2017 (4) TMI 721

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....CIT(A) erred in upholding the order of the AO and in disposing the appeal of the appellant on the following grounds : i. In denying the appellant the ability to offset short-term capital losses ('STCLs') first towards short-term capital gains ('STCGs') generated from transactions in derivatives and then subsequently towards STCGs from sale of equity shares which were subject to securities transaction tax ('STT'). ii. In adopting a mechanism to offset STCLs, which is not in accordance with the rights of the appellant and contrary to the learned CIT(A)'s own comments in the order. iii. In holding that the provisions of sections 70 and 71 of the Act have no role to play in determining computation of tax due on STCGs under section 115A....

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....a taxable income of Rs. 7,24,36,816/- comprising of Rs. 3,45,80,444/- from sale of equity shares which are subject to STT and Rs. 3,78,56,372/- from transactions in derivatives. 3.1 The Assessing Officer (AO) accepted the total income of the assessee of Rs. 7,24,36,816/- as disclosed in its return of income. The AO has set off Short Term Capital Loss (STCL) of Rs. 14,423,525/- arising on sale of shares on which STT has been paid (which are taxable @ 15%) against the STCG of Rs. 34,580,444/- arising on sale of shares on which STT has been paid, resulting in net STCG of Rs. 20,156,919/-. Further the AO has set off STCL of Rs. 89,228,278/- arising from transactions in derivatives (which are taxable @ 30%) against the STCG of Rs. 141,508,175....

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....ets Fund vs. DDIT (2013) (145 ITD 491) and CIT vs. Rungamatee Trexim (P) Ltd. (2008) (ITA No 812 of 208) (Calcutta High Court) (Unreported). 6. On the other hand, the learned DR relies on the order of the learned CIT(A). 7. We have heard the rival submissions and perused the relevant material on record. We begin with the decisions cited before us. In First State Investments (Honkong) Ltd. (supra), the assessee earned STCG on sale of shares in the A.Y. 2005-06. It bifurcated such STCG into two periods i.e. upto 30.09.2004 (in which tax was chargeable @ 30% and transactions were not chargeable to STT) and period post 30.09.2004 (in which case the reduced rate of 10% was applicable on STCG where transactions were chargeable to STT in vie....