arising from sale of securities not subjected to STT instead of STCG arising from sale of shares subjected to STT: 5. erred in not following the binding decisions of the Jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal: 6. erred in not granting set-off of the short-term capital gains arising from sale of share not subjected to STT against brought forward unabsorbed short-term capital loss subjected to STT. contrary to the provisions of section 74 of the Act. Arguments on merits of the Appellant's claim of set-off of long-term capital loss 7. erred in setting off the long -term capital losses brought forward from earlier Assessment Years amounting to Rs. 32,15,64,05,787 against the current year's net long-term capital gains amounting to Rs. 3,33,85,21,896, claimed as not chargeable to tax under Article 13 of the India Mauritius (IM Treaty). 8. erred in holding that long term capital gains not chargeable to tax under the IM Treaty form part of the 'total income' of the Appellant as per section 2(24) of the Act read with section 4 and 5 of the Act. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 25 9. erred in holding that mode of computation of capital gains should be as per the provisions of the Act and the provisions of IM treaty should be applied only to the 'net' capital gain which forms part of total income; 10. failed to appreciate that as per section 90(2) of the Act, each provision of the Act should be considered separately and therefore for determining 'total income', the income under head \"Capital gains\" has to be first determined considering the provisions of the Act or the treaty, whichever is more beneficial and once it is determined that the grandfathered gains are not chargeable to tax in India as per Article 13(4) of the IM Treaty and do not form part of the total income, the question of set off of brought forward losses there against does not arise;. Arithmetical errors in the computation sheet 11. Without prejudice to the above, erred in allowing set-off of brought forward short-term and long-term amounting to Rs. 6,25,42,92,811 in the computation sheet appended to the impugned order as against Rs. 9,27,28,03,245 allowed in the impugned order: 12. erred in computing tax liability on the STCG not subject to STT at the rate of 40% in the computation sheet annexed to the impugned order as against determined to be taxed at 30% in the impugned order, thereby resulting into additional tax liability; Short grant of taxes deducted at source (TDS) 13. erred in computing TDS credit amounting to Rs. 1,87,39,29,727 as against TDS credit claimed in the return of income amounting to Rs. 1,88,05,34,623; Levy of interest under section 234B of the Act - Rs. 4,96,38,028 14. erred in levying interest under Section 234B of the Act amounting to Rs. 49,638,028; Levy of interest under section 234C of the Act - Rs. 3,57,020 15. erred in levying interest under Section 234C of the Act amounting to Rs. 357,020; Initiation of penal proceedings under section 270A of the Act 16. Erred in initiating penalty under section 270A of the Act alleging underreporting of income by the Appellant.” 44. Ground no.1 is general in nature. Therefore, the same needs no specific adjudication. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 26 45. The issue arising in grounds no.2 to 6, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.2 to 6 raised in assessee’s appeal are allowed. 46. The issue arising in grounds no.7-10, raised in assessee’s appeal, pertains to the set off of the taxable (non-grandfathered) brought forward long-term capital loss against the exempt (grandfathered) long-term capital gains. 47. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee, in the instant appeal, is a company incorporated in Mauritius, and is registered with the Securities and Exchange Board of India as a Foreign Portfolio Investor. For the year under consideration, the assessee filed its return of income on 07/11/2022, declaring a total income of Rs. 869,44,46,360. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, it was observed that under the head “Capital Gains”, the assessee has brought forward the long-term capital loss of previous years amounting to Rs. 3215,64,05,787, and at the same time, the assessee has claimed net long-term capital gains amounting to Rs. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 27 333,85,21,896 on the sale of shares acquired before 01/04/2017 (grandfathered sale) as exempt under Article 13(4) of the India-Mauritius Double Taxation Avoidance Agreement (“DTAA”). The AO, vide draft assessment order dated 24/03/2024 passed under section 144C (1) of the Act, held that the assessee had opted for the benefit of India-Mauritius DTAA and at the same time the benefit of the Act. However, the assessee has a choice to be governed either by the Act or by the provisions of the DTAA. The AO further held that for any receipt to be exempt under the DTAA, the same must be taxable under the domestic law and for any receipt to be taxable under the Act, it must form part of the total income. Thus, the AO held that the long-term capital gains claimed as exempt by the assessee under the provisions of India-Mauritius DTAA are in the nature of income as per the provisions of section 2(24) of the Act, read with sections 4 and 5 of the Act. The AO held that the operation of section 90(2) of the Act does not change the method of set off for carry forward, and therefore, if there is any income during the year, whether exempt or not, and there is a loss and it fulfils the conditions laid down in section 70, then there must be set off first then only the remaining loss will be carried forward. The AO held that if the income itself is not part of total income, then the application of treaty benefits does not arise. Accordingly, the AO concluded that the loss can be set off against the gains which have been claimed as exempt under the treaty provisions since the gains from the part of the total income under section 4 of the Act. Consequently, the AO computed the balance long-term capital loss to be carried forward, amounting to Rs. 2316,78,17,415 as against Rs. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 28 2650,63,29,311 computed by the assessee for being carried forward to the subsequent years. 48. The assessee filed detailed objections, inter-alia, against the aforesaid findings of the AO. Vide directions dated 02/12/2024, issued under section 144C(5) of the Act, the learned DRP rejected the objections filed by the assessee and upheld the computation of balance long-term capital loss to be carried forward made by the AO vide draft assessment order. 49. In conformity with the directions issued by the learned DRP, the AO passed the impugned final assessment order under section 143(3) read with section 144C(13) of the Act computing the balance long-term capital loss to be carried forward to the subsequent years at Rs. 2316,78,17,415 as against Rs. 2650,63,29,311 computed by the assessee. Being aggrieved, the assessee is in appeal before us. 50. We have considered the submissions of both sides and perused the material available on record. In the present case, there is no dispute regarding the fact that during the year under consideration, the assessee earned long- term capital gains of Rs. 333,85,21,896, which were claimed as non-taxable in India under Article 13(4) of the India-Mauritius DTAA on the basis that since this long-term capital gains earned from the sale of shares acquired before 01/04/2017 (grandfathered sale), therefore, the gain arising therefrom is not taxable in India. Further, it is undisputed that the long-term capital loss of previous years, which was brought forward to the current year, was from the sale of shares which were acquired after 01/04/2017. As is evident from the ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 29 record, the assessee in its return of income for the year under consideration, claimed the long-term capital gains earned by it on the grandfathered sale as exempt from taxation in India, while the long-term capital loss brought forward from the previous years was set off against the net long-term capital gains accrued during the year from the non-grandfathered sale of shares. However, the AO set off the brought forward long-term capital loss from the non-grandfathered sale against the long-term capital gains earned by the assessee from the grandfathered sale. As per the assessee, by setting off the brought forward long-term capital loss against the long-term capital gains, which is exempt from tax in India as per Article 13(4) of the India-Mauritius DTAA, the Revenue has restricted the benefit granted to the assessee under Article 13(4) of the India-Mauritius DTAA read with section 90(2) of the Act. Thus, as per the assessee, the entire amount of long-term capital gains, i.e., Rs. 333,85,21,896, from the sale of shares acquired prior to 01/04/2017 should be treated as non-taxable in India in view of the provisions of Article 13(4) of the India-Mauritius DTAA and the long-term capital loss brought forward from the previous years should be set off only against the net long- term capital gains accrued during the year from the non-grandfathered sale of shares. 