CAPITAL INTERNATINAL EMERGING MARKETS FUND, MUMBAI V. DDIT (IT) 1(2), MUMBAI

ITA 8796/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4231 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 04-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY SRI VASTAVA
• Keywords: Capital asset; Share purchase agreement; Cost of acquisition; Valuation report
• Section: 14A

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - L BENCH. . , !' !' !' !' / #$%& #$%& #$%& #$%& , $ $ $ $ '( '( '( '( BEFORE S/SH.D.MANMOHAN,VICE-PRESIDENT & RAJENDR A,ACCOUNTANT MEMBER ./ ITA NO.8796/MUM/2010 , ) ) ) ) / ASSESSMENT YEAR-2007-08 CAPITAL INTERNATIONAL EMERGING MARKETS FUND, C/O. J.P.MORGAN CHASE BANK N.A. INDIA SUB CUSTODY, 6 TH FLOOR, B WING, PARADIGM TOWER, MINDSPACE MALAD GOREGAON LINK RD, MALAD (W) MUMBAI- 400064 VS. DDIT (IT) 1(2) 1 ST FLOOR, SCINIDA HOUSE, N.M.ROAD, BALLARD PIER MUMBAI- 400038 PAN: AAACC6434D ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT ) *+ *+ *+ *+ . . . . $ $$ $ / APPELLANT BY : MR. SRIRAM SESHADRI. ,-*+ / . $ / RESPONDENT BY : MR. AJAY SRIVASTAVA. / // / 0 0 0 0 / DATE OF HEARING : 04/07/2013 2) / 0 / DATE OF PRONOUNCEMENT : 10/07/2013 , 1961 / // / 254(1) $ $$ $ %030 %030 %030 %030 '$4 '$4 '$4 '$4 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 18.12.2009 OF THE ASSES SING OFFICER (AO),PASSED U/S.143(3)R.W.S. 144C(1) OF THE ACT, ASSESSEE HAS FILED FOLLOWING GR OUNDS OF APPEAL: 1.ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED DEPUTY DIRECTOR OF INCOME-TA X (INTERNATIONAL TAXATION) - 1(2) (LEARNED ASSESSING OFFICER) ERRED IN REJECTING THE APPELLANTS CLAIM OF LONG TERM CAPITAL LOSS (LTCL) INCURRED BY THE APP ELLANT, AMOUNTING TO RS 52,34,57,196, ON TRANSFER O F SHARES HELD BY THE APPELLANT IN SET SATELLITE (SING APORE) PTE LTD (SET SINGAPORE) FOR A CONSIDERATIO N OF SHARES IN SET INDIA PVT LTD (SET INDIA), ON TH E BASIS THAT THE APPELLANT DID NOT FILE DOCUMENTARY EVIDENCE WITH HIM IN RESPECT OF THE COST OF ACQUISI TION OF THE SHARES. 2.THE LEARNED ASSESSING OFFICER ERRED IN HOLDING TH AT THE APPELLANT DID NOT FILE DOCUMENTARY EVIDENCE FOR THE COST OF ACQUISITION OF THE SHARES OF SET SINGAP ORE WITHOUT APPRECIATING THE FACT THAT THE APPELLAN T DID NOT GET ADEQUATE TIME TO FURNISH THE DOCUMENTS, AS THE REQUEST FOR THE SAME WAS FIRST MADE ON DECEMBER 15, 2009 AND THE TIME GIVEN WAS TOO SHORT AS THE DR AFT ORDER WAS PASSED ON DECEMBER 18, 2009. 