FIDELITY RUTLAND SQUARE TRUST II STRATEGIC ADVISERS EMERGING MARKETS FUND ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION), MUMBAI

order \n09.06.2025\n13.06.2025\nORDER\nPer Bench:\n1. These are four appeals preferred by the different assessees\npertaining to Assessment Year 2022-2023 challenging four\nseparate Final Assessment Orders [dated 29/01/2025, 29/01/2025,\n29/01/2025 and 15/01/2025], passed by the Assessing Officer\nunder Section 143(3) read with Section 144C(13) read with\nSection 144B of the Income Tax Act, 1961 [hereinafter referred\nto as 'the Act'], as per the directions issued by Commissioner of\nIncome Tax [Dispute Resolution Panel (1)], Mumbai-3 [for short\n'DRP'] [on 04/12/2024, 04/12/2024, 04/12/2024 & 05/12/2024]\nunder Section 144C(5) of the Act for the Assessment Year 2022-\n2023. Since identical grounds were raised in all the four appeals,\nthe same were heard together and are, therefore, being disposed\noff by way of a common order.\nITA No.2125/MUM/2025 [Assessment Year 2022-2023]\nWe would first take up appeal preferred by Fidelity Rutland\nSquare Trust II Strategic Advisers FID EMG Markets Fund\nagainst the Final Assessment Order, dated 29/01/2025, passed\nby the Assessing Officer under Section 143(3) read with Section\n144C(13) read with Section 144B of the Act as per the directions\nissued by the DRP on 04/12/2024 under Section 144C(5) of the\nAct for the Assessment Year 2022-2023.\n2. The Assessee has raised the following grounds of appeal:\n\"Based on the facts and circumstances of the case and in law, the\nAppellant craves leave to prefer an appeal against the order\ndated

29. January 2025, issued by the Deputy/Assistant\nCommissioner of Income-tax (International Tax)-2(3)(1), Mumbai\n(hereinafter referred to as 'the Ld. AO'], under section 143(3)\nread with section 144C(13) of the Income-tax Act, 1961 (Act), in\npursuance of the directions dated

4. December 2024, issued by\nthe Hon'ble Dispute Resolution Panel-1, Mumbai (DRP-1) on the\nfollowing grounds, each of which is without prejudice to and\nindependent of the others\nOn the facts and circumstances of the case and in law, the Ld. AO\nand the Ld. DRP have:\nMerits of the case\nRejecting the hierarchy of set-off Short-term Capital Losses\nadopted by Appellant, and in raising a demand of INR 57,39,370.\n3. Errors in computation sheet appended with order.\n1. Erred in rejecting the hierarchy of set-off of short-term\ncapital losses adopted by the Appellant and thereby,\ntaxing the gross short-term capital gains in respect of\ntransactions on the sale of shares not chargeable to\nSecurity Transaction Tax ('STT');\n2. Erred to appreciate that income under the head 'Capital\ngains' is determined as per sections 45 to 55A of the Act\nwhilst sections 111A and 115AD only provide for\ndetermination of tax in certain cases and therefore, gains\narising on transactions subjected to STT and those not\nsubjected to STT are no different and satisfy the 'similar\ncomputation' condition specified in section 70(2) of the\nAct.\n3. Failed to appreciate that section 70 of the Act does not\nprovide any hierarchy for set-off of losses, the short-term\ncapital loss arising from sale of shares subjected to STT\ncan be first set-off against the short-term capital gains\narising from sale of securities not subjected to STT\ninstead of short-term capital gains arising from sale of\nshares subjected to STT.\n4. Erred in not following the binding decisions of the\njurisdictional Tribunal and rejecting the set-off merely\nbecause the Department has preferred an appeal before\nthe jurisdictional High Court against one of the orders of\nthe jurisdictional Tribunal.\n5. Thus, the Ld. AO erred in raising a demand of INR\n57,39,370.\n6. Erred in levying surcharge at the rate 25% on short-term\ncapital gains (not subjected to STT) as against 15% as\nclaimed by the Appellant in the return of income\n7. Erred in granting credit for taxes deducted at source only\nto the extent of INR 50,618,157 as against INR\n55,547,350 as claimed by the Appellant in the return of\nincome.\n8. Erred in levying interest under section 234C of the Act\namounting to INR 3,50,285,\n9. Initiating penalty proceedings under section 270A of the\nAct.\nErred in initiating penalty under section 270A of the\nAct alleging under reporting of income by the Appellant.”