Appeal details
Counselvise Citation
[2024] 101 COUNSELVISE.COM (IT) 6753 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-05-2024
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
I
Next Hearing Date
08-05-2024
Assessment Year
2021-2022
Appeal Filed On
13-12-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI SANDEEP SINGH KARHAIL, JM ITA Nos. 4564/Mu m/2023 (Assess ment Yea r: 2021-22) iShares MSCI EM UCI TS ETF USD ACC C/o Ernst & Young LLP, 17 th Floor, The Ru by, 29, Senapati Bapat Marg, Dadar ( West), Mumbai-400 028 Vs. Dy. Co mmissioner of Inco me Tax (International Tax)-2(2)(2) 1606, 16 th Floor, Air India Building, Nari man Point, Mu mbai-400 021 (Appellant) (Respondent) PAN No. AADCI3483P ITA Nos. 4567/Mu m/2023 (Assess ment Yea r : 2021-22) iShares MSCI INDIA UCITS ETF Ernst & Young LLP, 17 th Floor, The Ru by, 29, Senapati Bapat Marg, Dadar ( West), Mumbai-400 028 Vs. Dy. Co mmissioner of Inco me Tax (International Tax)-2(2)(2) 1606, 16 th Floor, Air India Building, Nari man Point, Mu mbai-400 021 (Appellant) (Respondent) PAN No. AAECI8727K Page | 2 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 ITA Nos. 4568/Mu m/2023 (Assess ment Yea r : 2021-22) iShares MSCI EM UCI TS ETF USD ACC Ernst & Young LLP, 17 th Floor, The Ru by, 29, Senapati Bapat Marg, Dadar ( West), Mumbai-400 028 Vs. Dy. Co mmissioner of Inco me Tax (International Tax)-2(2)(2) 1606, 16 th Floor, Air India Building, Nari man Point, Mu mbai-400 021 (Appellant) (Respondent) PAN No. AADCI3483P ITA Nos. 4569/Mu m/2023 (Assess ment Yea r : 2021-22) iShares MSCI EM IMI ESG SCREENED UCI TS ETF Ernst & Young LLP, 17 th Floor, The Ru by, 29, Senapati Bapat Marg, Dadar ( West), Mumbai-400 028 Vs. Dy. Co mmissioner of Inco me Tax (International Tax)-2(2)(2) 1606, 16 th Floor, Air India Building, Nari man Point, Mu mbai-400 021 (Appellant) (Respondent) PAN No. AAFCI0124F Page | 3 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 ITA Nos. 4570 /Mu m/2023 (Assess ment Yea r : 2021-22) iShares MSCI EM UCI TS ETF USD DIS T Ernst & Young LLP, 17 th Floor, The Ru by, 29, Senapati Bapat Marg, Dadar ( West), Mumbai-400 028 Vs. Dy. Co mmissioner of Inco me Tax (International Tax)-2(2)(2) 1606, 16 th Floor, Air India Building, Nari man Point, Mu mbai-400 021 (Appellant) (Respondent) PAN No. AADC13487K Assessee by : S h r i A n i s h T h a c k e r / P r a n a y G a n d h i , Le k h M e h t a , A R s Revenue by : S h r i A n i l S a n t , A d d l . C IT D R D a t e o f h e a r i n g : 0 9 . 0 5 . 2 0 2 4 Date of pronouncement : 3 1 . 0 5. 2 0 24 O R D E R PER BENCH 01. All these appeals are involving similar issues therefore those appeals are heard together and disposed of by this common order. 02. First we take up ITA number 4564/M/2022 filed by Ishare EMSC Mauritius co, Mumbai for assessment year 2021 – 22 against the assessment order passed under section 143 (3) read Page | 4 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 with section 144C (13) of the act dated 14th October thousand 23 passed by the Deputy Commissioner of income tax (International taxation) – 2 (2) (2), (the learned AO) in pursuance of directions passed under section 144C (5) of the income tax act issued by the dispute resolution panel – I, Mumbai (the learned DRP) dated 13 September 2023 wherein the total income of the assessee is assessed at 1,85,28,212/– instead of the return income of ₹ 17,736,991/–. 03. The only grievance of the assessee in this appeal which is press this ground number 4 – 2 with respect to the claim of set-off of short-term capital loss and arithmetical errors in the computation sheet. 04. Facts of the case show that assessee is a fundamental nine by a company in Mauritius and is registered with securities and exchange board of India as foreign portfolio investor (MPI). For the year under consideration the assessee's case was selected for scrutiny where assessee filed its return of income declaring total income of ₹ 17,736,990/– on 10/3/2022. In the return of income assessee has on short-term capital gain chargeable to tax at the rate of 15% of ₹ 309, 72,314/- , chargeable to tax at the rate of 30% of ₹ 791,221/– amounting to ₹ 31,763,535/– assessee has set of the brought forward short term capital losses covered under section 111A of the act and not short-term capital loss was carried forward of ₹ 17,690,846/–. The assessee has dividend income of ₹ 17,715,791/– which is chargeable to tax at the rate of 20% and interest on REIT of ₹ 21,200/– which is chargeable to tax at the rate of 5%. Page | 5 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 05. In the return of income assessee has earned term capital gain of ₹ 317,63,535/– after set-off of the short-term capital loss assessee has offered capital loss of ₹ 17,690,846/–. The short- term capital gain earned by the assessee comprised of Rs. 309,72,314/– which is taxable at the rate of 15%, ₹ 791,221/– which is chargeable to tax at the rate of 30%. The assessee set of Rs. 791,221/– of short-term capital losses other than those covered under section 111A of the Act. Thus, capital gain on of Rs. 309,72,314/– which is chargeable to tax at the rate of 15% has been set off against the brought forward short term capital losses of the assessee covered under section 111A of the income tax act . 06. As per the statement of computation of total income assessee has earned short-term capital gain during the year of ₹ 31,763,535/– and has also short-term capital loss for the current year of ₹ 49,454,381/–. Assessee has short-term capital loss brought forward of ₹ 103,551,143 and long-term capital loss brought forward of ₹ 359,405,011/–. Assessee has made into adjustment of short-term capital loss of ₹ 49,454,381/– with a short-term capital gain of ₹ 317,63,535/–. 07. The learned assessing officer noted that assessee had set off the losses of no taxable gains which is chargeable to tax at the rate of 15% against the higher taxable gains which is chargeable to tax at 30% even though the assessee is having gains from the lower taxable gains. Considering the facts the assessee was issued a notice as to why the set off of lower tax gain should not be denied with higher taxable gains as the income tax rules provided separate columns for set of and Page | 6 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 carry forward of losses. Assessee argued that section 70 of the income tax act allows the assessee to set-off the losses of lower taxable gains with gains of higher taxable gains. 08. The learned assessing officer did not agree with the same and held that the claim of the assessee who is having capital gains which are taxable at the rate of 15% where assessee has opted to set-off of losses having lowered taxability with gains of higher taxability is not in order. Further the income tax rules which frames the columns and procedures for each income tax return has clearly defined separate columns for set of and carry forward of gains of having different tax. Therefore the claim of the assessee was rejected. Thus the assessing officer computed set-off of short-term capital loss is covered under section 111A of the income tax act against short-term capital gains chargeable to tax at the rate of 15% and further did not grant any set of on short-term capital gain which is chargeable to tax at the rate of 30% of ₹ 791,221/–. Thus the learned assessing officer assessed income of the assessee of ₹ 791,022 by taxing gross amount of short-term capital gains chargeable to tax at the rate of 30% without setting of the same against short-term capital loss of the current year attributable to transaction on which security transaction tax is paid and against brought forward short-term capital losses. 09. Accordingly draft assessment order was passed by the learned assessing officer on 19/12/2022 determining the total income of the assessee at ₹ 1,85,28,212/–. Page | 7 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 010. Assessee preferred objection before the learned dispute resolution panel where directions were issued on 12/9/2023 rejecting the assessee's objection and upheld the action of the AO in taxing the gross amount of short-term capital gain chargeable to tax at 30% without setting of the same against current year short-term capital loss attributable to transactions on which security transaction tax is paid and against brought forward short term capital gain. Thus, the assessment order under section 143 (3) read with section 144C (13) of the act was passed on 14 October 2023 wherein the assessing officer upheld the addition by taxing the gross amount of short-term capital gain chargeable to tax at the rate of 30% without setting of the same against current year short-term capital loss attributable to transaction on which security transaction tax is paid and without allowing the brought forward short-term capital loss. Therefore, assessee is in appeal. 011. The assessee has stated that it is not pressing the ground of challenging the assessment order being barred by limitation of time and other technical grounds. It only challenges that the learned that assessing officer has not allowed set-off of short- term capital loss whether covered by securities transaction tax or not against short-term capital gain which is not subject to security transaction tax and chargeable to tax as per provisions of section 115AD of the act at the rate of 30%. The claim of the assessee is that if assessee has earned short-term capital loss on which security transaction tax is paid, it shall be first set off against the net short-term capital gain without payment of securities transaction tax. If there is some balance left of Page | 8 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 short-term capital loss on which security transaction taxes paid itself be set of against short-term capital gain on which security transaction tax is paid. If still there is a short-term capital gain on which security transaction tax paid remains then the gains are required to be set off against the available brought forward short-term capital loss. The learned authorized representative referred to the provisions of section 70 of the act and submitted that the act does not specify the manner and hierarchy of set-off of short-term capital loss against short-term capital gain where the gains are subjected to a differential tax rate. Consequently, in the absence of a specific stipulation in the act, the appellant, while computing the Net short-term capital gain taxable under the act has