3.NOTWITHSTANDING GROUND 1 ABOVE, THE LEARNED MEMBE RS OF THE DISPUTE RESOLUTION PANEL -1 (DRP), AFTER CONSIDERING THE DOCUMENTARY EVIDENCE THAT WAS SUBSEQUENTLY FILED BY THE APPELLANT WITH THEM, IN RESPECT OF THE COST OF ACQUISITION OF THE SHARES, H AVE ERRONEOUSLY RULED THAT THE APPELLANT PROVIDED N O SOUND REASON FOR ENTERING INTO A TRANSACTION, WHICH RESULTED IN LTCL OF RS 52,34,57,196 AND THAT NO 2 ITA NO. 8796/MUM/2010 CAPITAL INTERNATIONAL EMERGING MARKET S FUND PRUDENT BUSINESSMAN WOULD HAVE ENTERED INTO SUCH A TRANSACTION. 4.NOTWITHSTANDING GROUNDS 1 TO 3 ABOVE, THE LEARNED MEMBERS OF THE DRP HAVE QUESTIONED THE BASIS OF VALUATION OF THE SHARES OF THE OVERSEAS COMPANY, IE SET SINGAPORE, ARGUING THAT THIS IMPACTS THE SWAP RATIO ARRIVED AT BY THE TWO COMPANIES: SET SINGAPOR E AND SET INDIA, FOR ISSUING SHARES TO ALL THE SHAREHOLDERS IN SET SINGAPORE UNDER THE SHARE PURCH ASE AGREEMENT. ADDITIONALLY, THE LEARNED MEMBERS OF THE DRP HAVE RULED THAT THE VALUATION OF THE SHA RES OF SET SINGAPORE WAS NOT DONE IN ACCORDANCE WIT H THE INDIAN REGULATORY FRAMEWORK AND HAVE USED REGU LATORY NON-COMPLIANCE AS A REASONING TO DENY THE APPELLANT ITS TAX CLAIM OF LTCL OF RS 52,34,57,196. 5.GROUNDS 1 TO 4 ABOVE, THE LEARNED MEMBERS OF THE DRP HAVE RULED THAT THE VALUATION REPORT THAT WAS FURNISHED BY THE APPELLANT WAS ISSUED BY AN INDIAN FIRM OF CHARTERED ACCOUNTANTS:M/S R.L. RAWANI AND CO, AND SUCH REPORT WAS QUALIFIED BY A NUMBER OF LI MITING CONDITIONS; HENCE, THE LEARNED MEMBERS OF TH E DRP HAVE ERRONEOUSLY REJECTED THE TAX CLAIM OF THE APPELLANT OF LTCL OF RS 52,34,57,196. 6.NOTWITHSTANDING GROUNDS 1 TO 5 ABOVE, THE APPELLA NT RESPECTFULLY SUBMITS THAT THE HONOURABLE INCOME - TAX APPELLATE TRIBUNAL BE PLEASED TO DIRECT THAT TH E APPELLANT IS ENTITLED TO CARRY FORWARD THE LTCL ACCRUING TO IT AS WAS ACTUALLY INCURRED BY IT ON TH E TRANSFER OF SHARES OF SET SINGAPORE TO SET INDIA, WHICH LOSS IS COMPUTED AT RS 56,23,51,295. 7.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN DISALLOWING THE SET OFF OF SHORT TERM CAPITAL LOSS (SUBJECT TO SECURITIES TRANSACTION TAX) OF RS 539 A GAINST SHORT TERM CAPITAL GAINS (NOT SUBJECT TO SECURITIES TRANSACTION TAX). 8.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN NOT GRANTING CREDIT FOR TAX DEDUCTED AT SOURCE OF RS 46 , AS DIRECTED BY THE LEARNED MEMBERS OF THE DRP IN THEIR ORDER, WITHOUT ASSIGNING ANY REASONS FOR THE SAME. 9.