51. We find that a similar issue came up before the Co-ordinate Bench of the Tribunal in Bay Capital India Fund Limited vs. ACIT, in ITA No.4475/Mum/2023, for the assessment year 2021-22. While deciding the issue in favour of the taxpayer, the Co-ordinate Bench of the Tribunal vide order dated 20/06/2024 held that the entire long-term capital gains earned ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 30 by the assessee is exempted from taxation in India by virtue of Article 13(4) of the Treaty and long-term capital loss, whether brought forward or not, cannot be adjusted against the same. The relevant findings of the Co-ordinate Bench, in the aforesaid decision, are reproduced as follows: - “6. We heard the rival submission and perused the documents available on record. There is no dispute that the assessee is entitled to get exemption under Article-13(4) of DTAA amount to Rs. 26,36,44,954/-. But the dispute between the parties is whether it will be adjusted with the brought forwarded loss or not. Considering the plain reading of the section that capital loss, after being carried forward, can be set off only against income under the head capital gains. Therefore, existence of a taxable income is a precondition for a set of losses against such income. In this appeal, the gains of Rs. 26,36,44,954/- are admittedly exempt by virtue of article 13(4) of the treaty. The said gains, therefore, cannot be termed as income for the purpose of section 74 of the Act. We relied on the orders of the Coordinate Bench of ITAT-Mumbai in the cases of Swiss Finance Corporation (Mauritius) Ltd(supra) and J.P. Morgan India Investment Company Mauritius Ltd(supra). In our considered view the answer is against revenue. The exempted income is not a part of taxable Gross Total Income. The non-grandfathered LTCG will be adjusted with brought forwarded loss, following the order of Goldman Sachs Investments (Mauritius) Ltd.(supra). The orders which are relied on by the ld. DR are distinguishable. The impugned final assessment order is dismissed. The appeal of the assessee is succeeded.” 52. We find that a similar issue also came up for consideration before another Co-ordinate Bench of the Tribunal in Matrix Partners India Investment Holdings, LLC vs DCIT, in ITA No.3097/Mum/2023, for the assessment year 2020-21. The Co-ordinate Bench, vide order dated 29/01/2025, held that the capital gains that are already exempt under the provisions of DTAA cannot enter into computation of total income of the assessee in India, and therefore, the loss incurred by the taxpayer from the sale of non-grandfathered shares cannot be set off against the gain, which is exempt from taxation in India, as per Article 13(4) of the India Mauritius DTAA. The Co-ordinate Bench further held that the taxpayer is entitled to carry forward the loss arising from the ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 31 sale of shares to the subsequent year. The relevant findings of the Co-ordinate Bench, in the aforesaid decision, are reproduced as follows: - “6.4.2. It is noted that, Article 31 of Viena convention on the law of treaties states that, treaties should be interpreted in good faith, in accordance with the ordinary meaning to be given to the terms of the treaties in their context, and in the light of the its object and purpose. It also states that the context for the purpose of interpretation of the treaty shall comprise in addition to the test, including its preamble and annexes. One of the most difficult areas of treaty interpretation is how to cope up with silence of absent terms, if the treaty dose not expressly make provision for the matter in issue, should it be assumed that it is not covered depends on the nature of the treaty and the interaction of the various elements of Viena rules. In the present facts of the case the double taxation avoidance agreements is based on the principle to provide tax relief by preventing double taxation. 6.4.3. As per India Mauritius DTAA read with section 90(2), capital gains are to be taxed based on the place of residence of the recipient, by granting relief of tax on such gains in India. Admittedly, the treaty is silent in respect of the loss if earned by an assessee and leaves it unclear whether, one has to deduce to interpret loss being included along with gain. This in our opinion can be possible subject to later negotiations and are not regulated by the treaty. The nature of the treaty in the present fact is key factor and therefore, what is not expressly granted is not permitted. 6.4.4. In so far as, applicability of good faith in interpreting the treaty provisions, we note that good faith differs from most of the other elements under the Viena rules. It applies to the whole process of interpreting for treaty rather than solely to the meaning of particular words or phrases within it. Although, it is difficult to give precise content to the concept generally, it does include one principle that applies to the interpretation of specific terms used in a treaty, commonly described as the principal “effectiveness”. The aspect of the principle of effectiveness is preferring an interpretation that fulfils the aims of the treaty and the intent of the contracting states as given in various Articles. 6.4.5. Applying the above rules to Article 13(4) of India Mauritius DTAA, it is clear that non taxability of the capital gains in India prior to 01/04/2017 cannot act to the disadvantage of the tax payer. This is because section 90(2) is clear to mean that Government of India entered into DTAA with the Government of Mauritius, according to which the capital gains is not taxable in India. However, the provisions of the act shall apply to the extent they are more beneficial to the tax payer. 6.4.6. The Ld.AR in support relied on following observations from the decision of Hon’ble Pune Bench in case of Patni Computers Systems Ltd., reported in (2008) 114 ITD 159 8. The law laid down by the Hon'ble Supreme Court in binding on us under Article 141 of the Constitution of India. The prevailing legal position, therefore, is that once an income is held to be taxable in a tax jurisdiction under a double taxation ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 32 avoidance agreement, and unless there is a specific mention that it can also be taxed in the other tax jurisdiction, the other tax jurisdiction is denuded of its powers to tax the same. To that extent, the worldwide basis of taxation in the scheme of the Indian Income-tax Act is no longer applicable in a situation provisions of a double taxation avoidance agreement entered into under section 90 apply. The next question then arises whether in a loss situation in the PE State, as is the case before us, can the assessee be forced to go for taxation in accordance with the provisions of the treaty with the said PE State. The provisions of section 90(2) of the Indian Income-tax Act are quite unambiguous and categorical in this regard. Section 90(2), inter alia, provides that when the Government of India has entered into a double taxation avoidance agreement with Government of any other country, \"in relation to an assessee to whom such agreement applies, the provisions of this Act shall apply to the extent these are more beneficial to that assessee\". Section 90 only grants relief; it does not impose any liability. Even without such provisions, Courts in US and Germany, as indeed in other parts of the world, have held that a treaty cannot act to the disadvantage to the taxpayer. In other words, therefore, merely because India has entered into a double taxation avoidance agreement with a foreign country, the assessee cannot be denied the taxability under the scheme of the Indian Income-tax Act. The scheme of the double taxation avoidance agreement cannot, therefore, be thrust upon the assessee. In this particular case, it is obviously to the advantage of the assessee that he is taxed in India on the basis of his worldwide income, which includes losses incurred abroad, and not to invoke the provisions of the India- Japan tax treaty. The provisions of the Indian Income-tax Act must, therefore, apply to that extent. Then comes the objection of the revenue that in the event of the assessee not opting for treatment on the basis of India-Japan tax treaty this year, he will be shut out from availing the benefits of the said treaty in the subsequent years. We see no support for this proposition. Under the Income- tax Act, every year is an independent unit, and it is for the assessee to examine whether or not, in the light of the applicable legal provisions and in the light of the precise factual position, the provisions of the Income-tax Act are beneficial to him or that of the applicable double taxation avoidance agreement. There is no specific bar on such an approach of the assessee, and in the absence thereof, we cannot impose the same. In any event, this question is relevant only in the year in which the assessee claims the treaty benefits and not in this year in which the provisions of the Act are clearly more beneficial to the assessee, and, therefore, the assessee does not claim the treaty protection. Just because the assessee may, in Assessing Officer's perception, may claim treaty protection in a subsequent year, the treaty provisions cannot be thrust on the assessee this year as well. In this view of the matter, the assessee was indeed eligible to claim taxation on worldwide basis, disregard the scheme of taxability under the India-Japan tax treaty, and, in effect, claim deduction of loss incurred by the PE in Japan. The CIT(A) was thus justified in his conclusion to the effect that losses of assessee's PE in Japan are to be taken into account while computing assessee's total income liable to tax in India. Now coming to the contention whether each transaction can be considered as a separate source of income. 