ASST. COMMISSIONER OF INCOME TAX, (INTERNATIONAL TAXATION)-4(3)(2), MUMBAI , MUMBAI vs. WISDOMTREE INDIA INVESTMENT PORTFOLIO INC, MUMBAI

ITA 3302/MUM/2026Status: DisposedITAT Mumbai09 October 2026AY 2015-1621 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that there is no specific bar in the Income Tax Act or the India-Mauritius DTAA that restricts an assessee from claiming exemption benefit under Article 13 of the DTAA for current year capital gains income without setting off brought-forward losses. The assessee has the option under Section 90(2) of the Act to choose the more beneficial provision between the DTAA and the Income Tax Act. In this case, the assessee exercised its option to claim exemption for current year's entire capital gains income without setting off brought-forward capital losses. The Tribunal found that the issue was no longer res integra and respectfully followed decisions of the High Court and the Tribunal in similar cases, such as Goldman Sachs Investments (Mauritius) Ltd. Accordingly, the Tribunal found no infirmity in the order of the CIT(A) in granting relief to the assessee and dismissed the grounds raised by the Revenue. The appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue appealed the order of the CIT(A) for Assessment Year 2015-2016 concerning Wisdomtree India Investment Portfolio Inc., a Mauritius-incorporated Foreign Portfolio Investor (FPI) in India. The assessee had declared Nil income, carrying forward substantial short-term capital losses (STCL) and long-term capital losses (LTCL) from prior years. The original assessment accepted this. However, reassessment proceedings were initiated under Section 147, alleging that brought-forward capital losses should have been set off against current year capital gains before claiming exemption under Article 13 of the India-Mauritius DTAA, as per Section 74 of the Income Tax Act. The Assessing Officer (AO) adjusted the current year's capital gains against these brought-forward losses. The assessee appealed to the CIT(A), who allowed the appeal, holding that the assessee could claim exemption under the DTAA without setting off brought-forward losses.

What were the issues?

1. Whether the CIT(A) erred in allowing the carry forward of brought-forward short-term capital losses to subsequent years, disregarding that the India-Mauritius DTAA has no specific provision for carry forward, and thus Section 74 of the Income Tax Act should govern entirely? 2. Whether the CIT(A) erred in allowing the carry forward of brought-forward short-term capital losses by ignoring Section 74 of the Act, which mandates that such losses must first be set off against current year short-term/long-term capital gains assessable for that AY? 3. Whether the CIT(A) erred in allowing the carry forward of brought-forward short-term capital losses by permitting a piecemeal application of Section 74, ignoring the precondition that losses must be set off against available capital gains? 4. Whether the CIT(A) erred in allowing the carry forward of brought-forward short-term capital losses by failing to appreciate that Section 74, governing capital loss carry forward, is in Chapter VI, while total income computation is in Chapter III, implying a distinction in their application? Assessee's Contention: The assessee argued that it lawfully opted under Section 90(2) of the Act to claim exemption under Article 13 of the India-Mauritius DTAA, allowing it to claim exemption for current year capital gains without setting off brought-forward losses. The assessee relied on judicial pronouncements holding that an assessee can claim exemption under the DTAA without setting off brought-forward losses, as permitted by Section 90(2). Revenue's Contention: The Revenue contended that the DTAA has no provision for carry forward of losses, thus Section 74 of the Income Tax Act should apply in its entirety. They argued that brought-forward losses must be set off against current year gains before claiming DTAA benefits, and that the CIT(A) erred by allowing a piecemeal application of Section 74 and ignoring the precondition of set-off.

Which sections of the Income-tax Act were involved?

Section 147,Section 144C,Section 74,Section 139(1),Section 143(3),Section 90,Section 10(38)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI

Before: SHRI AMTI SHUKLA & SHRI RAKESH KUMAR LODHA

For Appellant: Shri Rajesh Simhunn/Ms
For Respondent: Ms. Arju Garodia CIT (DR)
Hearing: 19.08.2026Pronounced: 09.10.2026

ITA NO.3302-M-2026 WI OMTREE INDIA INVESTMENT PORTFOLIO INC- AY 2015-2016

PER : Shri Rakesh Kumar Lodha, Accountant Member:

This appeal has been filed by the Revenue against the Order u/s 250 of the Income Tax Act, 1961 ( herein after referred as “the Act”) dated 29/01/2026, passed by the Ld. Commissioner of Income Tax (Appeals) – 58 Mumbai, arising from the assessment order passed u/s 147, r w s section 144C for the assessment year 2015-2016. 2. The Revenue has raised the following grounds of

The order continues below.

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