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER ERRED IN NOT GRANTING C REDIT FOR REGULAR ASSESSMENT TAX PAID OF RS 1,418, AS DIR ECTED BY THE LEARNED MEMBERS OF THE DRP IN THEIR ORDER, WITHOUT ASSIGNING ANY REASONS FOR THE SAME. ASSESSEE-COMPANY,REGISTERED WITH SECURITIES AND EXC HANGE BOARD OF INDIA (SEBI) AS A FOREIGN INSTITUTIONAL INVESTOR,IS ENGAGED IN BUSINESS OF SH ARE TRADING. RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 19.10.2007DECLARING TOTAL INCOME OF R S.79.85 CRORES.AO FINALISED THE ASSESSMENT AFTER GETTING DIRECTIONS OF THE DRP-I, MUMBAI ON 12 .10.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS.79.85,92,040/-. 2. DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD CLAIMED CARRY FORWARD OF LONG TERM CAPITAL LOSS OF RS. 52,34,57,196/- U/S 74 OF THE ACT TO BE SET OFF AGAINST THE LONG TERM CAPITAL GAINS OF SUBSEQUENT YEARS,THAT THE ASSESSEE HELD 5,02,430SHARE; OF SET SATELLITE (SINGA - PORE) PTE LIMITED (SET SINGAPORE),THAT 0N MAY 13, 2006, THE ASSESSEE RECEIVED 31,402 SHARES OF SET INDIA PRIVATE LIMITED (SET INDIA) AS AN EX CHANGE FOR 5,02,43,051 SHARES HELD IN SET SINGAPORE (IN THE RATIO OF 1 SHARE OF SET INDIA FOR 16 SHARES HELD IN SET SINGAPORE) AS A RESULT OF ACQUISITION OF 100% SHAREHOLDING OF SET SINGAPORE B Y SET INDIA, THAT THE LONG TERM CAPITAL LOSS ON EXCHANGE TRANSACTION HAS BEEN COMPUTED BY THE AS SESSEE AT USD 1,16,81,705 AFTER DEDUCTING THE COST OF ACQUISITION OF 502,430 SHARES OF SET SI NGAPORE OF USD 1,28,76,865 FROM TOTAL SALE CONSIDERATION OF USD 11,95,160,THAT LONG TERM CAPIT AL LOSS AT USD 1,16,81,705 HAD BEEN CONVERTED INTO INR 52,34,57,196 AS PER THE PROVISIO NS OF RULE 115 OF THE I.T. RULES 1962.AO DIRECTED THE ASSESSEE TO FILE THE DOCUMENTARY EVIDE NCES IN RESPECT OF LONG TERM CAPITAL LOSS ALONG WITH THE DETAILED JUSTIFICATION FOR THE SAID LOSS A ND ADJOURNED THE CASE TO 29 OCTOBER 2009. ON THAT DAY ASSESSEES REPRESENTATIVE ATTENDED AND REQ UESTED FOR ADJOURNMENT OF HEARING. HIS REQUEST WAS ACCEDED BY THE AO AND THE CASE WAS ADJOURNED TO 24 NOVEMBER 2009.DURING HE COURSE OF HEARING REPRESENTATIVE OF THE ASSESSEE FILED A LETT ER DATED 1 NOVEMBER 2009 ALONG WITH THE SAME CERTAIN DOCUMENTS SUCH AS APPROVAL LETTERS AND REPO RT OF R.L. RAWANI & CO.CHARTERED ACCOUNTAN 3 ITA NO. 8796/MUM/2010 CAPITAL INTERNATIONAL EMERGING MARKET S FUND -TS.HOWEVER,AS PER THE AO DOCUMENTARY EVIDENCES IN RESPECT OF COST OF ACQUISITION WERE NOT FILED BY THE ASSESSEE.AO GAVE TWO MORE CHANCES TO THE ASS ESSEE TO PRODUCE THE DOCUMENTARY EVIDENCES IN RESPECT OF COST OF ACQUISITION, I.E. C OPY OF ALL THE SHARE PURCHASE AGREEMENT AND AGREEMENT IN RESPECT OF EXCHANGE OF SHARES, ETC. BU T,SAME WERE