6.5. The Ld.AR placed reliance on the following observations by Hon’ble Mumbai Special Bench in case of Montgomery Emerging Market Fund reported in (2006) 100 ITD 217 in support of the above argument. Hon’ble Special bench observed the distinction between 'source of income' and 'head of income' and that there can be multiple source of income under the same head of income. Hon’ble Special Bench also observed that, what is taxed by the Act is not different source of income, independently and that income from different source is clubbed under respective heads that are finally aggregated ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 33 into the total income. The relevant extract of the observations of the Hon’ble Special Bench in this regard held as under:- \"44. Therefore, it is very apparent that source of income does not mean head of income. The Assessing Officer has proceeded on a hypothesis as if the source of income is the head of income itself. This is not a proper construction of law provided in section 70. Short term capital gains/loss as well as long term capital gains/loss both are computed under the head \"capital gains\" for the aggregation of income culminating into total income which is taxable under the Income-tax Act. What is taxed by the Income-tax Act is not different sources of income independently, but income from different sources clubbed under respective heads and finally aggregated into the total income. The classification of income under different heads for computing the total income does not interfere with the independent character of different sources of income available to an assessee. Both, short term capital gains/loss and long term capital gains/loss are different sources of income, falling under the same head \"capital gains\". Even under short term capital gains, different transactions will be different sources of income resulting in short term capital gains/loss. Likewise, different transactions of long term capital assets will be different sources of income for an assessee to arrive at long term capital gains/loss. This is reflected in the scheme of computation of capital gains provided in section 48 where gains or loss is computed on the basis of individual asset and transaction and not on the basis of class of assets. Therefore, we have to agree with the argument of the learned senior counsel that every transaction of a property is a different source of income for the assessee. Head of income is not the source of income. Source of income is having the direct nexus with the stream or fountain out of which the income springs to the assessee. Head of income is provided for clubbing purpose of those like minded incomes derived from different sources for the purpose of aggregation and allowable deductions. (emphasis supplied) 6.5.1. From the above one can infer that there is no basis in grouping long term/short term capital assets. It can also be inferred that, long term and short term are different sources of income. Further, Hon’ble Special bench also observed that even the different short term assets and long term assets involved in the respective transactions are again different sources of income. In the present facts of the case, loss earned from sale of shares of Maharana and the gain earned from sale of shares of Maharana are therefore different sources of income. And further as per the observations of Hon’ble Special Bench, even under short term/long term computation, every transaction is a different source. 6.5.2. Further, the Co-ordinate Bench of this Tribunal in the case of Credit Suisse (Singapore) Co. (Mauritius) Ltd. In ITA No. 1107 and 1108/Mum/2022, upheld the theory of the segregation of capital gain for drawing DTAA to the extent of more beneficial to the assessee. The relevant finding of the Tribunal is reproduced as under: “8. In the case of Flagship Indian Investment Co (Mauritius) Ltd.(supra), the assessee had claimed benefit of Article -13 of the DTAA in respect of 'Capital Gains' and had sought to carry forward capital losses of the earlier years as the same could not be set off against capital gains for the relevant assessment year. The Assessing Officer and CIT(A) rejected assessee's claim of carry forward of capital losses on the pretext that since the assessee had claimed benefit of exemption under Article 13 of the DTAA on capital gains, capital losses are also exempt. When the issue reached before the Tribunal, the Coordinate Bench placing reliance on ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 34 the decision in the case of CIT vs. Western India Oil Distributing Co. Ltd., 249 ITR 517 (SC) and CIT vs. Manmohan Das 59 ITR 699(SC) and also after considering CBDT Circular No.22 of 1944 dated 29/07/1944 held that the assessee is justified in claiming carry forward of brought forward losses of the earlier years to the subsequent years and at the same time upheld assessee's claim of capital gains as exempt under the provisions of Article -13 of the DTAA. Thus, the Tribunal accepted the theory of segregation of capital gains and capital losses for drawing benefits of DTAA/the Act to the extent they are more beneficial to the assessee. 9. In the case of Goldman Sachs Investments (Mauritius) Ltd. (supra), the Co- ordinate Bench placing reliance on the decision of Flagship Indian Investment Co (Mauritius) Ltd.(supra) reiterated the position that the assessee is entitled to the benefit of Article-13 of DTAA in respect of capital gains and allowed carry forward of capital loss under the provisions of the Act. For the sake of completeness relevant extracts of the findings of the Coordinate Bench are reproduced herein under:- \"12. ……….We are unable to comprehend that now when admittedly the short term and long term capital gains earned by the assessee from transfer of securities during the year in question are exempt under Article 13 of the India-Mauritius Tax Treaty, where would there be any occasion for seeking adjustment of the brought forward STCL against such exempt income. Our aforesaid view is squarely covered by the order of the ITAT, Mumbai in the case of Flagship Indian Investment Company (Mauritius) Lid. (supra). In the case of the assessee before the Tribunal that pertained to A. Y. 2005-06 the assessee had brought fonvard capital loss of Rs. 87,06,49,335/-from transfer of securities in A.Y. 2002-03. The aforesaid loss was determined in the hands of the assessee vide an intimation under Sec. 143(1) for A.Y 2002-03. Observing, that since the capital gains were not taxable in India as per Article 13 of the Indian- Mauritius Tax Treaty, the A.O being of the view that capital loss would also be exempted, and therefore, the assessee would not be entitled to claim the set-off of the same against the capital gains for the relevaye assestment years. On benefit of carry forward of such capital losses of the earlier years, thus, declined the appeal, the CIT(A) upheld the order of the A.O. On further appeal, the Tribunal concluded that the assessee was fully justified in claiming the carry forward of the capital losses of the earlier years to the subsequent years, and both the A.O and the CIT(A) were in error in not allowing the same. Accordingly, the A.O was directed to allow the carry forward of the capital losses of the earlier vears to the subsequent years, according to law. As in the aforesaid case, in the case of the present assessee before us, as the short term and long term capital gains earned by the assessee from transfer of securities during the year in question are admittedly exempt from tax under Article 13 of the India- Mauritius tax treaty, therefore, the brought forward STCL of the previous years was rightly carried forward by the assessee to the subsequent years……… The Tribunal further held: ……….. Now coming to the claim of the revenue that as Sec. 45 of the