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TMI Blog2024 (6) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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% - As per assessee Short-term capital loss was set off against the net short-term capital gain on which no securities transaction taxes paid whereas as per revenue Short-term capital loss should be first set of against short-term capital gain on which securities transaction tax is paid - HELD THAT:- 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 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housand 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai (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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/ . Thus the assessee has earned total short-term capital gain of ₹ 69,451,924/ . The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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