NOT PRODUCED BEFORE HIM TILL 18.12.2009.IN THESE CIRCUMSTANCES HE HELD THAT THE ASSESSEE HAD FAILED TO FILE THE DOCUMENTARY EVIDENCES IN RESPECT OF COST OF ACQUISITION OF SHAR ES OF SET SINGAPORE OF USD 1,28,76,865 AS CLAIMED IT IN THE COMPUTATION OF LONG TERM CAPITAL LOSS.AO DISALLOWED THE ASSESSEES CLAIM OF LONG TERM CAPITAL LOSS,ON SWAP TRANSACTION,OF RS. 5 2,34,57,196/-. 2.1. THE MATTER WAS REFERRED TO DISPUTE RESOLUTION PANEL (DRP).AFTER CONSIDERING THE DRAFT ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE DRP HELD THAT NO SOUND REASON WAS FURNISHED BY THE ASSESSEE TO EXPLAIN AS TO WHY IT ENTERED IN AN EXCHANGE TRANSACTION THAT RESULTED IN HUGE LOSS OF RS.52.34 CRORES,THAT NO PRUDENT BUSINESSMAN WOUL D ENTER IN TO SUCH A TRANSACTION,THAT SWAP RATIO OF SHARES TRANSACTED WAS NOT DONE BY THE COMP ETENT AUTHORITY I.E. A MERCHANT BANKER,THAT VALUATION REPORT OF THE CA WAS QUALIFIED BY MANY A RESTRICTIONS. 2.2. BEFORE US,AUTHORISED REPRESENTATIVE(AR) SUBMITTED T HAT SWAPPING OF SHARES WAS APPROVED BY THE FIPB,GOVT.OF INDIA IN 2003, THAT MERCHANT BA NKERS REPORT WAS FILED BEFORE THE FIPB, THAT A VALUATION REPORT,PREPARED BY A CHARTERED ACCOUNTANT , WAS MADE AVAILABLE TO THE AO, THAT DUE TO SHORTAGE OF TIME CERTAIN PAPERS COULD NOT BE FURNIS HED DURING THE ASSESSMENT PROCEEDINGS,THAT ALL THE PAPERS,WHICH COULD NOT BE PRODUCED BEFORE THE A O,WERE PRODUCED BEFORE THE DRP, THAT DRP COULD NOT QUESTION THE PRUDENCE OF A BUSINESS-TRAN SACTION UNDERTAKEN BY THE ASSESSEE .HE RELIED UPON THE CASES OF SALITHO ORES LTD.(344ITR161-BOM H C),EMERALD COMMERCIAL LTD.(120 TAXMAN 282, CAL.HC.),CONTINENTAL CONSTRUCTION LTD.( 226ITR281).DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT LOSS CLAIMED BY THE ASSESSEE W AS RESULT OF VALUATION,THAT AO WAS ENTITLED TO MAKE INQUIRIES ABOUT THE LOSS. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL.WE FIND THAT SWAPPING OF SHARES WAS APPROVED BY AN AGENCY OF GOVT. OF IND IA I.E.FIPB AND IT HAD APPROVED THE RATIO OF SHARES TO BE SWAPPED.IN THESE CIRCUMSTANCES TO CHAL LENGE THE PRUDENCE OF THE TRANSACTION WAS NOT PROPER. IN OUR OPINION,EVEN IF THE TRANSACTION WAS NOT APPROVED BY THE SOVEREIGN AND IT WAS CARRIED OUT BY THE ASSESSEE IN NORMAL COURSE OF ITS BUSINESS AO/DRP COULD NOT QUESTION THE PRUDENCE OF THE TRANSACTION.GENUIUNESS OF A TRANSAC TION CAN BE DEFINITELY A SUBJECT OF SCRUTINY BY REVENUE AUTHORITIES,BUT TO DECIDE THE PRUDENCE OF A TRANSACTION IS PREROGATIVE OF THE ASSESSEE.A DECISION AS WHETHER TO DO /NOT TO DO BUSINESS OR TO CARRY OUT / NOT TO CARRY OUT A CERTAIN TRANSACTION IS TO TAKEN BY A BUSINESSMAN.IF IT IS P ROVED THAT A TRANSACTION HAD TAKEN PLACE,THEN RESULTANT PROFIT OR LOSS HAS TO BE ASSESSED AS PER THE TAX STATUTES.THEREFORE,IN OUR HUMBLE OPINION BY CASTING DOUBT ABOUT THE PRUDENCE OF THE TRANSACT ION,MEMBERS OF THE DRP HAD STEPPED IN TO AN EXCLUSIVE DISCRETIONARY ZONE OF A BUSINESSMAN AND I T IS NOT PERMISSIBLE.CASES RELIED UPON BY THE AR OF THE ASSESSEE ,SUPPORT OUR VIEW. BUT,IT IS ALSO A FACT THAT DURING THE ASSESSMENT PR OCEEDINGS,ASSESSEE HAD NOT FURNISHED DETAILS CALLED FOR BY THE AO.HE HAS GIVEN A CATEGORICAL FIN DING THAT TILL THE DATE OF PASSING OF ASSESSMENT ORDER, THE ASSESSEE HAD NOT FILED THE EVIDENCES IN RESPECT OF THE CLAIM MADE IN THE RETURN OF INCOME.ANY CLAIM MADE BY THE ASSESSEE HAS TO BE PR OVED BY HIM AND ASSESSEE CANNOT ESCAPE FROM THE SCRUTINY BY THE AO. WE FIND THAT AO HAD GI VEN SUFFICIENT OPPORTUNITIES TO THE ASSESSEE ,BUT ASSESSEE DID NOT FURNISH REQUISITE INFORMATIO N.THEREFORE,IN THE INTEREST OF JUSTICE,WE ARE 4 ITA NO. 8796/MUM/2010 CAPITAL INTERNATIONAL EMERGING MARKET S FUND REMITTING BACK THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION WITH A DIRECTION TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.H ERE,WE WANT TO CLARIFY THAT MATTER IS SENT BACK TO THE AO FOR LIMITED PURPOSE OF VERIFICATION OF TH E DOCUMENTARY EVIDENCES IN RESPECT OF COST OF ACQUISITION, I.E. COPY OF ALL THE SHARE PURCHASE AG REEMENTS AND AGREEMENTS IN RESPECT OF EXCHANGE OF SHARES,ETC.AS FAR AS PRUDENCE OF THE TRANSACTION IS CONCERNED, AS STATED EARLIER,IS NOT BE DECIDED BY THE AO. GROUNDS OF APPEAL 1-6 ARE ALLOWED IN FAVOUR OF THE ASSESSEE ,IN PART. 3. SECOND EFFECTIVE GROUND (GROUND NO.7)OF APPEAL IS A BOUT DISALLOWANCE OF SET-OFF OF SHORT TERM CAPITAL LOSS (SUBJECT TO SECURITIES TRANSACTION TAX ) OF RS. 539/- AGAINST SHORT TERM CAPITAL GAINS (NOT SUBJECT TO SECURITIES TRANSACTION TAX).DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE AO THAT IN ITS COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED SET OFF OF SHORT-TERM CAPITAL LOSS SUBJECTED TO SECURITIES TRANSACTION TA X(STT) AGAINST THE SHORT-TERM CAPITAL GAINS (OTHERS) OF RS. 539/- THAT WAS NOT SUBJECTED TO STT .AS PER THE AO TAX RATE FOR STT TRANSACTIONS WAS 10%,WHEREAS NON- STT TRANSACTIONS WERE LIABLE T O BE TAXED @ 30%. AS PET THE AO ASSESSEES CLAIM OF SET OFF OF SHORT-TERM CAPITAL L OSS, SUBJECTE TO STT PAID TRANSACTION AGAINST SHORT-TERM CAPITAL GAINS,NOT