first set off the total short-term capital loss which is subject to security transaction tax as well as not subject to security transaction tax against short-term capital gain taxable at the rate of 30% and the balance has been set off against short- term capital gain taxable at the rate of 15%. He thereafter submitted that the reference to clause 'similar competition' connotes computation of capital gain as per the provisions of section 48 to 55 of the act but it does not relate to the tax rate applicable on such gain. For this proposition he relied upon the decision of the coordinate bench in case of 33 SOT 26 in case of first State investments (Hong Kong) Ltd, J P Morgan fund (ITA number 2862/MUL/2022 dated 21st of March 23), J S capital LLC (160 taxmann.com 686 (MU M)). Thus it was claimed that in absence of specific stipulation for staff, the appellant has the choice to choose the set of approach which is beneficial to it. It was further stated that the differential rate of Page | 9 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 taxation on short-term capital gain and short-term capital loss does not preclude the assessee to claim set of against these short-term capital gain. Thus it is submitted that in computing the tax liability the short-term capital loss may be set off against short-term capital gain taxable at the rate of 30% and the balance be set of against short-term capital gain taxable at the rate of 15%. Thus in the absence of any specific provision to the contrary in the act, the assessee may adopt the basis that is most beneficial to it even if such a basis has the effect of reducing the overall tax liability. For this proposition assessee relied upon the decision of honourable Calcutta High Court in case of ITA number 812 of 2008 dated 19 December 2008 in case of Rungamatee Trexim and Montgomery emerging markets fund (hundred ITD 217 (MU M) (SB) therefore submitted that assessee should be permitted to 1st set of 15% short-term capital loss against the 30% short-term capital gain first and then against 15% short-term capital gain and carry forward the balance short-term capital loss. This was the argument with respect to ground number 4 – 10 of the appeal. 012. The learned authorized representative also submitted that there is an error in computing the income from capital gains. The correct income from capital gain is ₹ 859,680 in the computation seat however the learned assessing officer has computed it at ₹ 791,221/–. Assessee has filed an application under section 154 of the act which is still unattended and undisposed. 013. With respect to the levy of interest under section 234A of the act it was submitted that the learned assessing officer has Page | 10 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 levied interest of ₹ 25,325/– wherein the assessee has filed its return of income on/3/2022 which is within the extended time limit of 15/3/2022 and therefore the interest under section 234A has been levied as assessee has filed its return of income in time. 014. The learned departmental representative vehemently supported the order of the learned assessing officer in stating that the income tax returns are framed as per the income tax act which does not allow the claim made by the assessee and therefore the lower authorities are correct in holding that it is not a similar competition because the tax rate in the short-term capital gain on by the assessee and the short-term capital loss account by the assessee are different. 015. We have carefully considered the rival contention and perused the orders of the lower authorities. As the learned authorized representative is not pressed ground number 2 and 3 of the appeal is dismissed. Ground number 1 is general in nature and therefore same is also dismissed. Ground number 11 – 14 are with respect to the error in the computation of the capital gain where assessee claimed that the correct computation of capital gain is ₹ 859,680/– against ₹ 791,221/- taken by the learned assessing officer. Assessee has already filed an application under section 154 of the income tax act wherein 4 computational errors are pointed out. The learned assessing officer is directed to correct the same after verification. Accordingly those grounds are allowed for statistical purposes. Ground number 15 is for the levy of interest under section 234A the assessee says that the due date of filing of Page | 11 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 return of income was 15/3/2022 and the assessee has already filed return of income on 10/3/2022 and therefore there is no question of levy of interest under that section. We direct the learned assessing officer to verify once again whether the interest under section 234A is chargeable to tax or not where assessee has filed return of income within the due dates. Thereafter, the learned AO may decide the issue. Thus ground number 15 is allowed to that extent. Ground number 16 – 18 consequential or premature in nature and therefore same are dismissed. 016. This Leaves us with the only grounds relating to computation of short-term capital gain and set off of short-term capital loss. The only issue in this appeal is that assessee has earned short-term capital gain of ₹ 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 and losses. 