\n4. Ground No.1 to 6:\nThe relevant facts in brief are that the Assessee, a trust\norganized in the United States of America, is registered with the\nSecurities and Exchange Board of India (SEBI) as a Foreign\nPortfolio Investor. The Assessee makes portfolio investments in\nIndian securities in accordance with the SEBI (Foreign Portfolio\nInvestors) Regulations, 2019. For the Assessment Year 2022-\n2023, the Assessee filed return of income on 27/07/2022\ndeclaring total income of INR.318,44,39,730/-. In the return of\nincome the Assessee offered to tax the net Short Term Capital\nGains (STCG) of INR.3,70,83,534/- [taxable at 15% under\nSection 111A of the Act] computed in the following manner:\nParticulars\nAmount (In INR.)\nShort-Term Capital Gains\n2,67,46,584\n[which is not subject to Securities Transaction Tax (STT) and\ntaxable as per section 115AD of The Act at the rate of 30%]\nAdd Short-Term Capital Gains\n88,21,26,634\n[subject to STT and taxable as per section 115AD read with section\n111A of the Act at the rate of 15%]\nLess. Short-Term Capital Loss\n(87,17,89,684)\n[which is subject to STT]\nNet Short-Term Capital Gains Chargeable to Tax\n3,70,83,534\n[Offered to tax as STCG subject to STT and taxable as per section\n115AD read with section 111A of the Act at the rate of 15%]\n5. The case of the Assessee was selected for scrutiny and the\nAssessing Officer noted that the Assessee had adopted following\nhierarchy of setting off the short term capital loss with short\nterm capital gains:\n(a)\nShort Term Capital Loss (STT paid) was first set off\nagainst the Short Term Capital Gains (Non-STT:\ntaxable at the rate of 30% under Section 115AD)\n(b)\nBalance Short Term Capital Loss (STT paid) was set\noff against the Short Term Capital Gains (STT paid:\ntaxable at the rate of 15% under Section 111A)\nThereafter, the Balance Short Term Capital Gain of\n6. INR.3,70,83,534/- was offered to tax at the rate of 15% under\nSection 111A.\n7. According to the Assessing Officer, the Assessee should have\ndetermined the Net Short Term Capital Gain for STT Paid\ntransactions taxable at the rate of and Net Short Term Capital\nGain for Non-STT Paid transactions, separately, since the non-\nSTT trade transactions were taxable at the rate of 30% under\nSection 115AD and STT paid transaction were taxable at the rate\nof 15% under Section 111A. Section 115AD and Section 111A of\nthe Act provided two separate manner of computation of capital\ngains. The hierarchy of set off followed by the Assessee has\nresulted in STCG of INR. 2,67,46,584/- being offered to tax at\nthe lower rate of 15% under Section 111A of the Act whereas\nthe same were taxable at the rate of 30% under Section 115AD\nof the Act. Therefore, in the Draft Assessment Order, dated\n12/03/2024, the Assessing Officer proposed that the current\nyear Short-Term Capital Loss of INR.87,17,89,684/- (STT paid\ntransactions) be set-off against the Short-Term Capital Gains\n(STT paid transactions) of INR.88,21,26,634/- taxable under\nSection 111A of the Act. While that balance Short-Term Capital\nGains (STT paid transactions) of INR.1,03,36,950/- be taxed\n@15% and the Short Term Capital Gains (non-STT paid\ntransaction) be taxed @30% is INR.2,67,46,584/-.\n8. In objections filed by the Assessee against the Draft Assessment\nOrder before the DRP, the Assessee placing reliance upon\nvarious judicial precedents, contended that capital gains income\nas offered to tax by the Assessee should be accepted. However,\nthe DRP rejected the objections raised by the Assessee observing\nthat the issue had not attain finality since the appeal preferred\nby the Revenue in the case of Director of Income Tax (IT)-I\n(Appellant) Vs. M/s. DWS India Equity Fund, Income Tax Appeal\nNo.1414 of 2012 was admitted and was pending adjudication.\nAccordingly, the Assessing Officer passed the Final Assessment\nOrder, dated 29/01/2025, re-computing the taxable STCG as\nunder:\nShort-term capital gains/ (loss)\nTaxable at 15%\n(STT paid)\nTaxable at 30%\n(Non-STT paid)\nShort-Term Capital Gains\n88,21,26.634\n2,67,46,584\nLess: Short-Term Capital Losses\n(67,17,89,654)\nNil\nNet Short-Term Capital Gains\n1,03,36,950\n2,67,46,584\n9. Being aggrieved, the Assessee has preferred the present appeal\nbefore the Tribunal on the grounds reproduced in paragraph 2\nabove.\n10. We have considered the rival submissions and have perused the\nmaterial on record.