TaxTMI 
TaxTMI 
2025 (5) TMI 1794
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....er section 143(3) read with section 144C(13) of the Income-tax Act, 1961 ('the Act'), in pursuance of the directions under section 144C(5) of the Act issued by the Hon'ble Dispute Resolution Panel - II, Mumbai ('Ld. DRP*) dated 29 November 2024 on the following grounds, each of which is without prejudice to and independent of the other. On the facts and circumstances of the case and in law, the Ld. AO and the Ld. DRP have: Merits of the case Rejecting the hierarchy of set-off of Short-Term Capital losses adopted by the Appellant. 1. erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the Appellant and thereby, taxing the gross short-term capital gains in respect of transactions on sale of Rights Entitlement / fractional proceeds not chargeable to Security Transaction Tax ('STT'); 2. failed to appreciate that income under the head 'Capital gains' is determined as per sections 45 to 55A of the Act whilst sections 111A and 115AD of the Act only provide for determination of tax in certain cases and therefore, gains arising on transactions subjected to STT and those not subjected to STT are no different and satisf....
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....al loss on transaction subject to STT (c) 1,362,792,200 Net Short-term capital loss on transaction subject to STT [D=(A+B)-C)] 3,121,786,831 Total short-term capital gains chargeable to tax 3,121,786,831 5. Thus, it was observed that the assessee set off the short-term capital loss (on which STT was paid), which is taxable at 15% under section 111A of the Act, against the short-term capital gains (on which STT was not paid), which is taxable at 30% under section 115AD of the Act, and thereafter, set off the balance loss against the short-term capital gains earned on the transaction of sale of share subjected to STT. Accordingly, the assessee was asked to show cause as to why such an adjustment of short-term capital loss with short-term capital gains having a differential rate of taxation should not be rejected and an adjustment be made accordingly. In response, the assessee submitted that section 70(2) of the Act provides for set off of short-term capital loss against the income arising under similar computation from any other capital asset. The assessee further submitted that the reference to "a similar computation" in respect of any other capital asset could only connote....
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....44C(5) of the Act, the learned DRP rejected the objections filed by the assessee and upheld the computation of capital gains made by the AO vide draft assessment order. The learned DRP further noted that this issue is pending consideration before the Hon'ble Bombay High Court in the case of DIT vs. M/s. DWS India Equity Fund, in ITA No.1414 of 2012, and there is no judicial finality on this issue. 9. In conformity with the directions issued by the learned DRP, the AO passed the impugned final assessment order under section 143(3) r.w. section 144C(13) of the Act computed the net short-term capital gains of INR 47,99,29,138. Being aggrieved, the assessee is in appeal before us. 10. During the hearing, the learned Authorized Representative ("learned AR") submitted that this issue is covered in favour of the assessee by various decisions of the Co-ordinate Bench of the Tribunal. 11. On the other hand, the learned Departmental Representative ("learned DR") vehemently relied upon the order passed by the lower authorities and submitted that under section 70(2) of the Act the short-term capital loss can only be set off against the short-term capital gains which is computed in a similar....
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.... the tax bracket of such gain and losses. 017. The only dispute between the assessee and revenue is as under:- Sr. No. Assessee's version Revenue's Version 1. Short-term capital loss was set off against the net short-term capital gain on which no securities transaction taxes paid Short-term capital loss should be first set of against short-term capital gain on which securities transaction tax is paid 2. Balance short-term capital loss shall be first set of against short-term capital gain on which securities transaction taxes paid If short-term capital loss still remains it is to be carried forward and not that of against short-term capital gain on which no securities transaction tax is paid and consequently short-term capital gain on which no securities transaction tax is paid is to be taxed at the rate of 30% 3. If short-term capital gain on which securities transaction tax is paid still remains, such gains are set of against available brought forward short-term capital loss One short-term capital gain on which no securities transaction tax is paid is proposed to be taxed at the rate of 30% the brought forward short-term capital loss allowed to be carried for....
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....te of tax payable on short-term capital gain. 021. Therefore, we do not find any reason to deprive the assessee from setoff of short-term capital losses suffered by the assessee for the same year against the short-term capital gains earned by the assessee. Such claim is in accordance with the provisions of section 70 (2) of the act. 022. We find that several judicial precedents relied upon by the assessee also supports the case of the assessee. The honourable Calcutta High Court in Rungamatee Trexim ITA number 812 of 2008 dated 19 December 2008 held that there is no provision nor the act compels the assessee to lst set of short-term capital gain which STT against short-term capital loss with STT and then allows set of against short-term capital gain without STT. Therefore, without multiplying judicial precedents, following the decision of the honourable Calcutta High Court, and several other judicial precedents of the coordinate benches relied upon before us, we allow ground number 4 - 10 of the appeal of the assessee and direct the assessing officer to allow set-off of short-term capital loss suffered by the assessee against short-term capital gain of Rs. 791,221/-." 15. Furt....