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 Short-term capital loss should be first set of against short-term capital Page | 12 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 which no securities transaction taxes paid gain on which securities transaction tax is paid 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 is allowed to be carried forward without utilizing such brought forward short-term capital loss was set off Page | 13 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 018. 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 ₹ 49,454,381/– (which is subject to securities transaction tax) and also earned short-term capital gain of ₹ 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 Page | 14 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 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. 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 1st set 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 Page | 15 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 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 ₹ 791,221/–. 023. Accordingly appeal of the assessee is partly allowed. 024. Coming to ITA number 4568/M/2023 which is filed by the assessee against the assessment order passed under section 143 (3) read with section 144C (13) of the act dated 14/10/2023 passed by the Deputy Commissioner of income tax (International taxation) – 2 (2) (2), Mumbai (the learned AO) in pursuance of the directions issued under section 144C (5) of the act issued by the dispute resolution panel – 1, Mumbai (the learned DRP) on 12/9/2023 wherein the income of the assessee of ₹ 58,178,706 is assessed at ₹ 61,915,486/– . 025. Fact shows that assessee has earned the income under the head capital gains for the current year of short-term capital loss of ₹ 1,189,960/– and has also earned short-term capital gain of ₹ 5,474,831/–. The short-term capital gain comprises of the short-term capital gain as computed under section 111A of the act of ₹ 1,738,051/– and the balance of ₹ 3,736,780 was other short-term capital gain. It has also short-term capital loss brought forward from earlier years of ₹ 56,764,317/–. The assessee has made into had adjustment of short-term capital loss with the short-term capital gain and also set of brought forward short-term capital losses to the extent of ₹ 4,284,871/–. The claim of the assessee is that assessee has Page | 16 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 earned short-term capital gain which is not subject to STT and taxable under section 115AD of the act at the rate of 30% of ₹ 3,736,780/–. It has short-term capital loss for the current year of ₹ 1,189,960/–. This leaves with the balance of natural short-term capital gain of ₹ 2,546,820 out of that. As assessee has another short-term capital gain which is subject to STT and has taxable under section 115AD read with section 111A of the act at the rate of 15% of ₹ 1,738,051/– which leaves the total short-term capital gain to be set off of ₹ 4,284,871/–. As assessee has short-term capital loss brought forward from earlier years of ₹ 56,764,317/–, out of that ₹ 4,284,871/– is brought forward short-term capital loss adjusted against the short-term capital gain of the year. This resulted into the total short-term capital gain offered in the return of income at rupees Nil. 026. The learned assessing officer held that assessee is not entitled to claim set-off of brought forward short-term capital losses against the short-term capital gain of ₹ 3,736,780/– as it is subject to tax at the rate of 30% whereas the current year's short-term capital loss and brought forward short-term capital loss are chargeable to tax at the rate of 15%. 027. As we have held in ITA number 4564/M/2023 that provisions of section 70 does not lay down the order of set of of short- term capital losses as well does not make any distinction about the rate of tax pertaining to such short-term capital losses, the issue in this appeal is squarely covered by the decision in ITA number 4564/M/2023. Accordingly ground number 4 – 8 of the appeal of the assessee is allowed and AO is directed to Page | 17 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 grant short-term capital loss of ₹ 1,189,960/- be first set of against the short-term capital gain of ₹ 3,736,780 and further brought forward short-term capital loss to the extent of ₹ 2,546,820/– can also be set off against the balance short-term capital gain. 028. Ground number 1 is general in nature, ground number 2 and 3 are not pressed, ground number 14 is premature and therefore these grounds are dismissed. 029. Ground number 9 – 13 a read with respect to the computational error, which becomes now merely academic in view of our decision in ground number 4 – 8 of the appeal of the assessee. 030. In the result ITA number 4568/M/2023 is partly allowed. 031. ITA number 4567/M/20 23 is filed by the assessee against the assessment order passed under section 143 (3) read with section 144C (13) of the act dated 14/10/23 passed by the Deputy Commissioner of income tax (International taxation) – 2 (2) (2), Mumbai (the learned AO) in pursuance of the direction under section 144C (5) of the act issued by the dispute resolution panel – one, Mumbai dated 11/9/2023 wherein the income of the assessee returned of ₹ 1,315,354,310/– is assessed at ₹ 1,342,831,140/–. 032. The only issue in this appeal is that assessee has earned short- term capital gain of ₹ 27,576,830/– which is not subject to STT and is chargeable to tax at the rate of 30% against which assessee is not allowed set-off of losses of short-term capital Page | 18 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 gain of the year on which securities transaction tax is paid and also brought forward short-term capital loss of earlier years. 033. Both the parties confirmed that this issue is identical to ITA number 4568/M/2023 wherein as per ground number 4 – 8 identical issue is involved. The parties also confirmed that their argument and submissions are also identical. 034. While dealing with the ITA number 4568/M/2023 where in we have allowed ground number 4 – 8 of the appeal of the assessee directing the learned assessing officer to grant set-off of short-term capital losses on by the assessee during the year and also brought forward short-term capital losses of earlier year against the short-term capital gain earned by the assessee in similar manner. Therefore we direct the learned assessing officer to grant set-off against the short-term capital gain of ₹ 2,75,76,830 against the short-term capital losses on during the year as well as brought forward from earlier years. Accordingly ground number 4 – 8 of the appeal is allowed. 035. Ground number 1 is general, 2 is not pressed, 3 is also not pressed, ground number 15 is consequential and ground number 16 is premature and therefore all these grounds are dismissed. 036. Ground number 14 of the appeal is against the levy of interest under section 234A of the act. The claim of the assessee is that the due date for filing of the return of income for that year was 15/3/2022 and assessee has filed its return of income on 11/3/2022 and therefore there cannot be any reason to charge interest under section 234A of the act. The learned assessing Page | 19 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 officer is directed to verify the same and if the contention of the assessee is found correct, delete the above interest. Accordingly ground number 14 is allowed as indicated above. 037. Ground number 9 – 13 are the errors in the computation sheet, which becomes redundant in view of our decision in ground number 4 – 8 of the appeal and therefore same are dismissed. 038. In the result appeal of the assessee is partly allowed. 039. ITA number 4569/M/2023 is filed by the assessee against the assessment order passed under section 143 (3) read with section 144C (13) of the act dated 14/10/2023 passed by the Deputy Commissioner of income tax (International taxation) – 2 (2) (2), Mumbai (the learned AO) in pursuance of the direction issued under section 144C (5) of the act by the dispute resolution panel – 1, Mumbai (the learned DRP) dated 13/9/2023 wherein the return of income filed by the assessee on 11/3/2022 of ₹ 135,569,970/– was assessed at ₹ 135,569,970/- but where the assessee has paid tax on short- term capital gain at the rate of 15%, the learned assessing officer charged tax rate on short-term capital gain of ₹ 3,405,574 at 30% and short-term capital gain of ₹ 36,203,796 at the rate of 15%. 040. The computation of total income shows that assessee has earned short-term capital gain under section 11A of the act of ₹ 66,046,350 which is chargeable to tax at the rate of 15%. Assessee has also short-term capital gain which is chargeable to tax at the rate of 30% of ₹ 3,405,574/–. Thus the assessee has earned total short-term capital gain of ₹ 69,451,924/–. The Page | 20 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 assessee has also earned during the year short-term capital loss of ₹ 29,842,554/–. The assessee has set of the short-term capital gain of ₹ 69,451,924 against the loss of ₹ 29,842,554 resulting into an action of them capital gains for the year of ₹ 39,609,370/-. On this the assessee has paid 15% of the tax. 041. The claim of the learned assessing officer is that assessee should pay tax on short-term capital gain of ₹ 3,405,574 at the rate of 30% and on the balance short-term capital gain of ₹ 36,203,796/- [ Rs 66046350/- (-) 29842554/- ] at the rate of 15%. 042. The learned assessing officer is of the view that on the capital gain of ₹ 3,405,574/– assessee should pay tax at the rate of 30% and cannot be set off against the current short-term capital losses as well as brought forward short-term capital losses because they fall into 15% tax bracket. The action of the learned assessing officer is upheld by the learned dispute resolution panel. 043. In ITA number 4567/M/2023 and 4568/M/2023 four assessment year 2021 – 22 relying upon the several judicial precedent we have held that there is no order of precedence of set-off of short-term capital losses qualified by the tax rate. Therefore, we direct the learned assessing officer to grant set- off of capital gain of ₹ 3,405,574 and by the assessee against the short-term capital loss on by the assessee during the year irrespective of its tax rate. This is raised according to ground number 3 – 6 of the appeal. Therefore, same are allowed. Page | 21 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 044. Ground number 1 and 2 are not pressed therefore same are dismissed. Ground number 7 is with respect to the arithmetic error, which becomes redundant in view of our decision in ground number 3 – 6 of the appeal. Therefore according these grounds are dismissed. 