\n11. The solitary issue that arise for consideration is whether Short\nTerm Capital Loss from STT paid transactions can be set off\nagainst Short Term Capital Gains arising from Non-STT paid\ntransactions prior to setting off the available Short Term Capital\nGains arising from STT paid transactions.\n12. We find that identical issue had come up for consideration before\nthe Hon'ble High Court at Culcutta in the case of Commissioner\nof Income Tax, Kol-II Vs. Rungamatee Trexim Pvt. Ltd.\n[2008] [ITA No.812 of 2008], dated 19/12/2008. The Hon'ble\nCulcutta High Court decided the issue in the favour of the\nAssessee holding as under:\n\"In Ground Nos.5 and 6 the assessee has objected to the mode of\nset off adopted by the Assessing Officer in assessing income from\nshort term capital cases. During the year under consideration the\nassessee earned short term capital gain of Rs.7,29,584/- in\ntransaction in shares where security transaction tax was not\npaid and income was subject to tax at normal rate. The assessee\nalso earned short term capital gain of Rs.2,27,564/ in transaction\nin shares where security transaction tax was paid and income\nwas eligible for concessional rate of tax under section 111A.\nThe assessee also suffered short term capital loss of\nRs.7.17,660/- in transactions in shares involving payment of\nsecurity transaction tax. In the impugned order the A.O.\ncomputed the capital gain in the following manner without\ndiscussing any reasons for adopting such mode of computation.\nCalculation of income/loss from capital gain\nShort term capital loss with STT\nShort term capital gain with STT\nNet Short Term capital loss with STT\nShort term capital gain without STT\nNet Short term capital gain\nLess Brokerage\nTaxable short term capital gain of normal rate\nLong term capital gain at 10% rate (as per computation)\n(-)7.17,660/-\n2,27,564/-\n(-) 4,90,096/-\n7,29,584/-\n2,39,488/-\n5,914/-\n2,33,574/-\n1,49,431/-\nI have perused the assessment order and have considered\nsubmissions of the A/R. In the impugned order the A.O. has not\ngiven any reasons for first sitting off short term capital gain with\nSTT against short term capital STT and then allow of set off of\nremaining loss of Rs.4,90,096/ against short term capital gain\nwithout STT. The mode of set off adopted by the A.O. shown that\nbe accepted in principle that short term capital loss with STT can\nbe legally set oft against short term capital gain without STT.\nAccording to the assessee, the chronology for the set off by the\nA.

was contrary to chronology adopted by the assessee, only\nbecause the assessee's mode resulted in concessional rate of the\ntax being applied to higher amount of short term capital gain\nwhich resulted more tax benefit to an assessee.\nOn perusal of the provision of section 70, I find that there\nis no prohibition nor the Act compels the assessee to first\nset off short term capital gain with STT against short term\ncapital loss with STT and then allows set off against short\nterm capital gain without STT. In absence of any specific\nmode of set off provided in the Act and in absence of any\nprohibition and in absence of any specific chronology for set off\nprescribed in the Act, the assessee was entitled to exercise his\noption with regard to the chronology of set off which was most\nbeneficial to the assessee. It is settled proposition of law that\nwhen a provision of the Act gives option to the assessee, such\noption should be exercised which will favour the assessee and not\nthe revenue. The A/R for the assessee was well justified in relying\non the decision of the Calcutta High Court and the Circular of the\nBoard dated 7.7.1955 since the principles laid down therein\nappeared to be fully applicable.\nThe Commissioner of Income Tax (Appeals) therefore came to\nthe conclusion in favour of the assessee. He further came to the\nconclusion that the disallowance has been made on presumption.\nIn these circumstances, the order passed by the Commissioner of\nIncome Tax and subsequent thereto, the Commissioner of\nIncome Tax (Appeals) had already considered the case of the\ndepartment and upheld the order passed by it. We have carefully\nconsidered the said question and in our considered opinion, there\nis no illegality or irregularity in respect of the order so passed by\nthe learned Tribunal. We, accordingly, find that there is no reason\nto interfere with the order so passed by the learned Tribunal and\nfurther the order so passed by the learned Tribunal does not\nsuffer from any illegality or irregularity and we find that no\nsubstantial question of law is involved in this appeal. Hence, we\ndismiss the appeal.\nAll parties concerned are to act on a xerox signed copy of the\nminutes of this order on the usual undertakings.\nUrgent Xerox certified copy of this, if applied for, be supplied to\nthe parties subject to compliance with all requisite formalities.”\n(Emphasis Supplied)\n13. The above judgment was followed by the Co-ordinate Bench of\nthe Mumbai Tribunal in the case of Vanguard Total\nInternational Stock Index Fund¹ wherein it was held as\nunder:\n"3. At the very outset, the Id. Counsel for the assessee argued\nthe appeal on the issues raised vide Ground No.5.\n4. Representatives of both the sides were heard at length.\nCase records carefully perused and the relevant\ndocumentary evidence brought on record duly considered.\n5. During the year under consideration, the assessee earned\nshort term capital gain, interest on IT refund, dividend\nreturn from Indian companies and interest from\nREUIT/INVIT Units. The assessee filed its return of income\n¹ITA No.4656/Mum/2023 (Assessment Year 2021-2022), dated 13/12/2024\non 12/03/2022 declaring total income at\nRs.11,40,04,39,930/-. The assessee is a trust organized in\nU.S.A. and is registered with the Securities & Exchange\nBoard of India (SEBI) as a Foreign Portfolio Investor. The\nentire quarrel revolves around the following short term\ncapital gains/losses:\nSTCG (non STT)\nSTCL (current STT)\nSTCL (bf) STT\nBalance STCL (STT)\nSTCG (STT)\nNet STCG (STT)\n742,238,907\n(616,271,201)\n(223,701,502)\n(9,77,33,796)\n174,64,01,537\n164,86,67,741\n5.

29. January 2025, issued by the Deputy/Assistant\nCommissioner of Income-tax (International Tax)-2(3)(1), Mumbai\n(hereinafter referred to as 'the Ld. AO'], under section 143(3)\nread with section 144C(13) of the Income-tax Act, 1961 (Act), in\npursuance of the directions dated

4. December 2024, issued by\nthe Hon'ble Dispute Resolution Panel-1, Mumbai (DRP-1) on the\nfollowing grounds, each of which is without prejudice to and\nindependent of the others.\nOn the facts and circumstances of the case and in law, the Ld. AO\nand the Ld. DRP have:\nMerits of the case\nRejecting the hierarchy of set-off Short-term Capital Losses\nadopted by Appellant, and in raising a demand of INR 8,28,146.\n1. Erred in rejecting the hierarchy of set-off of short-term\ncapital losses adopted by the Appellant and thereby,\ntaxing the gross short-term capital gains in respect of\ntransactions on the sale of shares not chargeable to\nSecurity Transaction Tax ('STT');\n2. Erred to appreciate that income under the head 'Capital\ngains' is determined as per sections 45 to 55A of the Act\nwhilst sections 111A and 115AD only provide for\ndetermination of tax in certain cases and therefore, gains\narising on transactions subjected to STT and those not\nsubjected to STT are no different and satisfy the 'similar\ncomputation' condition specified in section 70(2) of the\nAct.\n3. Failed to appreciate that section 70 of the Act does not\nprovide any hierarchy for set-off of losses, the short-term\ncapital loss arising from sale of shares subjected to STT\ncan be first set-off against the short-term capital gains\narising from sale of securities not subjected to STT\ninstead of short-term capital gains arising from sale of\nshares subjected to STT.\n4. Erred in not following the binding decisions of the\njurisdictional Tribunal and rejecting the set-off merely\nbecause the Department has preferred an appeal before\nthe jurisdictional High Court against one of the orders of\nthe jurisdictional Tribunal.\n5. Thus, the Ld. AO erred in raising a demand of INR\n8,28,146/-.\n6. Erred in granting credit for taxes deducted at source only\nto the extent of INR 9,44,18,740 as against INR\n9,47,66,743 as claimed by the Appellant in the return of\nincome.\n7. Erred in levying interest under section 234C of the Act\namounting to INR 43,100.\n8. Initiating penalty proceedings under section 270A of the\nAct.\nErred in initiating penalty under section 270A of the\nAct alleging under reporting of income by the Appellant.”