SUBJECTED TO STT WAS N OT PROPER AS PER THE SPECIFIC PROVISIONS OF THE ACT. HE FURTHER HELD THAT THE PROVISIONS OF SEC .70(2) OF THE ACT, DEALT WITH SET OFF OF LOSS FROM ONE SOURCE AGAINST INCOME FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME,THAT IN ORDER TO SET OFF THE SHORT TERM CAPITAL LOSS AGAINST THE SHO RT TERM CAPITAL GAIN THERE SHOULD BE SHORT TERM CAPITAL LOSS AND SHORT TERM CAPITAL GAIN ON COMPUTA TION MADE U/S 48 TO 55 ARISING FROM SALE OF SHORT TERM CAPITAL ASSETS,THAT THE ASSESSEE WAS ENT ITLED TO HAVE THE AMOUNT OF SUCH SHORT TERM CAPITAL LOSS SET OFF AGAINST THE SHORT TERM CAPITAL GAIN, IF ANY, AS ARRIVED UNDER A SIMILAR COMPUTATION MADE FOR THE ASSESSMENT YEAR UNDER CONS IDERATION.AO FURTHER REFERRED TO SECTION 111A AND 115AD OF THE ACT IN THIS REGARD. 3.1. BEFORE US,AR SUBMITTED THAT IN VIEW OF PROVISIONS O F SECTION 70(2)OF THE ACT ASSESSEE HAD AN OPTION TO SET OFF A SHORT TERM CAPITAL LOSS AGAINST ANY OTHER SHORT TERM CAPITAL GAIN,THAT LANGUAGE OF SECTION 70(3)SUPPORTED THE SAID VIEW OF THE ASSESSEE ,THAT SECTIONS 111A AND 115AD FELL IN CHAPTER XII OF THE ACT,THAT BOTH THE SECTIO NS DEALT WITH RATE OF TAX AND NOT WITH COMPUTATION OF INCOME UNDER A PARTICULAR HEAD,THAT COMPUTATION OF CAPITAL GAINS WAS GOVERNED BY THE PROVISIONS OF SECTION 48 OF THE ACT.HE RELIE D UPON THE ORDER DATED 11.04.2012 OF THE ITAT MUMBAI,DELIVERED IN THE CASE OF DWS INDIA EQUITY FU ND(ITA5055/MUM/2010-AY.2007-08).DR SUBMITTED THAT ANALOGY OF SECTION 14A HAD TO BE APP LIED TO THE CASE UNDER CONSIDERATION,THAT SET OFF OF LOSS SHOULD NOT BE ALLOWED. 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL.WE FIND THAT IDENTICAL ISSUE WAS DECIDED IN THE FAVOUR OF THE ASSESSEE BY THE TR IBUNAL IN THE CASE OF DWS INDIA EQUITY FUND(SUPRA) IN FOLLOWING MANNER : 5.WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING SET OFF OF SHORT TERM CAPITAL LOSS ARISING FROM STT PAID SHARE TRANSACTIONS AGAINST SHORT TERM CAPITAL GAIN ARISIN G FROM NON STT TRANSACTIONS. THE ASSESSEE HAD EARNED SHORT TERM CAPITAL GAIN OF RS.4 0,25,93,717/- FROM NON STT TRANSACTIONS AND IT HAD INCURRED SHORT TERM CAPITAL LOSS OF RS.1,26,45,10,006/- FROM STT PAID TRANSACTIONS. THE ISSUE IS WHETHER SHORT TERM CAPITAL LOSS CAN BE SET OFF AGAINST SHORT TERM CAPITAL GAIN MENTIONED ABOVE. UNDER THE PROVIS IONS OF SECTION 70(2), SHORT TERM CAPITAL LOSS ARISING FROM ANY ASSET CAN BE SET OFF AGAINST SHORT TERM CAPITAL GAIN ARISING 5 ITA NO. 8796/MUM/2010 CAPITAL INTERNATIONAL EMERGING MARKET S FUND FROM