Act, by virtue of India-Mauritius tax treaty was rendered unworkable in respect of \"capital gains\" derived by the assessee from transfer of securities in India, therefore, the \"capital losses\" would also not form part of the assessee's \"total income\", and thus, could not be computed under the Act. we are afraid does not find favour with us. Apropos the aforesaid observation of the A.O, we are of the considered view that the same had been arrived at by loosing sight of the fact that the \"capital losses\" in question had been brought forward from the earlier years and had been determined and allowed to be carried forward by the A. while framing the assessment for A.Y 2012-13, vide his order passed u/s 143(3), date 19-3- ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 35 2015 and had not arisen during the year under consideration i.e A.Y 2013- 14. Accordingly, the claim of the A.O that the \"capital losses\" b/forward from the earlier years, pertaining to a source of income that was exempt from tax was thus not to be carried forward to the subsequent years, being devoid of any merit, is thus rejected. At this stage, we may herein observe that it is for the assessee to examine whether or not in the light of the applicable legal provisions and the precise factual position the provisions of the IT Act are beneficial to him or that of the applicable DTAA. In any case, the tax treaty cannot be thrust upon an assesses. In case the assessee during one year does not opt for the tax treaty, it would not be precluded from availing the benefits of the said treaty in the subsequent years. Our aforesaid view is fortified by the order of the ITAT, Pune in Palm Computer Systems Ltd. (supra). We thus in terms of our aforesaid observations, not being able to persuade ourselves to subscribe to the view taken by the A.O/DRP, who as noticed by us hereinabove had sought adjustment of the b/forward STCL against the exempt short term and long term capital gains earned by the assessee during the year in question, thus 'set aside' the order of the A.O in context of the issue under consideration. Accordingly, we direct the A.O to allow carry forward of the b/forward STCL of Rs. 3926,36,70,910/- to the subsequent years.\" From the reading of above decisions, it is evident that there is no impedement in segregating capital losses and capital gains from different source of income under the head 'capital gains' for the purpose of claiming the benefit of DTAA/ provisions of the Act as the case may be, whichever is more beneficial to the assessee in terms of section 90(2) of the Act.” 7. It is relevant to understand the scheme of the act, to find out if the capital gains earned by the assessee from sale of shares that does not form part of total income of virtue of DTAA would enter the computation of total income. Section 4 of the act is the charging section that describes the rates on income charged for a particular assessment year. Section 2(45) defines the total income to be the amount of income referred to section 5 and computed in the manner laid down in the Act. Section 14 of the act categorises income under various heads of income like salaries, income from house property, profit and gains from business of profession, capital gains and income from other sources. Section 66 to 80 deals with the aggregation of income and set off /carry forward of loss. 7.1. Hon’ble Bombay High Court in case of CIT vs. M. N. Raigi reported in (1949) 17 ITR 180 considered as to whether share income of a partner which does not form part of the total income, is to be added to the total income in order to determine the rate at which income tax was payable by the partner. Section 16 of Income Tax Act 1922, corresponding to section 66 of the Income tax Act 1961 was subject matter for consideration in the aforesaid decision. Hon’ble Court after analysing the scheme of computation observed and held as under : Now, the scheme of the Indian Income-tax Act is that income, profits and gains of an assessee are liable to tax subject to certain exemptions and exceptions. Although certain sums may be exempted from taxation, still they may form part of the total income of an assessee in order to determine the rate at which income- tax is payable. Therefore it follows that the total income of an assessee is not necessarily wholly subject to tax. Portions of it may be exempt from taxation and yet may be computed for the purpose of determining the rate at which tax is payable. Mr. Joshi's contention is that all sums which are exempted from taxation ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 36 must still be brought into the total income of the assessee for the purpose of determining the rate at which income-tax is payable, except where the statute in terms excludes these sums from the total income of the assessee. It is pointed out that in Section 4, sub-section (3), certain incomes, profits or gains falling within the classes mentioned in that sub-section are not to be included in the total income of the person receiving the income, and Mr. Joshi argues that except in these cases, in every other case, although the tax is not payable on certain sums, they must be included in the total income for the purpose of determining the rate. It is therefore argued that although under Section 25(4) an exemption is given to the assessee because there is a succession to the business carried on and no tax is payable by the assessee, the sum which is exempted under this sub-section does form part of the total income for the purpose of determining the rate. Total income is defined in Section 2(15) of the Act, and it means total amount of income, profits and gains computed in the manner laid down in this Act. Therefore, it would be erroneous to suggest that total income is to be determined only in the light of Section 4, sub-section (3), of the Act. How total income is to be computed and determined depends upon the various provisions contained in the Act as a whole. Then we might look at various sections which provide for exemptions from the payment of tax. There is Section 7 which contains various provisos which cover sums not liable to tax. Similarly Section 8. Section 14 also contains exemptions with regard to certain sums on which no tax is payable, and Section 15 contains exemptions in cases of life insurance. It will be noticed that the language used in all these sections, to which I have referred, is similar, if not indentical, with the language used in Section 25(4), viz., that the tax is not payable on these different sums. Now, if Mr. Joshi's contention was sound, then with regard to these various exemptions which I have enumerated, although tax is not payable, they should all be included in the total income for the purpose of determining the rate payable in respect of income-tax. Now, the short and conclusive answer to that contention is Section 16 of the Indian Income-tax Act. It is that section which in terms includes in the total income of an assessee only certain sums which are exempted from the payment of tax. Therefore, by implication, where the sums are not included in the total income by Section 16, those sums are not only exempted from the payment of tax, but they are also excluded from the total income. Now, when we look at Section 16, it does not include the sum covered by Section 25(4) as a sum which is to be included in the total income of the assessee. The scheme, therefore, of the Income-tax Act is clear and is very different from what Mr. Joshi suggests it is. The scheme is that wherever one finds an exemption or exclusion from payment of tax, the exemption or exclusion also operates for the purpose of computing the total income. Not only is the sum not liable to tax, but it is also not to form part of the total income for the purpose of determining the rate. When the Legislature indends that certain sums, although not liable to tax, should be included in the total income, it expressly so provides, as it is done in Section 16, and therefore Prima facie, when we come to Section 25(4) and when we find that the assessee is not liable to pay tax on the sum received by him as his share of the partnership, that sum cannot and does not form part of his total income. Mr. Joshi has not succeeded in pointing out to us any provision in the Act whereby this particular sum covered by Section 25 (4) has been made a part of the total income of the assessee. Therefore, in my opinion, the share of the profit of the assessee in the firm of S.B. Billimoria & Co., in the accounting year 1942 cannot be included in the total income of the assessee for ascertaining the rate of income-tax. 7.2. It is thus clear from the above observation from the Hon’ble Bombay high court that, income does not form part of the total income do not enter the computation of the total income at all applying the above principle above ratio to the present facts of the case the capital gains that are already exempt under the DTAA which are binding on the parties being exempt in India, cannot enter the computation of total income of assessee in India. Therefore, setting off the loss suffered by the assessee from sale of shares of Maharana, against ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 37 the gains earned from sale of shares of Maharana would tantamount to taxing the gain in India which is in violation of Article 13(3)(4) of DTAA as it stood prior to amendment. 