MERRILL LYNCH CAPITAL MARKETS ESPANA SA., MUMBAI V. DDIT (IT) 4(1), MUMBAI

ITA 4796/MUM/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9277 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 10-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 19-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Additional evidence

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L, MUMBAI .. , ! '# $% , & !, ' BEFORE SHRI R.S.SYAL, AM AND SHRI AMIT SHUKLA, JM ./ ITA NO.4796/MUM/2009 ( &) * &) * &) * &) * / / / / ASST YEAR : 2005-2006) M/S.MERRILL LYNCH CAPITAL MARKETS ESPANA SA C/O. M/S.G.M.KAPADIA & CO. 1001, RAHEJA CHAMBERS 213 NARIMAN POINT, MUMBAI 400 021. PAN : AACCM7105R. THE DY.DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) 4(1) MUMBAI. ( +, / // / APPELLANT) ) ) ) ) / VS. ( -.+,/ RESPONDENT) +, / // / 0 0 0 0 / APPELLANT BY : SHRI NITESH JOSHI -.+, / 0 / 0 / 0 / 0 / RESPONDENT BY : MS. NEERAJA PRADHAN ) / # / / / / DATE OF HEARING : 10.12.2012 12* / # / DATE OF PRONOUNCEMENT : 12.12.2012 !$ !$ !$ !$ / / / / O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 10.06.2009 IN RELATION TO THE ASSESSMENT YEAR 2005-2006. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE TAXABILITY OF ` 97,25,000 AS `OTHER INCOME AS AGAINST THE ASSESSE ES CLAIM OF SUCH SUM AS REPRESENTING `CAPITAL GAIN. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY RESIDENT OF SPAI N AND REGISTERED AS ITA NO.4796/MUM/2009 M/S.MERRILL LYNCH CAPITAL MARKETS ESPANA SA. 2 FII WITH SEBI. A PROFIT OF ` 97.25 LAKH EARNED ON ACCOUNT OF ITS TRANSACTION WITH FOREIGN EXCHANGE AND WAS TREATED A S SHORT TERM CAPITAL GAIN AND HENCE IMMUNE FROM TAXATION IN VIEW OF ARTICLE 14(6) OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND SPAIN (HEREINAFTER CALLED DTAA). THE ASSESSING O FFICER TREATED THIS AMOUNT AS INCOME FROM OTHER SOURCES TAXABLE IN INDIA AS PER ARTICLE 23(3) OF THE DTAA. THE LEARNED CIT(A) UPHEL D THE ASSESSMENT ORDER ON THIS POINT. 3. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS COVERED BY CERTAIN ORDERS PASSED BY THE TRIBUNAL INCLUDING THAT OF DDIT V. M/ S.D.B. INTERNATIONAL (ASIA) LTD. ITA NO.2954/MUM/2010. IN THE OPPOSITION THE LD. DR INVITED OUR ATTENTION TOWARDS CERTAIN AD DITIONAL EVIDENCE FILED BEFORE THE TRIBUNAL FOR THE FIRST TIME IN THE SHAPE OF COPY OF CERTIFICATE FROM CITIBANK AND COPY OF STATEMENTS OF MONTHLY OUTSTANDING FORWARD CONTRACTS SUBMITTED BY THE CITI BANK TO THE RESERVE BANK OF INDIA. THE LEARNED AR WAS FAIR ENOU GH TO CONCEDE THAT SUCH ADDITIONAL EVIDENCE COULD NOT BE FILED BE FORE THE AUTHORITIES BELOW BECAUSE IT WAS NOT CONSIDERED EXPEDIENT IN TH E FACTS AND CIRCUMSTANCES OF THE CASES. HOWEVER IT WAS MAINTAIN ED THAT THESE DOCUMENTS ARE VITAL TO SUPPORT THE CLAIM OF THE ASS ESSEE. SIMILAR REQUEST WAS MADE THROUGH THE ASSESSEES LETTER DATE D 08.04.2011 AT THE TIME OF FILING ADDITIONAL EVIDENCE AND REQUESTI NG FOR THE ITA NO.4796/MUM/2009 M/S.MERRILL LYNCH CAPITAL MARKETS ESPANA SA. 3 ADMISSION OF SUCH ADDITIONAL EVIDENCE IN THE INTERE ST OF SUBSTANTIAL JUSTICE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RELEVANT MATERIAL ON RECORD. INSOFAR AS THE RATIO OF THE DECISIONS RELIED UPON BY THE ASSESSEE IN D.B.INTERNATIONAL (ASIA) LTD. AND OTHERS IS CONCERNED, WE FIND THAT IT HAS BEEN CATEGORICALLY H ELD THAT WHEN FII ENTER INTO FORWARD EXCHANGE CONTRACT TO PROVIDE HED GING MECHANISM AGAINST ADVERSE FOREIGN EXCHANGE MOVEMENT, SUCH PR OFIT/LOSS HAS TO BE CONSIDERED AS INCOME FROM CAPITAL GAIN. THERE IS NO DISPUTE ON SUCH RATIO EMANATING FROM OTHER DECISIONS AS WELL SINCE THE LD . DR HAS NOT POINTED OUT ANY CONTRARY DECISION. HOWEVER THE FACTS OF THE INSTANT CASE ARE REQUIRED TO BE EXAMINED IN THE LIG HT OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE ON THIS ISSUE. WE, T HEREFORE, SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FI LE OF A.O. FOR TAKING A FRESH DECISION AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY TO THE ASSESSEE. NEEDLESS TO SAY THE AS SESSEE WILL BE ENTITLED TO PLACE RELIANCE ON ADDITIONAL EVIDENCE F ILED BEFORE US OR WHICH IT FURTHER PROPOSES TO FILE BEFORE THE A.O. I N SUPPORT OF ITS CASE IN SUCH FRESH PROCEEDINGS. THE ASSESSING OFFICER WI LL ALSO TAKE INTO CONSIDERATION THE RATIO DECIDENDI OF THE AFORE-NOTED ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF D.B.INTERNATIONAL (ASIA) LTD. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ITA NO.4796/MUM/2009 M/S.MERRILL LYNCH CAPITAL MARKETS ESPANA SA. 4 ORDER PRONOUNCED ON THIS 12 TH DAY OF DECEMBER, 2012. !$ / 12* 3!)4 2 / 5 SD/- SD/- (AMIT SHUKLA) (R.S.SYAL) & ! & ! & ! & ! / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER MUMBAI ; 3!) DATED : 12 TH DECEMBER, 2012. DEVDAS* !$ / -&#'6 76*# !$ / -&#'6 76*# !$ / -&#'6 76*# !$ / -&#'6 76*#/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. 8 () / THE CIT(A)-XXXIII, MUMBAI. 4. 8 / CIT 5. 6;5 -&#&) , , / DR, ITAT, MUMBAI 6. 5< = / GUARD FILE. !$) !$) !$) !$) / BY ORDER, .6# -&# //TRUE COPY// > > > >/ // /? @ ? @ ? @ ? @ ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI