2024 (4) TMI 834

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....020-21. The assessee has raised the following grounds before us: "1. On the facts and in the circumstances of the case and in law, the [final assessment] order [dated 26 July 2023] passed by the Assistant Commissioner of Income-tax - International tax Circle 3(1)(1) Mumbai ('Ld. AO') under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (Act') is bad in law and void ab initio. 2. On the facts and in the circumstances of the case and in law, the final assessment order dated 26 July 2023 passed by the Ld. AO under section 143(3) read with section 144C(13) of the Act having been passed beyond the limitation provided in terms of section 153 of the Act, is illegal, being barred by limitation, v....

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.... of Total Income of the Appellant when making its determinations in the notice of demand and computation sheet in connection with the final assessment order dated 26 July 2023. 6. On the facts and in the circumstances of the case and in law and as a consequence of the misstatement by the Ld. AO in Ground 5 above, the Id. AO erred in determining the Total Income of the Appellant amounting to INR 347, 883 ,770/- and thereby, consequentially determining the demand of INK 137, 496 ,340/-. 7. On the facts and in the circumstances of the case and in law and as a consequence of the misstatement by the Ld. AO in Ground 5 above, the Ld. AO erred in consequential levying interest under section 234A & 234B of the Act amounting to INR....

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....t and interest on debt securities amounting to Rs. 4,99,98,090/-. 3. After perusing the detail filed by the assessee the AO noticed from the computation of income filed by the assessee in the return of income that it has set off STCG on sale of derivatives amounting to Rs. 23,07,57,354/- and STCG on physical settlement of derivatives amounting to Rs. 4,56,47,848/- which was taxable at the rate of 30% with current year, STCL on sale of equity on which STT was paid taxable at the rate of 15% amounting to Rs. 25,49,24,728/- and has set off the above balance STCG with STCL brought forward from the A.Y. 2019-20 amounting to Rs. 2,14,80,473/-. After perusal of the aforesaid information the AO was of the view that STCG on sale of derivatives wa....

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....115AD of the Act against STCG taxable at the rate of 30% under section 111A read with section 115AD of the Act cannot be disallowed and the Act does not provide for bifurcation of STCL in different categories on the basis of tax rates. In support of his contention the Ld. Counsel has referred the various judicial pronouncements as under: 1. CIT v. Rungamatee Trexim (Pvt) Ltd. - ITA No. 812 of 2008 (Kol. HC) (2008) 2. First State Investments (Hongkong) Ltd. v. ADIT (International Taxation) - ITA No. 2895/Mum/2008 3. GSB Capital Markets Ltd. v. DCIT - ITA No.307/Mum/2014 4. ADIT (International Taxation) v. Legg Mason Asia (Ex Japan) Analyst Fund - ITA No. 7625/Mum/2011 5. VEMF -A, LP v. DCIT - ITA ....

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....ld be either LTCG or STCG. Further, we have perused the decision of ITAT, Mumbai in the case of Legg Mason Asia (Ex Japan) Analyst Fund (supra) wherein it is held that loss arisen on short term capital asset is to be set off against income arising from such assets for same year, irrespective of whether transactions are categorized as off market transactions or on market transactions. 8. We have also gone through the decision of ITAT, Mumbai in the case of VEMF-A, LP (supra) wherein on identical issue and similar fact the ITAT has decided the issue in favour of the assessee. The relevant extract of the decision is reproduced as under: "7. We have heard the rival submissions and perused the relevant material on record. We begin wi....

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....ndia Equity Ltd. (supra). The decision in DWS India Equity Ltd. has been followed in Capital International Emerging Markets Fund (supra). In Rungamatee Trexim (P) Ltd. (supra), Hon'ble Calcutta High Court held as under: "On perusal of the provision of section 70, I find that there is no prohibition nor the Act compels the assessee to first set off short term capital gain with STT against short term capital loss with STT and then allows set off against short term capital gain without STT. In absence of any specific mode of set off provided in the Act and in absence of any prohibition and in absence of any specific chronology for set off prescribed in the Act, the assessee was entitled to exercise his option with regard ....