8. Now we shall examine the provision relating to carry forward of the loss suffered from sale of shares of Maharana the assessee in the present case as carry forwarded long-term capital loss as per section 74 of the Act. Reference is made to the CBDT Circular No. 22 of 1944 dated 29/07/1944 that states that: “If the total income is a loss it has to be carry forwarded subject to the provisions us. 24(2) of the Indian income tax act 1922 and cannot be set off against any income which does not form part of the total income.” The circular also stated that, “the non resident otherwise would not get any relief in the Indian Taxation on account of loss incurred by in India.” Accordingly the Ld.AO is directed to grant the carry forward of the loss as claimed by the assessee.” 53. Therefore, from a careful perusal of these decisions, it is evident that all the submissions of the Revenue, raised in the instant appeal, have already been considered by the Co-ordinate Benches. Thus, respectfully the decisions of the Co-ordinate Bench as cited supra, we are of the considered view that the long-term capital gains earned by the assessee from the transactions, which are grandfathered as per the provisions of Article 13(4) of the India- Mauritius DTAA, cannot adjusted against the brought forward long-term capital loss incurred by the assessee. Accordingly, the AO is directed to allow the exemption of the entire long-term capital gains amounting to Rs. 333,85,21,896 earned by the assessee from the transactions which are covered under the provisions of Article 13(4) of the India-Mauritius DTAA. Further, the AO is directed to allow the set off of long-term capital loss brought forward from the previous years against the net long-term capital gains accrued during the year from the non-grandfathered sale of shares. Accordingly, the impugned order on this issue is set aside, and grounds no.7- 10 raised in assessee’s appeal are allowed. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 38 54. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 07/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, grounds no. 11 and 12 raised in assessee’s appeal are allowed for statistical purposes. 55. The issue arising in ground no. 13, raised in assessee’s appeal, pertains to the short grant of TDS credit. During the hearing, the learned AR submitted that the assessee has also filed a rectification application before the AO on 07/02/2025 in this regard, which is still pending consideration. Accordingly, we deem it appropriate to restore this issue to the file of the AO with the direction to grant the credit of taxes deducted at source, in accordance with the law, after conducting the necessary verification. We order accordingly. As a result, ground no.13 raised in assessee’s appeal is allowed for statistical purposes. 56. The issue arising in grounds no. 14 and 15, raised in assessee’s appeal, pertains to the levy of interest under sections 234B and 234C of the Act, which is consequential in nature. Therefore, the same needs no separate adjudication. 57. Ground no.16, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 39 58. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA No. 2149/Mum/2025 IShare India 50 ETF – A.Y. 2022-23 59. In this appeal, the assessee has raised the following grounds: - “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2)(2), Mumbai [the learned AO\"] in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble DRP - I, Mumbai dated 2 December 2024 on the following grounds, each of which is without prejudice to and independent of the others: On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: General 1. Erred in assessing the total income of the Appellant at Rs. 3,82,18,15,110 instead of the returned income of Rs 3,41,36,05,850. Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant 2. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on the sale of shares not chargeable to Securities Transaction Tax (STT\"): 3. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act; 4. failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off, the short-term capital loss arising from sale of shares subjected to STT can first be set-off against the short-term capital gains arising from sale of securities not subjected to STT instead of short-term capital gains arising from sale of shares subjected to STU; 5. erred in not granting set-off of the unabsorbed brought forward short-term capital losses against the short-term capital gains (not subject to STT) of the year under consideration. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 40 6. erred in not following the binding decisions of the Jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal; Failure to allow of set-off of brought forward long-term capital losses 7. erred in setting off the long -term capital losses brought forward from earlier Assessment Years amounting to Rs.1,96,12,42,731 against the current year's net long-term capital gains amounting to Rs. 40,82,09,257, claimed as not chargeable to tax under Article 13 of the India Mauritius (IM Treaty). 8. erred in holding that long-term capital gains not chargeable to tax under the IM Treaty form part of the 'total income' of the Appellant as per section 2(24) of the Act read with section 4 and 5 of the Act. 9. erred in holding that mode of computation of capital gains should be as per the provisions of the Act and the provisions of IM treaty should be applied only to the 'net' capital gain which forms part of total income; 10. failed to appreciate that as per section 90(2) of the Act, each provision of the Act should be considered separately and therefore for determining 'total income', the income under head \"Capital gains\" has to be first determined considering the provisions of the Act or the treaty, whichever is more beneficial and once it is determined that the grandfathered gains are not chargeable to tax in India as per Article 13(4) of the IM Treaty and do not form part of the total income, the question of set off of brought forward losses there against does not arise; Arithmetical errors in the computation sheet 11. Without prejudice to that stated above, erred in computing the brought forward losses and gross total income in the computation sheet as against the impugned order. 12. Without prejudice to above, erred in computing the gross total income at Rs. 5,49,27,94,236 in the computation sheet, as against Rs. 3,82,18,15,110 determined in the impugned order; 13. Without prejudice to above, erred in granting TDS credit amounting to Rs. 62,11,65,557 has which has resulted in short grant of TDS to the extent of Rs. 1,60,433. 14. Without prejudice to the above, erred in levying interest under section 234B amounting to Rs. 7,94,29,712 in the computation sheet, annexed with the impugned order; Initiation of penal proceedings under section 270A of the Act 15. erred in initiating penalty under section 270A of the Act alleging misreporting of income by the Appellant;” ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 41 60. Ground no.1 is general in nature. Therefore, the same needs no specific adjudication. 61. The issue arising in grounds no.2 to 6, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.2 to 6 raised in assessee’s appeal are allowed. 62. The issue arising in grounds no.7-10, raised in assessee’s appeal, pertains to the set off of the taxable (non-grandfathered) brought forward long-term capital loss against the exempt (grandfathered) long-term capital gains. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, the AO is directed to allow the exemption of the entire long-term capital gains earned by the assessee from the transactions which are covered under the provisions of Article 13(4) of the India-Mauritius DTAA. Further, the AO is directed to allow the set off of long-term capital loss brought forward from the previous years against the net long-term capital gains accrued during the year from the non- grandfathered sale of shares. Accordingly, the impugned order on this issue is set aside, and grounds no.7-10 raised in assessee’s appeal are allowed. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 42 63. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 07/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, grounds no.11 and 12 raised in assessee’s appeal are allowed for statistical purposes. 