\n23. The relevant facts in brief are that the Assessee, a trust\norganized in the United States of America, is registered with the\nSecurities and Exchange Board of India (SEBI) as a Foreign\nPortfolio Investor. The Assessee makes portfolio investments in\nIndian securities in accordance with the SEBI (Foreign Portfolio\nInvestors) Regulations, 2019. For the Assessment Year\n2022-2023, the Assessee filed return of income on 28/07/2022\ndeclaring total income of INR.96,48,81,150/-. In the return of\nincome the Assessee offered to tax the net Short Term Capital\nGains (STCG) of INR.2,82,24,400/- [taxable at 15% under\nSection 111A of the Act] computed in the following manner:\nParticulars\nAmount (In INR.)\nShort-Term Capital Gains\n1,77,58,894\n[which is not subject to Securities Transaction Tax (STT) and\ntaxable as per section 115AD of The Act at the rate of 30%]\nAdd Short-Term Capital Gains\n1,29,01,641\n[subject to STT and taxable as per section 115AD read with section\n111A of the Act at the rate of 15%]\nLess. Short-Term Capital Loss\n(24,36,135)\n[which is subject to STT]\nNet Short-Term Capital Gains Chargeable to Tax\n2,82,24,400\n[Offered to tax as STCG subject to STT and taxable as per section\n115AD read with section 111A of the Act at the rate of 15%]\n24. However, the Assessing Officer and DRP did not accept the\nAssessee's treatment and recomputed the assessable capital\ngains as under:\nShort-term capital gains/ (loss)\nTaxable at 15%\n(STT paid)\nTaxable at 30%\n(Non-STT paid)\nShort-Term Capital Gains\n1,29,01,641\n1,77,58,894\nLess: Short-Term Capital Losses\n(24,36,135)\nNil\nNet Short-Term Capital Gains\n1,04,65,506\n1,77,58,894\n25. Accordingly, the Assessing Officer passed the Final Assessment\nOrder, dated 29/01/2025, holding that STCG of\nINR.1,04,65,506/- was taxable at the rate of 15% under Section\n115AD read with Section 111A of the Act and the balance\namount of INR.1,77,58,894/- was taxable at the rate of 30% as\nper Section 115AD of the Act.\n26. Being aggrieved, the Assessee has preferred the present appeal\nbefore the Tribunal on the grounds reproduced in paragraph 22\nabove.\n27. We have considered the rival submissions and have perused the\nmaterial on record. During the course of hearing both the sides\nhad agreed that our findings/adjudication in the case of Fidelity\nRutland Square Trust II Strategic Advisers FID EMG Markets\nFund for the Assessment Year 2022-2023 [ITA\nNo.2125/Mum/2025] shall apply mutatis mutandis to the present\nappeal. Accordingly, keeping in view identical facts and\ncircumstances, and adopting the reasoning given while\nadjudicating ITA No.2125/Mum/2025 hereinabove, we proceed\nto adjudicate the ground raised in the present appeal.\n28. Ground No.1 to 5:\nGround No.1 to 5 raised by the Assessee pertained to re-\ncomputation of net Short Term Capital Gains Tax liability. In\nview of Paragraph 3 to 16 above, we direct the Assessing Officer\nto accept the Net Short Term Capital Gains as offered to tax by\nthe Assessee in the return of income. The additional demand raised\non the Assessee on account of re-computation of capital gains by the\nAssessing Officer is deleted and the Assessing Officer is directed to re-\ncompute the tax liability (including surcharge) as per law\naccordingly. Thus, in terms of aforesaid, Ground No.1 to 5 raised\nby the Assessee are allowed.\n29. Ground No.6:\nGround No.6 raised by the Assessee is directed against the\nnon-grant of credit of tax deducted at source. The Assessee has\nclaimed that as against the credit of taxes deducted at source\namounting to INR.9,44,18,740 as claimed in the return of\nincome, the Assessing Officer has granted credit only to the\nextent of INR.9,47,66,743/-. Therefore, the Assessing Officer is\ndirected to verify the records and grant credit for the balance amount of\ntaxes deducted at source as per law. In terms of aforesaid\nGround No.6 raised by the Assessee is allowed for statistical\npurposes.\n30. Ground No.7:\nGround No.7 raised by the Assessee pertains to levy of interest\nunder Section 234C of the Act and the same is disposed off as\nbeing consequential in nature.\n31. Ground No.8:\nGround No.8 raised by the Assessee pertains to initiation of\npenalty proceedings under Section 270A of the Act and the same\nis dismissed as being premature in nature.\n32. In result, appeal preferred by the Assessee is partly allowed.\n Year 2022-2023]\n33. Next, we would take up appeal preferred by the Assessee (i.e.,\nFidelity Rutland Square Trust II : Strategic Advisers\nEmerging Markets Fund) against the Final Assessment Order,\ndated 29/01/2025, passed by the Assessing Officer under\nSection 143(3) read with Section 144C(13) read with Section\n144B of the Act as per the directions issued by the DRP on\n04/12/2024 under Section 144C(5) of the Act for the\n Assessment Year 2022-2023.\n34. The Assessee has raised the following grounds of appeal:\n\"Based on the facts and circumstances of the case and in law, the\nAppellant craves leave to prefer an appeal against the order\ndated

