DCIT (IT)-3(1)(2), MUMBAI vs. M/S LAZARD ASSET MANAGEMENT LLC AC CIMCO INC, MUMBAI

Date of Hearing 24.01.2023 Date of Pronouncement 10.02.2023 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the revenue is directed against the order passed by the ld. CIT(A)-57, Mumbai, dated 02.06.2022 for A.Y. 2012-13. The revenue has raised the following grounds before us:

1. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in deleting the addition on Short Term Capital Gain of Rs.1,96,36,85,939/- yielding from trade transaction on assessee's own code.

P a g e | DCIT (IT)-3(1)(2) Vs. M/s Lazard Asset Management LLC 2. Whether on facts and circumstances and in law, the Ld CIT(A) had erred in arriving at a conclusion that no trade was booked in the name of LAM LLC A/C CIMCO when in fact trades were booked on its PAN and profits accrued to it.

3. Whether on facts and circumstances and in law, Ld CIT(A) has erred in ruling in favour of the assessee as the assessee has not provided any documentary proof to substantiate its claims, even those claims that pertain to its own group entities.

Sr. No. F.Y. Code of Information Type Total value info 1 2011-12 CIB 1. Share Transaction of Rs.963,74,35,734/- Rs.20,000/- more 2. Premia of Rs.10,000/- and above. 3. Contract of Rs.10,10,0000 or more in the commodities exchange.

4. The assesse explained that it was a sub-account of Lazard Asset Management LLC a Foreign Institutional Investor (FII) registered with the SEBI. It was also explained that assesse had not filed the return of income for assessment year 2012-13 as the assesse had sold all its investment and surrendered its FII registration with the SEBI. The assesse also explained that trades listed in ITS statement referred by the assessing officer were actually allocated to some other PAN and for that submitted the confirmation of broker. 5. However, the AO has not agreed with the submission of the assesse and stated that assesse could not explain the taxability trades reflected in ITC details. The assessing officer was of the view that average return in share trading in Indian stock exchange was about 10 to 15%, therefore, treated the profit on sale of share @ 15% to the amount of Rs.29,45,52,891/- as short term capital gain and taxed in the hands of the assesse. 6. Aggrieved, the assesse filed the appeal before the ld. CIT(A). The ld. CIT(A) has deleted the impugned addition holding that these transactions did not belong to the assesse and were allocated to other PAN, therefore, the A.O cannot ask the assesse to explain the ultimate taxability of the transaction. The relevant part of the decision of CIT(A) is reproduced as under: “5.1.3 Before me, the assessee submitted that as per SEBI Circular No MRD/DOP/SE/Cir 35/2004, the transactions were first entered in the name of the parent FII at the order entry level and the allocation to the individual sub- accounts can be done in the post closing session. The assessee stated that it has stopped trading in shares. However, its PAN was used at the entry level and subsequently, the trades were allocated to other PANS. 5.1.4 This fact was verified by the AO. by issuing notices u's. 133(6) However, he further asked the assessee to explain the ultimate taxability of the P a g e | DCIT (IT)-3(1)(2) Vs. M/s Lazard Asset Management LLC transactions present in ITS details and since it was not explained the AO. estimated the income on such transactions @ 15%. 5.1.5 In my view, once it is accepted by the AO that these transactions do not belong to assessee and were allocated to other PANS, then the AO cannot ask the assessee to explain the ultimate taxability of the transactions. In such circumstances, the best course available to A.O. is to intimate the AOS of the other PANS to ensure that these transactions are reported /accounted for by such PANS. 5.1.6 Considering the above, I am of the opinion that no income can be attributed to the assessee once it is accepted by the AO. that these transactions belong to and were allocated to other PANS as per the SEBI circular.”