64. The issue arising in ground no.13, raised in assessee’s appeal, pertains to the short grant of TDS credit. During the hearing, the learned AR submitted that the assessee has also filed a rectification application before the AO on 07/02/2025 in this regard, which is still pending consideration. Accordingly, we deem it appropriate to restore this issue to the file of the AO with the direction to grant the credit of taxes deducted at source, in accordance with the law, after conducting the necessary verification. We order accordingly. As a result, ground no.13 raised in assessee’s appeal is allowed for statistical purposes. 65. The issue arising in ground no.14, raised in assessee’s appeal, pertains to the levy of interest under section 234B of the Act, which is consequential in nature. Therefore, the same needs no separate adjudication. 66. Ground no.15, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. 67. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 43 ITA No. 2150/Mum/2025 IShare MSCI Emerging Markets ETF – A.Y. 2022-23 68. In this appeal, the assessee has raised the following grounds: - “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2)(2), Mumbai ['the learned AÖ'] in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble DRP - I, Mumbai dated 4 December 2024 on the following grounds, each of which is without prejudice to and independent of the others: On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: General 1. Erred in assessing the total income of the Appellant at Rs. 94,53,00,04,750 instead of the returned income of Rs 87,66,46,34,360. Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant 2. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on the sale of shares not chargeable to Securities Transaction Tax (\"STT\"): 3. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act; 4. failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off, the short-term capital loss arising from sale of shares subjected to STT can first be set-off against the short-term capital gains arising from sale of securities not subjected to STT instead of short-term capital gains arising from sale of shares subjected to STT; 5. erred in not granting set-off of the unabsorbed brought forward short-term capital losses against the short-term capital gains (not subject to STT) of the year under consideration. 6. erred in not following the binding decisions of the Jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal; ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 44 Failure to allow of set-off of brought forward long-term capital losses 7. erred in setting off the long-term capital losses brought forward from earlier Assessment Years amounting to Rs.14,40,33,83,965 against the current year's net long-term capital gains amounting to Rs. 6,86,52,70,391, claimed as not chargeable to tax under Article 13 of the India Mauritius (IM Treaty) 8. erred in holding that long-term capital gains not chargeable to tax under the IM Treaty form part of the 'total income' of the Appellant as per section 2(24) of the Act read with section 4 and 5 of the Act. 9. erred in holding that mode of computation of capital gains should be as per the provisions of the Act and the provisions of IM treaty should be applied only to the 'net' capital gain which forms part of total income; 10. failed to appreciate that as per section 90(2) of the Act, each provision of the Act should be considered separately and therefore for determining total income', the income under head \"Capital gains has to be first determined considering the provisions of the Act or the treaty, whichever is more beneficial and once it is determined that the grandfathered gains are not chargeable to tax in India as per Article 13(4) of the IM Treaty and do not form part of the total income, the question of set off of brought forward losses there against does not arise; Arithmetical errors in the computation sheet 11. Without prejudice to that stated above, erred in computing the brought forward losses and gross total income in the computation sheet as against the impugned order. 12. Without prejudice to above, erred in computing the gross total income at Rs. 94,91,38,88,241 in the computation sheet, as against Rs. 94,53,00,04,750 determined in the impugned order; Initiation of penal proceedings under section 270A of the Act 13. erred in initiating penalty under section 270A of the Act alleging misreporting of income by the Appellant;” 69. Ground no.1 is general in nature. Therefore, the same needs no specific adjudication. 70. The issue arising in grounds no.2 to 6, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 45 we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.2 to 6 raised in assessee’s appeal are allowed. 71. The issue arising in grounds no.7-10, raised in assessee’s appeal, pertains to the set off of the taxable (non-grandfathered) brought forward long-term capital loss against the exempt (grandfathered) long-term capital gains. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, the AO is directed to allow the exemption of the entire long-term capital gains earned by the assessee from the transactions which are covered under the provisions of Article 13(4) of the India-Mauritius DTAA. Further, the AO is directed to allow the set off of long-term capital loss brought forward from the previous years against the net long-term capital gains accrued during the year from the non- grandfathered sale of shares. Accordingly, the impugned order on this issue is set aside, and grounds no.7-10 raised in assessee’s appeal are allowed. 72. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 07/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, grounds no.11 and 12 raised in assessee’s appeal are allowed for statistical purposes. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 46 73. Ground no.13, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. 74. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA No. 2151/Mum/2025 IShare Core MSCI Total International Stock ETF – A.Y. 2022-23 75. In this appeal, the assessee has raised the following grounds: - “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, Issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2)(2), Mumbai ['the learned AO'] in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble DRP - 1, Mumbai dated 5 December 2024 on the following grounds, each of which is without prejudice to and independent On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: General 1. Erred in assessing the total income of the Appellant at Rs. 1,00,35,11,480 instead of the returned income of Rs 96,69,39,710. Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant 2. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on the sale of shares not chargeable to Securities Transaction Tax ('STT\"): 3. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act; ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 47 4. failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off, the short-term capital loss arising from sale of shares subjected to STT can first be set-off against the short-term capital gains arising from sale of securities not subjected to STT instead of short-term capital gains arising from sale of shares subjected to STT; 5. erred in not granting set-off of the unabsorbed brought forward short-term capital losses against the short-term capital gains (not subject to STT) of the year under consideration. 6. erred in not following the binding decisions of the Jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal; Failure to allow of set-off of brought forward long-term capital losses 7. erred in setting off the long -term capital losses brought forward from earlier Assessment Years amounting to Rs. 88,61,91,893 against the current year's net long-term capital gains amounting to Rs. 13,67,35,365, claimed as not chargeable to tax under Article 13 of the India Mauritius (IM Treaty) 8. erred in holding that long-term capital gains not chargeable to tax under the IM Treaty form part of the 'total income' of the Appellant as per section 2(24) of the Act read with section 4 and 5 of the Act. 9. erred in holding that mode of computation of capital gains should be as per the provisions of the Act and the provisions of IM treaty should be applied only to the 'net' capital gain which forms part of total income; 10. failed to appreciate that as per section 90(2) of the Act, each provision of the Act should be considered separately and therefore for determining 'total income', the income under head \"Capital gains\" has to be first determined considering the provisions of the Act or the treaty, whichever is more beneficial and once it is determined that the grandfathered gains are not chargeable to tax in India as per Article 13(4) of the IM Treaty and do not form part of the total income, the question of set off of brought forward losses there against does not arise; Arithmetical errors in the computation sheet 11. Without prejudice to that stated above, erred in computing the brought forward losses and gross total income in the computation sheet as against the impugned order. 