ANY OTHER ASSET UNDER A SIMILAR COMPUTATION MA DE.THE AO HELD THAT SINCE GAIN WAS FROM SHARES ON WHICH NO STT WAS PAID AND LOSS FROM STT PAID TRANSACTIONS, THESE FELL IN DIFFERENT CATEGORIES AND COULD NOT BE SET OFF AGAIN ST EACH OTHER.WE FIND THAT THIS ASPECT HAS ALREADY BEEN EXAMINED BY THE MUMBAI BENCH OF TH E TRIBUNAL IN THE CASE OF FIRST STATE INVESTMENTS (HONG KONG) LTD. VS. ADIT(SUPRA), IN WH ICH IT HAS BEEN HELD THAT THE PHRASE UNDER SIMILAR COMPUTATION MADE REFERS TO COMPUTAT ION OF INCOME, THE PROVISIONS FOR WHICH ARE CONTAINED UNDER SECTIONS 45 TO 55A OF THE ACT. THE TRIBUNAL ALSO HELD THAT THE MATTER OF COMPUTATION OF INCOME WAS A SUBJECT WHICH CAME ANTERIOR TO THE APPLICATION OF RATE OF TAX WHICH ARE CONTAINED IN SECTION 110 TO 1 15BBC. THEREFORE, MERELY BECAUSE THE TWO SET OF TRANSACTIONS ARE LIABLE FOR DIFFERENT RA TE OF TAX, IT CANNOT BE SAID THAT INCOME FROM THESE TRANSACTIONS DOES NOT ARISE FROM SIMILAR COMPUTATION MADE AS COMPUTATION IN BOTH THE CASES HAS TO BE MADE IN SIMILAR MANNER UND ER THE SAME PROVISIONS. THE TRIBUNAL THEREFORE, HELD THAT SHORT TERM CAPITAL LOSS ARISIN G FROM STT PAID TRANSACTIONS CAN BE SET OFF AGAINST SHORT TERM CAPITAL GAIN ARISING FROM NO N SIT TRANSACTIONS. THE CASE OF THE ASSESSEE IS IDENTICAL. THEREFORE, RESPECTFULLY FOLL OWING THE DECISION OF THE TRIBUNAL, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAM E IS, THEREFORE, UPHELD. 6.IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . RESPECTFULLY, FOLLOWING THE ABOVE MENTIONED ORDER O F THE TRIBUNAL,WE DECIDE GROUND NO.7 IN FAVOUR OF THE ASSESSEE. 4. DURING THE COURSE OF HEARING BEFORE US,AR DID NOT P RESS GROUND NO.8 AND 9 OF THE APPEAL. BOTH THE GROUNDS ARE TREATED DISMISSED AS NOT PRESSED. AS A RESULT APPEAL FILED BY THE ASSESSEE STANDS P ARTLY ALLOWED. 5 06 50 7 ' 8 / 3 4 9 $ #: / # 0 ;. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY, 2013 '$4 / 2) $ % = >' 10, # 2013 / 3 ? SD/- SD/- ( . / D. MANMOHAN ) ( #$%& #$%& #$%& #$%& / RAJENDRA ) !' !' !' !' / VICE-PRESIDENT $ $ $ $ '( '( '( '( /ACCOUNTANT MEMBER / MUMBAI, >' /DATE: 10.07.2013 '$4 '$4 '$4 '$4 / // / ,0@ ,0@ ,0@ ,0@ A$@)0 A$@)0 A$@)0 A$@)0 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / *+ 2. RESPONDENT / ,-*+ 6 ITA NO. 8796/MUM/2010 CAPITAL INTERNATIONAL EMERGING MARKET S FUND 3. THE CONCERNED CIT (A) / B C 4. THE CONCERNED CIT / B C 5. DR L BENCH, ITAT, MUMBAI / @D 3 ,0 , . . % . 6. GUARD FILE/ 3 E - @0 ,0 //TRUE COPY// '$4 / BY ORDER, / # DY./ASST. REGISTRAR , /ITAT, MUMBAI