ADIT(IT)-2(1), MUMBAI V. STATE STREET BANK & TRUST CPMPANY AS TRUSTEE E.I. DUPONT DE NEMOURS AND COMPANY PENSIN TRUST FUND, MUMBAI

ITA 3768/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4680 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 20-09-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI B. RAMAKO TAIAH,(AM) ITA NO.3768/MUM/2009 ASSESSMENT YEAR : 2005-06 ASSTT. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)-2(1) ROOM NO.120, 1 ST FLOOR SCINDIA HOUSE, BALLARD ESTATE N.M. ROAD MUMBAI-400 038. ..( APPELLANT ) VS. STATE STREET BANK & TRUST COMPANY AS TRUSTEEE FOR E.I. DUPONT DE NEMOURS AND COMPANY PENSION TRUST FUND C/O. SR BATLIBOI & CO. 18 TH EXPRESS TOWERS NARIMAN POINT MUMBAI-400 021. ..( RESPONDENT ) P.A. NO. (AACTS 2322 K) APPELLANT BY : MS. KUSUM INGLE RESPONDENT BY : SHRI F ARROKH IRANI O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 12.3.2009 PASSED BY THE LD. CIT(A) FOR THE AS SESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE, A FOREIGN INSTITUTIONAL INVESTOR IS ENGAGED IN INVESTMENTS IN INDIA UNDER THE GUIDELINES SET IN THIS REGARD BY SEBI. THE ASSESSEE FILED RET URN DECLARING TOTAL INCOME OF RS.29,23,01,840/-. DURING THE COURSE OF ASSESSME NT IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE INVESTME NT ACTIVITY DURING THE YEAR, THE ASSESSEE HAS RESULTED IN CAPITAL GAINS/LO SSES AS UNDER :- ITA NO.3768/M/09 A.Y:05-06 2 PARTICULARS 01.04.2004 TO 30.09.2004 01.10.2004 TO 31.03.2005 SHORT TERM CAPITAL GAINS 10,53,73,689 2,41,90,567 SHORT TERM CAPITAL LOSS 1,16,82,383 71,84,368 SHORT TERM CAPITAL GAINS(NET) 9,36,91,306 1,70,06,199 THIS MEANS THAT TAX IS PAYABLE @ 30% ON RS.9,36,91, 306/- AND @ 10% ON RS.1,70,06,199/- IN TERMS OF THE PROVISIONS OF SEC. 115 AD AND SEC.111A RESPECTIVELY OF THE ACT. HOWEVER, THE ASSESSEE HAS OFFERED RS.8,65,06,938/- FOR TAXATION @ 30% AND RS.2,41,90,567/- @ 10%. ACC ORDING TO THE ASSESSING OFFICER BY VIRTUE OF PROVISIONS OF SECTIO NS 111A AND 115AD, TWO DISTINCT TIME PERIODS, FIRSTLY FROM 1.4.2004 TO 30. 9.2004 AND SECONDLY FROM 1.10.2004 TO 31.3.2005, TWO DIFFERENT TAX RATES APP LY. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE MANNER OF MAKING SET OFF O F SHORT TERM CAPITAL LOSS RS.71,84,368/- OUT OF SHORT TERM CAPITAL GAINS OF R S.1,05,37,368/-BY THE ASSESSEE IS INCORRECT AND ACCORDINGLY THE ASSESSING OFFICER COMPUTED SHORT TERM CAPITAL GAIN FOR TWO PERIODS AND CHARGED TO TA X NET SHORT TERM CAPITAL GAINS U/S.115AD AFTER REDUCING SHORT TERM CAPITAL G AINS/LOSS U/S.115A AND THEREBY WORKED OUT THE TOTAL SHORT TERM CAPITAL GAI NS AT RS .11,06,98,649/- COMPLETED THE ASSESSMENT AT AN INCOME OF RS.29,23,0 1,840/-, VIDE ORDER DATED 14.12.2007 PASSED U/S. 143(3) OF THE INCOME T AX ACT, 1961, (THE ACT). ON APPEAL, THE LD. CIT(A) FOLLOWING THE RATIO AND A NALOGY OF THE ORDER OF THE TRIBUNAL HELD THAT THE APPELLANT IS ENTITLED TO SET OFF SHORT TERM CAPITAL LOSS AGAINST SHORT TERM CAPITAL GAINS COMPUTED FOR THE P ERIOD UPTO FROM 1.4.2004 TO 30.9.2004 AND ACCORDINGLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO SET OFF OF SHORT TERM CAPITAL LOSS ON S ALE TRANSACTIONS SUBJECT TO SECURITIES TRANSACTIONS TAX (STT) AGAINS T SHORT-TERM ITA NO.3768/M/09 A.Y:05-06 3 CAPITAL GAIN ON SALE TRANSACTIONS NOT SUBJECT TO ST T EVEN THOUGH THERE WAS SUFFICIENT SHORT-TERM CAPITAL GAIN ON SALE TRANSACTIONS SUBJECT TO STT AVAILABLE FOR SET OFF. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(APPEALS) ON THE ABOVE GROUND(S) BE SET ASIDE AN D THAT OF THE ASSESSING OFFICER RESTORED. 4. AT THE TIME OF HEARING THE LD. DR SUPPORTS THE O RDER OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE SUBMITS THAT THE IMPUGNED ISSUE IS FULLY COVERED IN FAVOUR OF THE AS SESSEE BY THE ORDER OF THE TRIBUNAL IN FIRST STATE INVESTMENTS (HONGKONG) LTD. VS. ADIT (INTL. TAXATION) (2009) 33 SOT 26 (MUM.) WHICH HAS BEEN FOLLOWED IN FIDELITY INVESTMENT TRUST FIDELITY OVERSEAS FUND VS. ADDL.DIT (INTL. TA XATION) (2009)TIOL-595- ITAT-MUM AND IN ADIT (INTL. TAXATION) VS. AMERICAN CENTURY TWENTIETH CENTURY INTERNATIONAL DISCOVERY FUND IN ITA NO.3602 /MUM/2009 FOR ASSESSMENT YEAR 2005-06 DATED 20.8.2010. HE ALSO PL ACED ON RECORD THE COPY OF THE SAID ORDERS OF THE TRIBUNAL. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE. WE FURTHER FIND THAT THE ISSUE IS SQUAREL Y COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL CITED SUPRA, WHEREIN IT HAS BEEN HELD THAT SHORT TERM CAP ITAL LOSS SUFFERED AFTER 1.10.2004 COULD BE SET OFF AGAINST SHORT TERM CAPIT AL GAINS EARNED BEFORE 30.9.2004. IN THE ABSENCE OF ANY DISTINGUISHING FE ATURE BROUGHT ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE CONSI STENT VIEW OF THE TRIBUNAL HOLD THAT THE SHORT TERM CAPITAL LOSS SUFFERED AFTE R 1.10.2004 COULD BE SET OFF AGAINST SHORT TERM CAPITAL GAINS EARNED BEFORE 30.9 .2004 AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDING OF THE LD. CIT(A ) IN DIRECTING THE ASSESSING OFFICER TO ALLOW SET OFF OF THE SHORT TERM CAPITAL LOSS OF RS.71,84,368/- FOR THE PERIOD FROM 1.10.2004 TO 31.3.2005 AGAINST THE SHORT TERM CAPITAL GAIN ITA NO.3768/M/09 A.Y:05-06 4 OF RS.10,53,73,689/- COMPUTED FOR THE PERIOD FROM 1 .4.2004 TO 30.9.2004. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE, REJ ECTED. 7. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.9.2010. SD/- SD/- (B. RAMAKOTAIAH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 24.9.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.