12. Without prejudice to above, erred in computing the gross total income at Rs. 1,09,99,12,790 in the computation sheet, as against Rs. 1,00,35,11,480 determined in the impugned order; 13. Without prejudice to that stated above, erred in computing income from other sources as Rs. 1,00,35,11,478. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 48 14. Without prejudice to that stated above, erred in computing income chargeable to special rate as Rs. 1,06,33,41,023. 15. Without prejudice to above, erred in granting TDS credit amounting to Rs. 20,38,97,227 which has resulted in short grant of TDS to the extent of Rs. 8,97,933 16. Without prejudice to that stated above, erred in levying interest under section 234B of the Act amounting to Rs. 1,11,05,420 and interest undersection 234C of the Act amounting to Rs. 4,357 Initiation of penal proceedings under section 270A of the Act 17. erred in initiating penalty under section 270A of the Act alleging under- reporting of income by the Appellant;” 76. Ground no.1 is general in nature. Therefore, the same needs no specific adjudication. 77. The issue arising in grounds no.2 to 6, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.2 to 6 raised in assessee’s appeal are allowed. 78. The issue arising in grounds no.7-10, raised in assessee’s appeal, pertains to the set off of the taxable (non-grandfathered) brought forward long-term capital loss against the exempt (grandfathered) long-term capital gains. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, the AO is directed to allow ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 49 the exemption of the entire long-term capital gains earned by the assessee from the transactions which are covered under the provisions of Article 13(4) of the India-Mauritius DTAA. Further, the AO is directed to allow the set off of long-term capital loss brought forward from the previous years against the net long-term capital gains accrued during the year from the non- grandfathered sale of shares. Accordingly, the impugned order on this issue is set aside, and grounds no.7-10 raised in assessee’s appeal are allowed. 79. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 07/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, grounds no.11-14 raised in assessee’s appeal are allowed for statistical purposes. 80. The issue arising in ground no.15, raised in assessee’s appeal, pertains to the short grant of TDS credit. During the hearing, the learned AR submitted that the assessee has also filed a rectification application before the AO on 07/02/2025 in this regard, which is still pending consideration. Accordingly, we deem it appropriate to restore this issue to the file of the AO with the direction to grant the credit of taxes deducted at source, in accordance with the law, after conducting the necessary verification. We order accordingly. As a result, ground no.15 raised in assessee’s appeal is allowed for statistical purposes. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 50 81. The issue arising in ground no.16, raised in assessee’s appeal, pertains to the levy of interest under sections 234B and 234C of the Act, which is consequential in nature. Therefore, the same needs no separate adjudication. 82. Ground no.17, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. 83. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITA No. 2153/Mum/2025 IShares MSCI India ETF – A.Y. 2022-23 84. In this appeal, the assessee has raised the following grounds: - “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2)(2), Mumbai ['the learned AÖ\"] in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble DRP - I, Mumbai dated 4 December 2024 on the following grounds, each of which is without prejudice to and independent of the others: On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: Ground of Appeal No. 1: General 1. erred in assessing the total income of the Appellant at Rs. 31,266,588,050 instead of the returned income of Rs. 19,205,442,980; Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant 2. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on the sale of shares not chargeable to Securities Transaction Tax ('STT'): 3. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 51 provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act; 4. failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off, the short-term capital loss arising from sale of shares subjected to STT can first be set-off against the short-term capital gains arising from sale of securities not subjected to STT instead of short-term capital gains arising from sale of shares subjected to STT; 5. erred in not following the binding decisions of the Jurisdictional Tribunal pronounced in favour of the Fund pertaining to AY 2021-22 and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal; 6. Without prejudice to the above, erred in not granting set-off of the net short-term capital gains arising from sale of share not subjected to STT against brought forward unabsorbed short-term capital loss subjected to STT, contrary to the provisions of section 74 of the Act. Failure to allow of set-off of brought forward long-term capital losses 7. erred in setting off the long -term capital losses brought forward from earlier Assessment Years amounting to Rs. 26,17,71,96,254 against the current year's net long-term capital gains amounting to Rs. 12,06,10,45,056, claimed as not chargeable to tax under Article 13 of the India Mauritius (IM Treaty): 8. erred in holding that long term capital gains not chargeable to tax under the IM Treaty form part of the 'total income' of the Appellant as per section 2(24) of the Act read with section 4 and 5 of the Act; 9. erred in holding that mode of computation of capital gains should be as per the provisions of the Act and the provisions of IM treaty should be applied only to the 'net' capital gain which forms part of total income; 10. failed to appreciate that as per section 90(2) of the Act, each provision of the Act should be considered separately and therefore for determining 'total income', the income under head \"Capital gains* has to be first determined considering the provisions of the Act or the treaty. whichever is more beneficial and once it is determined that the grandfathered gains are not chargeable to tax in India as per Article 13(4) of the IM Treaty and do not form part of the total income, the question of set off of brought forward losses there against does not arise. Arithmetical errors in the computation sheet 11. erred in computing the income from other sources at Rs. 31,26,64,88,041 in the computation sheet, as against Rs. 5,64,49,35,672 determined in the impugned order; and accordingly computed tax liability on the aforementioned additional income of Rs. 25,62,15,52,369 at the rate of 40% which has resulted in erroneous addition to tax liability. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 52 Levy of interest under section 234B of the Act - Rs. 3,97,95,94,668 12. erred in levying interest under Section 234B of the Act amounting to Rs. 3,97,95,94,668; Levy of interest under section 234C of the Act - Rs. 15,241 13. erred in levying interest under Section 234C of the Act amounting to Rs. 15,241; Initiation of penal proceedings under section 270A of the Act 14. erred in initiating penalty under section 270A of the Act alleging misreporting of income by the Appellant.” 85. Ground no.1 is general in nature. Therefore, the same needs no specific adjudication. 86. The issue arising in grounds no.2 to 6, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.2 to 6 raised in assessee’s appeal are allowed. 87. The issue arising in grounds no.7-10, raised in assessee’s appeal, pertains to the set off of the taxable (non-grandfathered) brought forward long-term capital loss against the exempt (grandfathered) long-term capital gains. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, the AO is directed to allow ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 53 the exemption of the entire long-term capital gains earned by the assessee from the transactions which are covered under the provisions of Article 13(4) of the India-Mauritius DTAA. Further, the AO is directed to allow the set off of long-term capital loss brought forward from the previous years against the net long-term capital gains accrued during the year from the non- grandfathered sale of shares. Accordingly, the impugned order on this issue is set aside, and grounds no.7-10 raised in assessee’s appeal are allowed. 88. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 06/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, ground no.11 raised in assessee’s appeal is allowed for statistical purposes. 89. The issue arising in grounds no.12 and 13, raised in assessee’s appeal, pertains to the levy of interest under sections 234B and 234C of the Act, which is consequential in nature. Therefore, the same needs no separate adjudication. 90. Ground no.14, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. 