045. In the result ITA number 4569/M/2023 is partly allowed. 046. ITA number 4570/M/2023 is filed by the assessee against the assessment order passed under section 143 (3) read with section 144C (13) of the act dated 14/10/2023 passed by the Deputy Commissioner of income tax (International taxation) – 2 (2) (2), Mumbai (the learned AO) passed in pursuance of direction issued under section 144C (5) of the act issued by the dispute resolution panel – 1, Mumbai (the learned DRP) dated 12 September 2023 wherein the income of the assessee return at ₹ 22,03,96,120/– is assessed at ₹ 234,895,280/–. The only grievance in this appeal is that assessee short-term capital gain of ₹ 234,895,280/– is taxed at the rate of 30% without utilizing the brought forward short-term capital loss for set of purposes. 047. The fact shows that during the year the assessee has on short- term capital gain under section 111A of the act of ₹ 8,771,564/– and other short-term capital gain of ₹ 14,499,155/– totaling to ₹ 23,270,719/–. The assessee has also short-term capital loss for the current year of ₹ 13,466,801/– therefore the net short-term capital gain earned by the assessee for the year was ₹ 9,803,918/–. The assessee has brought forward short-term capital loss of ₹ 287,302,516/– out of Page | 22 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 which the assessee has set off brought forward short-term capital loss of ₹ 9,803,918 against the net short-term capital gain earned by the assessee during the year. Therefore the short-term capital gain shown by the assessee chargeable to tax during the year is Rs Nil. 048. The learned assessing officer held that short-term capital gain earned by the assessee of ₹ 1,44,99,155/– is subject to tax and the rate of 30% and such short-term capital gain cannot be adjusted against the current short-term capital loss of brought forward short-term capital loss of the assessee. This is confirmed by the learned dispute resolution panel also. 049. Therefore the only grievance of the assessee is that short-term capital gain of rupees one core 44,99,155 which is not subject to securities transaction tax and is chargeable to tax at the rate of 30% should be set off against the short-term capital loss on by the assessee during the year which is subject to securities transaction tax and further against brought forward short-term capital loss. 050. Both the parties confirmed that this is identical to the appeal in ITA number 4567/4568/4569/M/2023 dealt with in this order. Their arguments are also similar. 051. We have carefully considered the rival contention and perused the orders of the learned AO as well as the direction of the learned dispute resolution panel. We find that the only issue involved in this appeal is whether the short-term capital gain earned by the assessee during the year can be set off against the other short-term capital loss for the current year as well as Page | 23 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 the brought forward short-term capital losses despite different tax bracket as well as without any order of precedence of set- off. Identical issue has been decided in the above ITA's wherein we have held that there is no bar under the provisions of section 70 with respect to the inter-head adjustment of short-term capital gain against the short-term capital loss is irrespective of the bracket of tax rate. Therefore we direct the learned assessing officer to allow assessee to set of short-term capital gain of ₹ one core 44,99,155 against the short-term capital loss which is subject to securities transaction tax and also against the brought forward short-term capital losses. Accordingly ground number 4 – 10 of the appeal of the assessee is allowed. 052. Ground number 1 is general, ground number 2 and 3 are not pressed, ground number 11 – 15 becomes redundant in view of our decision in ground number 4 – 10, ground number 7 is consequential and ground number 18 is premature and therefore all these grounds are dismissed. 053. Ground number 16 is with respect to the levy of interest under section 234A of the act, assessee claims that the due date for filing of return of income is 15/3/2022 and assessee has filed its return of income on 12/3/2022/– and therefore the interest under section 234A cannot be charged. The learned assessing officer is directed to verify and decide the issue in accordance with the law. 054. In the result appeal of the assessee is partly allowed. Page | 24 ITA No. 4564, 567 to 4570/Mum/2023 iShares MSCI EM VCITS ETF USD Acc; A.Y. 2021-22 055. In view of the above facts all the appeals filed by the assessee are partly allowed. Order pronounced in the open court on 31.05.2024. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (PRAS HANT M AHAR ISHI) (JUDIC IAL M EM BER) (ACC OUNTANT MEMB ER) Mumbai, Dated: 31.05.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai
