9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 1049 - AT - Income TaxSetting off the short term capital losses brought forward from earlier AYs against the current year's short term capital gains, claimed as exempt under Article 13 of the IM treaty - Whether carry forward permitted only the balance short term capital losses instead of entire brought forward short term capital losses? - HELD THAT - As the DRP in its order u/s 144C(5), had directed adjustment of the Long term capital gains as against the b/forward STCL as per Sec. 74(1)(a) of the Act, therefore, pursuant to its aforesaid directions, it had therein directed that its observations recorded would also stand modified. We herein conclude that the assessee is duly entitled for carry forward of its brought forward Long term capital losses to the subsequent years - brought forward STCL of the earlier years are not to be adjusted against the Short term capital gain earned by the assessee during the year in question, we herein direct that on the same basis the brought forward Long term capital losses of the earlier years shall not be set off against the Long term capital gain earned by the assessee from transfer of securities during the year in question i.e A.Y 2013-14. Levying interest u/s 234C - HELD THAT - As per the Explanation to Sec. 234C, for the purpose of computing the interest liability therein contemplated, the tax due on the returned income has to be reduced by any tax deductible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction and is taken into account in computing the total income of the assessee. The interest income received by the assessee from Indian Oil Corporation Ltd. was liable for deduction of tax at source, which however, was not done by the payer. Accordingly, tax deductible at source on the aforesaid amount of interest income, as stated by the ld. A.R, and rightly so, had to be excluded from the tax due on the returned income for the purpose of computing the interest liability u/s 234C - See NGC NETWORK ASIA LLC 2009 (1) TMI 174 - BOMBAY HIGH COURT We are in agreement with the claim of the ld. A.R that the tax deductible at source on the aforesaid interest income received by the assessee from Indian Oil Corporation Ltd. was liable to be excluded at the time of working out the assessee s liability towards interest under Sec. 234C. We thus direct the A.O to recompute the interest liability under Sec. 234C in terms of our aforesaid observations
Issues Involved:
1. Set-off of short-term capital losses against exempt short-term capital gains under Article 13 of the India-Mauritius Double Taxation Avoidance Agreement (IM Treaty). 2. Denial of the right to carry forward taxable long-term capital losses. 3. Inadvertent consideration of long-term capital gains as long-term capital losses. 4. Inadvertent consideration of non-existent short-term capital gains. 5. Levy of interest under section 234C of the Income Tax Act. Issue-wise Detailed Analysis: 1. Set-off of Short-term Capital Losses Against Exempt Short-term Capital Gains: The assessee, a tax resident of Mauritius, claimed exemption on capital gains from securities under Article 13 of the India-Mauritius DTAA. The AO argued that since the capital gains were exempt, the assessee could not carry forward capital losses. The DRP, however, observed that once the capital losses were determined and allowed to be carried forward in an earlier year, they could not be reviewed in subsequent years. The Tribunal concluded that exempt capital gains could not be adjusted against brought forward capital losses, allowing the assessee to carry forward the short-term capital losses without set-off against the exempt gains. 2. Denial of Right to Carry Forward Taxable Long-term Capital Losses: The AO denied the carry forward of long-term capital losses despite these being determined and allowed in the previous assessment year. The DRP initially upheld this view but later rectified its order, allowing the carry forward of long-term capital losses after setting off against the current year's gains. The Tribunal directed that long-term capital losses from previous years should be carried forward without adjustment against exempt gains, aligning with the treatment of short-term losses. 3. Inadvertent Consideration of Long-term Capital Gains as Long-term Capital Losses: The AO mistakenly considered long-term capital gains as losses. The DRP acknowledged this error, and the Tribunal directed rectification, ensuring accurate reflection of gains and losses. 4. Inadvertent Consideration of Non-existent Short-term Capital Gains: The AO erroneously recorded non-existent short-term capital gains. The Tribunal instructed correction of this mistake, ensuring the assessee's income was accurately assessed. 5. Levy of Interest Under Section 234C: The AO levied interest under section 234C for deferred advance tax payment. The assessee argued that tax was not deducted at source on interest income from Indian Oil Corporation, which should be considered while computing interest liability. The Tribunal agreed, referencing the Bombay High Court's ruling in DIT (International Taxation) Vs. NGC Network Asia LLC, and directed the AO to recompute the interest liability after excluding the tax deductible at source. Conclusion: The Tribunal allowed the appeal, directing the AO to: - Allow the carry forward of short-term and long-term capital losses without adjusting against exempt gains. - Correct the inadvertent errors regarding capital gains and losses. - Recompute the interest liability under section 234C, considering the tax deductible at source.
|