91. In the result, the appeal by the assessee is partly allowed for statistical purposes. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 54 ITA No. 2154/Mum/2025 IShares MSCI All Country Asia Ex Japan ETF – A.Y. 2022-23 92. In this appeal, the assessee has raised the following grounds: - “On the facts and circumstances of the case, the Appellant craves leave to prefer an appeal against the order under section 143(3) read with section 144C(13) of the Act dated 15 January 2025, issued by the Deputy Commissioner of Income Tax (International Taxation) - 2(2)(2), Mumbai ['the learned AO'] in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble DRP - I, Mumbai dated 4 December 2024 on the following grounds, each of which is without prejudice to and independent of the others: On the facts and in the circumstances of the case and in law, the learned AO/ Hon'ble DRP: General 1. erred in assessing the total income of the Appellant at Rs. 15,439,342,780 instead of the returned income of Rs. 15,269,254,390. Merits of the case: Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant 2. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on the sale of shares not chargeable to Securities Transaction Tax (STT\"): 3. failed to appreciate that income under the head 'Capital Gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STI and those not subjected to STT are no different and satisfy the 'similar computation' condition specified in section 70(2) of the Act; 4. failed to appreciate that since section 70 of the Act does not provide any hierarchy for set-off, the short-term capital loss arising from sale of shares subjected to STT can first be set-off against the short-term capital gains arising from sale of securities not subjected to ST instead of short-term capital gains arising from sale of shares subjected to STT; 5. erred in not following the decision of the Jurisdictional Tribunal in the Appellant's own case for AY 2021-22 as well as other binding decisions passed by the Jurisdictional Tribunal and rejecting the set-off merely because the Department has preferred an appeal before the Jurisdictional High Court against one of the orders of the Jurisdictional Tribunal; 6. Without prejudice to the above, erred in not granting set-off of the short- term capital gains arising from sale of share not subjected to STT against ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 55 brought forward unabsorbed short-term capital loss subjected to STT, contrary to the provisions of section 74 of the Act. Failure to allow of set-off of brought forward long-term capital losses 7. Erred in setting off the long-term capital losses brought forward from earlier Assessment Years amounting to Rs. 1,60,40,49,814 against the current year's net long-term capital gains amounting to Rs. 16,99,88,378, claimed as not chargeable to tax under Article 13 of the India Mauritius (IM Treaty): 8. erred in holding that long-term capital gains not chargeable to tax under the IM Treaty form part of the 'total income' of the Appellant as per section 2(24) of the Act read with section 4 and 5 of the Act; 9. erred in holding that mode of computation of capital gains should be as per the provisions of the Act and the provisions of IM treaty should be applied only to the 'net' capital gain which forms part of total income; 10. failed to appreciate that as per section 90(2) of the Act, each provision of the Act should be considered separately and therefore for determining total income', the income under head \"Capital gains has to be first determined considering the provisions of the Act or the treaty, whichever is more beneficial and once it is determined that the grandfathered gains are not chargeable to tax in India as per Article 13(4) of the IM Treaty and do not form part of the total income, the question of set off of brought forward losses there against does not arise; Arithmetical errors in the computation sheet 11. erred in computing total income from capital gains at Rs. 15,93,21,43,434 in the computation sheet annexed to the impugned order as against Rs.15,16,95,73,921 determined in the impugned order; 12. erred in allowing set-off of brought forward long-term and short-term capital losses aggregating to Rs. 1,26,25,15,976 in the computation sheet appended to the impugned order as against Rs. 2,19,49,73,867 allowed in the impugned order; 13. erred in computing the income taxable at special rate at Rs. 16,20,18,12,286 in the computation sheet annexed to the impugned order as against Rs. 15,43,93,42,780 determined in the impugned order and consequently computing higher tax liability; 14. Without prejudice to that stated above, erred in setting off brought forward capital losses amounting to Rs. 1,26,25,15,976 in the computation sheet annexed to the impugned order as against Rs. 2,19,49,73,867 provided in the impugned order which is not aligned as per the mechanism provided in the order and as per the directions issued by the Hon'ble DRP. Short-grant of taxes deducted at source (TDS) 15. Erred in computing TDS credit amounting to Rs. 5,51,76,149 as against TDS credit claimed in the return of income amounting to Rs. 5,70,62,930. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 56 Levy of interest under section 234C of the Act - Rs. 1,958 16. Erred in levying interest under Section 234C of the Act amounting to Rs. 1,958; Initiation of penal proceedings under section 270A of the Act 17. Erred in initiating penalty under section 270A of the Act alleging misreporting of income by the Appellant.” 93. Ground no.1 is general in nature. Therefore, the same needs no specific adjudication. 94. The issue arising in grounds no.2 to 6, raised in assessee’s appeal, pertains to the manner of set off of short-term capital loss, which was incurred by the assessee from the transaction in shares on which STT was paid. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, we direct the AO to accept the methodology adopted by the assessee for the computation of the capital gains. As a result, grounds no.2 to 6 raised in assessee’s appeal are allowed. 95. The issue arising in grounds no.7-10, raised in assessee’s appeal, pertains to the set off of the taxable (non-grandfathered) brought forward long-term capital loss against the exempt (grandfathered) long-term capital gains. Since we have already adjudicated a similar issue in the foregoing paragraphs, therefore, our findings/conclusions as rendered therein shall apply mutatis mutandis to this appeal. Accordingly, the AO is directed to allow the exemption of the entire long-term capital gains earned by the assessee from the transactions which are covered under the provisions of Article 13(4) ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 57 of the India-Mauritius DTAA. Further, the AO is directed to allow the set off of long-term capital loss brought forward from the previous years against the net long-term capital gains accrued during the year from the non- grandfathered sale of shares. Accordingly, the impugned order on this issue is set aside, and grounds no.7-10 raised in assessee’s appeal are allowed. 96. As regards the arithmetical errors in the computation sheet, the learned AR submitted that the assessee has filed a rectification application on 07/02/2025, which is pending consideration. Accordingly, we direct the AO to correctly compute the income of the assessee in accordance with law after considering our aforesaid directions. As a result, grounds no.11-14 raised in assessee’s appeal are allowed for statistical purposes. 97. The issue arising in ground no.15, raised in assessee’s appeal, pertains to the short grant of TDS credit. During the hearing, the learned AR submitted that the assessee has also filed a rectification application before the AO on 07/02/2025 in this regard, which is still pending consideration. Accordingly, we deem it appropriate to restore this issue to the file of the AO with the direction to grant the credit of taxes deducted at source, in accordance with the law, after conducting the necessary verification. We order accordingly. As a result, ground no.15 raised in assessee’s appeal is allowed for statistical purposes. 98. The issue arising in ground no.16, raised in assessee’s appeal, pertains to the levy of interest under section 234C of the Act, which is consequential in nature. Therefore, the same needs no separate adjudication. ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153, 2154/ Mum/2025 58 99. Ground no.17, raised in assessee’s appeal, pertains to the initiation of penalty proceedings under section 270A of the Act, which is premature in nature. Therefore, the said ground is dismissed. 100. In the result, the appeal by the assessee is partly allowed for statistical purposes. 101. To sum up, all the appeals are partly allowed for statistical purposes. Order pronounced in the open Court on 11/06/2025 Sd/- VIKRAM SINGH YADAV ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 11/06/2025 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "