The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), held that Non-resident FII can claim benefit of Article13(4) of DTAA for entire current year Short or Long-Term Capital Gains.
The Assessee, Swiss Finance Corporation (Mauritius) is a non-resident Foreign Institutional Investor (FII) registered as a company in Mauritius. The Assessee filed its original return of income for the Assessment Year 2015-16 which was later revised declaring “Nil” income and claiming refund of INR thirty thousand. The return was selected for scrutiny. During the assessment proceeding, the Assessing Officer noted that the Assessee was claiming carry forward of Short Term Capital Losses and Long Term Capital Losses.
The AO also noted that the Assessee had earned Short Term Capital Gains and Long Term Capital Gains during the current year which have been claimed to be exempt from tax in terms of Article 13(4) of Agreement for Avoidable of Double Taxation and Prevention of Fiscal Evasion between India and Mauritius (DTAA). According to the Assessing Officer, the Assessee should have first set off the Brought Forward Short/Long Term Capital Gains with the current year Short/Long Term Capital Gains before claiming benefit of Article 13(4) of the DTAA.
Accordingly, the Assessing Officer completed assessment Under Section 143(3) read with Section 144C(3) of the Income Tax Act at “Nil” income after setting off entire brought forward Short Term Capital Loss of INR Thousand Five hundred and sixty four crores and brought forward Long Term Capital Loss of INR one Crore.
The CIT(A) granted relief to the assessee in appellate proceedings and hence the present appeal has been preferred by the Revenue.
Dismissing the appeal A Bench consisting of Om Prakash Kant, Accountant Member and Rahul Chaudhary, Judicial Member relied on the judgment in Goldman Sachs Investments (Mauritius) Ltd and wherein it was observed that “The Assessee was entitled to claim benefit of Article 13(4) of DTAA in respect of the entire current year Short/Long Term Capital Gains. The Tribunal also permitted carry forward of the Brought Forward Short/Long Term Capital Gains to the subsequent assessment years holding that the Short/Long Term Capital Loss permitted to be carried forward in a previous assessment could not be reviewed in the assessment proceedings of a subsequent assessment year.”
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