TaxTMI 
TaxTMI 
2025 (1) TMI 1182
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....2023] 153 taxmann.com 162 (Bombay) and the Hon'ble Madras High Court in the case of Roca Bathroom Products (P.) Ltd. [2021] 127 taxmann.com 332 (Madras). 2. Without prejudice to the what is stated in 1 above, the Assessing Officer erred in setting off the carried forward short term capital loss of Assessment Year 2020-21 amounting to Rs. 9,94,33,237/- (which as per Double Taxation Avoidance Agreement entered into between India and Mauritius (DTAA) is loss arising from sale of shares acquired post 1.4.2017 (non-grandfathered) and from taxable source as per the provisions of the Act)against the short term and long term capital gains earned during the previous year relevant to assessment year under appeal which was claimed as not chargeable to tax under the provisions of the DTAA instead of allowing the same to be carried forward as per the provisions of section 74 of the Act. 3. (a) Without prejudice to what is stated in 1 above the Assessing Officer erred in law in setting off the carried forward Long term capital losses incurred during the Assessment Year 2020-21 amounting to Rs. 45,67,23,162/- (which as per DTAA is loss arising from sale of shares acquired po....
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....ired to be computed as per the Act. (iii) The Assessing Officer erred in concluding that when the appellant has adopted DTAA benefit, resorting to carry forward under section 74 during the year, is claiming both Act and DTAA provisions for capital gains simultaneously and thus appellant has adopted a hybrid approach. The appellant reiterates that it has made its entire computation of income by adopting the DTAA provisions and has not adopted a hybrid approach. 6. The Assessing Officer failed to bring out any distinction from the facts of the case of the appellant with that of the various decisions of the jurisdictional Income tax Appellate Tribunal which were relied upon by the Appellant and have held that no set off of losses can be made against the income not chargeable to tax under the DTAA relying upon on certain judicial precedents which have no relevance to the facts of the case and are distinguishable. 7. Without prejudice to what is stated above the Assessing Officer erred in computing the total income and setting off of losses in the Computation Sheet (issued alongwith the Assessment order) to a sum of Rs. 35,61,18,070/- as against a sum of Rs. 2....
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....TAA as per section 90(2) of the Act. Accordingly, assessee claimed the long-term and short-term capital gains to be exempt under Article 13(3) and Article 13(4) of India Mauritius DTAA as it stood prior to amendment. 2.2 It was further noted, by the Ld. AO that during the year assessee had brought forward long-term capital loss of Rs. 45,67,23,162/- from assessment year 2020-21 and long-term capital loss suffered during the year under consideration of Rs. 11,29,28,448/-. The Ld. AO noted that, assessee carry forwarded the brought forward short-term capital loss of Rs. 9,94,33,237 after setting off sum of Rs. 3,76,76,098/- during the year under consideration. The assessee chose to avail treaty benefit as per India Mauritius DTAA in respect of the Long-term and short-term capital gains earned from sale of shares. 2.3 A show-cause notice dated 26/12/2022 was issued calling upon assessee as to why the short-term and long-term capital loss should not be set off against the long-term and short-term capital gains during the year under consideration. In response to the said notice, vide reply dated 28/12/2022 the assessee submitted that, taxable profits or loss construe separate spec....
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....y the order of the Ld. AO the assessee preferred objection before the DRP. 2.6 The DRP to upheld the proposed computation. On receipt of the DRP direction the Ld. AO passed the impugned order restricting exemption under Article 13(3)/(4) of India Mauritius DTAA after setting off the short-term and long-term capital losses against the short-term and long-term capital gain. Aggrieved by the order of the Ld. AO assessee is in appeal before this Tribunal. 3. Ground No. 1 raised by the assessee is challenging the final assessment order passed by the Ld. AO to be void ab initio as it is passed beyond the period of limitation as per the ratio laid down by the Hon'ble Bombay High Court in case of shelf drilling Ron Tappmeyer Ltd. Reported in (2023) 153 taxmann.com 162. The Ld. AR submitted that the issue is not contested by the assessee before this tribunal as per the instructions by the assessee. Accordingly ground No. 1 raised by the assessee is dismissed as infructuous. 4. The Ld. AR submitted that Grounds No. 2-6 & 9 are on the aspect of the manner in which the exemption available to the assessee under Article 13 of India Mauritius DTAA has been computed by the Ld.AO.....
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....that in relation to the assessee like the one in the present case to whom the double tax avoidance treaty entered into by the Indian government applies, the provisions of Income-tax Act shall apply to the extent they are more beneficial to him, It, therefore, follows that if the provisions of the domestic law are more beneficial to the assessee than the provisions of the relevant tax treaty, the provisions of the domestic law shall override and prevail over the provisions of the treaty, Article 23 of the Indo- Japanese treaty, therefore, cannot be interpreted in a way as sought by Shri Girish Dave because if such interpretation is assigned to article 23 and the interest income which is otherwise not taxable in India as per the domestic law is held to be taxable relying on the provisions of the treaty, the same will run contrary to the provisions of section 90(2). Such interpretation, therefore, cannot be assigned to article 23 and the only interpretation which, in our opinion, can be assigned to the said article so as to make the provisions thereof in consonance with section 90(2) of the domestic law is that If there is an express provision made in the convention giving benefit to ....
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..... AR also placed reliance on the decision of coordinate bench of tribunal in case of J.P. Morgan India Investment Company Mauritius Limited reported in ITA No. 2382/MUM/2021 vide order dated 27/09/2022, wherein this Tribunal observed and held as under: "30. As stated above, the capital gain as per the Indian Mauritius DTAA is taxable in the resident country and the source country has given up its rights to tax the income. The question of computation in the source country does not therefore arise. Accordingly, the income from capital gains is not taxable in India as per Article 13(4) DTAA and accordingly, the mode of computation income in India as the source country will not arise. If the particular income is not to be taxed at all, the question of including the same under the total income and determining the taxability on the same will not arise and the contention of Ld. DR that the total income as per Act is to be calculated to determine the tax liability and thereafter, the benefit is to be given cannot upheld. Accordingly, we hold that the losses which have been brought forward from earlier years will be carried forward to the subsequent years without setting off the sa....
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....annot be subjected tax in India. 5.2 In the year 2016 Article 13 of DTAA was amended which was notified on 10/08/2016 wherein, any gains on sale of shares of an Indian company acquired after 01/04/2017 is liable to be taxed on full rate under the provisions of the Income Tax Act. Admittedly, the losses in the present facts of the case suffered by the assessee arises out of sale of shares of Indian company acquired post 01/04/2017. 5.3 The Ld.AO while computing the exemption under Article 13(3)/(4) neted off the losses against the gains, thereby taxing the gains which, otherwise is exempt as per the pre-amended Article 13(3)/(4) of India Mauritius DTAA. In our view the computation of capital gains earned will have to be as per the provisions of DTAA prior to amendment and will be taxable as per the residency of the assessee as India had given up its right to tax such gains prior to 01/04/2017. As there is no dispute that assessee is resident of Mauritius, the question of taxing capital gains earned on sale of share/derivatives acquired prior to 01/04/2017, cannot arise to be in India, as they do not enter into the computation of income as per the Income Tax Act. 5.4 In so f....