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TMI Blog2022 (10) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... ains to the subsequent assessment years holding that the Short/Long Term Capital Loss permitted to be carried forward in a previous assessment could not be reviewed in the assessment proceedings of a subsequent assessment year. Thus we find merit in the contention of Assessee that all the issues raised by the Revenue in the present appeal stand decided in favour of the Assessee. - Om Prakash Kant, Accountant Member Shri Rahul Chaudhary, Judicial Member For the Appellant/Department : Shri Soumendu Kumar Dash. For the Respondent/Assessee : Shri P.J. Pardiwala/Shri Niraj Sheth. ORDER PER RAHUL CHAUDHARY, JUDICIAL MEMBER: 1. These are two appeals filed by the Revenue for the Assessment Years 2015-16 and 2017-18. Since the appeals involve identical issue arising from similar factual matrix, the same were heard together and are being disposed by way of a common order. The appeals are treated as having been filed within limitation in view of the order, dated 10.01.2022, passed by the Hon ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020. ITA No. 1338/MUM/2021 (Assessment Year 2015-16) 2. By way of the present appeal the Revenue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was claiming carry forward of Short Term Capital Losses (INR 1564,45,73,787/-) pertaining to Assessment Years 2009-10, 2012-13 and 2014-15 and Long Term Capital Losses (INR 1,78,94,380/-) pertaining to Assessment Years 2012-13. He also noted that the Assessee had earned Short Term Capital Gains of INR 2358,83,17,621/- and Long Term Capital Gains of INR 790,74,11,573/- during the current year which have been claimed to be exempt from tax in terms of Article 13(4) of Agreement for Avoidable of Double Taxation and Prevention of Fiscal Evasion between India and Mauritius (hereinafter referred to as the DTAA ). According to the Assessing Officer, the Assessee should have first set off the Brought Forward Short/Long Term Capital Gains with the current year Short/Long Term Capital Gains before claiming benefit of Article 13(4) of the DTAA. Accordingly, the Assessing Officer completed assessment Under Section 143(3) read with Section 144C(3) of the Act at Nil income after setting off entire brought forward Short Term Capital Loss of INR 1564,45,73,787/- and brought forward Long Term Capital Loss of INR 1,78,94,380/-. 5. Being aggrieved, the Assessee preferred appeal before CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (supra), wherein the other two decisions of the Tribunal were also considered and relied upon. The relevant extract of the aforesaid decision of the Tribunal reads as under: 11. On a perusal of the grounds of appeal, we find, that there are two facets on the basis of which the observations of the A.O/DRP as regards carry forward of the earlier years capital losses has been assailed by the assessee before us, viz. (i). that the A.O/DRP had erred in concluding that the Short term capital losses brought forward by the assessee from the preceding years were to be first set off against the short term and long term capital gains for the year under consideration i.e. A.Y 2013-14, and only the balance amount of short term capital losses were to be carried forward to the subsequent years; AND (ii). that the A.O/DRP had erred in denying the assessee's right to carry forward the Long term capital losses brought forward from the preceding years, despite the fact, that the same were determined and permitted to be carried forward by the A.O vide his assessment order passed u/s 143(3), dated 19-3- 2015 for A.Y 2012-13. 12. We shall first deal with the grievance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal that pertained to A.Y. 2005-06 the assessee had brought forward capital loss of Rs. 87,06,49,335/- from transfer of securities in A.Y. 2002-03. The aforesaid loss was determined in the hands of the assessee vide an intimation under Sec. 143(1) for A.Y 2002-03. Observing, that since the capital gains were not taxable in India as per Article 13 of the Indian-Mauritius Tax Treaty, the A.O being of the view that capital loss would also be exempted, and therefore, the assessee would not be entitled to claim the benefit of carry forward of such capital losses of the earlier years, thus, declined the set-off of the same against the capital gains for the relevant assessment years. On appeal, the CIT(A) upheld the order of the A.O. On further appeal, the Tribunal concluded that the assessee was fully justified in claiming the carry forward of the capital losses of the earlier years to the subsequent years, and both the A.O and the CIT(A) were in error in not allowing the same. Accordingly, the A.O was directed to allow the carry forward of the capital losses of the earlier years to the subsequent years, according to law. As in the aforesaid case, in the case of the present assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, pertaining to a source of income that was exempt from tax was thus not to be carried forward to the subsequent years, being devoid of any merit, is thus rejected. At this stage, we may herein observe that it is for the assessee to examine whether or not in the light of the applicable legal provisions and the precise factual position the provisions of the IT Act are beneficial to him or that of the applicable DTAA. In any case, the tax treaty cannot be thrust upon an assessee. In case the assessee during one year does not opt for the tax treaty, it would not be precluded from availing the benefits of the said treaty in the subsequent years. Our aforesaid view is fortified by the order of the ITAT, Pune in Patni Computer Systems Ltd. (supra). We thus in terms of our aforesaid observations, not being able to persuade ourselves to subscribe to the view taken by the A.O/DRP, who as noticed by us hereinabove had sought adjustment of the b/forward STCL against the exempt short term and long term capital gains earned by the assessee during the year in question, thus 'set aside' the order of the A.O in context of the issue under consideration. Accordingly, we direct the A.O t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the carry forward of brought forward STCL, the Long term capital losses amounting to Rs. 7,63,95,386/- that were brought forward from the preceding years were also to be allowed to be carried forward to the subsequent years. At the same time, the DRP observed that as the assessee during the year in question i.e. A.Y 2013-14 had shown short term and long term capital gains, therefore, the b/forward losses would be first 'set off' against such income, and the remaining losses would be allowed to be carried forward to the subsequent years. Accordingly, it was observed by the DRP that as the assessee had during the year in question i.e. A.Y 2013-14 shown Long term capital gains of Rs. 5,63,11,782/-, therefore, the same would be first set off against the b/forward Long term capital losses of Rs. 7,63,95,386/-, and the balance amount would be allowed to be carried forward to the subsequent years. However, as the DRP in its order u/s 144C(5), dated 21-11-2016 at Page 8 - Para 2.10 had directed adjustment of the Long term capital gains of Rs. 5,63,11,782/- as against the b/forward STCL of Rs. 3926,36,70,910/-, as per sec. 74(1)(a) of the Act, therefore, pursuant to its aforesaid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the Assessee by the decision of Tribunal in the case of Goldman Sachs Investments (Mauritius) Ltd. (supra). Accordingly, we do not find any infirmity in the order passed by the CIT(A). Ground No. 1, 2 and 3 raised by the Revenue are dismissed. 11. In result, the present appeal preferred by the Revenue is dismissed. ITA No. 2449/MUM/2021 (Assessment Year 2017-18) 12. By way of the present appeal the Revenue has challenged the order, dated 05.03.2021, passed by the CIT(A) for the Assessment Years 2017-18, whereby the CIT(A) had partly allowed the appeal filed by the Assessee against the Assessment Order, dated 20.02.2019, passed under Section 143(3) read with Section 144C(3) of the Act. 13. Both the sides agreed that the issues raised in the present appeal for the Assessment Year 2017-18 were identical to those raised in appeal for the Assessment Year 2015-16. Accordingly, our findings in relation to issues raised in appeal for the Assessment Year 2015-16 shall apply mutatis mutandis to the issue raised in the present appeal. Therefore, in view of paragraphs 9 and 10 above, Ground No. 1, 2 and 3 raised by the Revenue are dismissed. 14. In result, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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