29. January 2025, issued by the Deputy/Assistant\nCommissioner of Income-tax (International Tax)-2(3)(1), Mumbai\n(hereinafter referred to as 'the Ld. AO'], under section 143(3)\nread with section 144C(13) of the Income-tax Act, 1961 (Act), in\npursuance of the directions dated

4. December 2024, issued by\nthe Hon'ble Dispute Resolution Panel-1, Mumbai (DRP-1) on the\nfollowing grounds, each of which is without prejudice to and\nindependent of the others\nOn the facts and circumstances of the case and in law, the Ld. AO\nand the Ld. DRP have:\nMerits of the case\nRejecting the hierarchy of set-off Short-term Capital Losses\nadopted by Appellant, and in raising a demand of INR\n106,785,350.\n1. Erred in rejecting the hierarchy of set-off of short-term\ncapital losses adopted by the Appellant and thereby,\ntaxing the gross short-term capital gains in respect of\ntransactions on the sale of shares not chargeable to\nSecurity Transaction Tax ('STT');\n2. Erred to appreciate that income under the head 'Capital\ngains' is determined as per sections 45 to 55A of the Act\nwhilst sections 111A and 115AD of the Act only provide for\ndetermination of tax in certain cases and therefore, gains\narising on transactions subjected to STT and those not\nsubjected to STT are no different and satisfy the 'similar\ncomputation' condition specified in section 70(2) of the\nAct.\n3. Failed to appreciate that section 70 of the Act does not\nprovide any hierarchy for set-off of losses, the short-term\ncapital loss arising from sale of shares subjected to STT\ncan be first set-off against the short-term capital gains\narising from sale of securities not subjected to STT\ninstead of short-term capital gains arising from sale of\nshares subjected to STT.\n4. Erred in not following the binding decisions of the\njurisdictional Tribunal and rejecting the set-off merely\nbecause the Department has preferred an appeal before\nthe jurisdictional High Court against one of the orders of\nthe jurisdictional Tribunal.\n5. Thus, the Ld. AO erred in raising a demand of INR\n10,67,85,350.\n6. Erred in considering the brought forward long-term capital\nloss as Nil instead of INR.615,368,413 and not allowing\nthe set-off of the same against the net long-term capital\ngain.\n7. Erred in granting credit for taxes deducted at source only\nto the extent of INR 10,09,36,049 as against INR\n106,223,167 as claimed by the Appellant in the return of\nincome.\n8. Erred in levying interest under section 234B and section\n234C of the Act amounting to INR 26,946,836 and\nINR.583,049 respectively.\nInitiating penalty proceedings under section 270A of the\nAct.\n9. Erred in initiating penalty under section 270A of the Act\nalleging under reporting of income by the Appellant.”\n35. The relevant facts in brief are that the Assessee, a trust\norganized in the United States of America, is registered with the\nSecurities and Exchange Board of India (SEBI) as a Foreign\nPortfolio Investor. For the Assessment Year 2022-2023, the\nAssessee filed return of income on 29/07/2022 declaring total\nincome of INR.2,76,16,85,960/-. In the return of\nincome the Assessee offered to tax the net Short Term Capital\nGains (STCG) of INR.95,83,54,878/- [taxable at 15% under Section 111A of\nthe Act] computed in the following manner:\nParticulars\nAmount (In INR.)\nShort-Term Capital Gains\n1,00,15,252\n[which is not subject to Securities Transaction Tax (STT) and\ntaxable as per section 115AD of The Act at the rate of 30%]\nAdd Short-Term Capital Gains\n1,59,56,97,823\n[subject to STT and taxable as per section 115AD read with section\n111A of the Act at the rate of 15%]\nLess: Short-Term Capital Loss [which is subject to STT]\n(32,77,53,368)\nBalance Short-Term Capital Gains\n[Subject to STT and taxable as per section 115AD read with\nsection 111A of the Act at the rate of 15%]\n1,27,79,59,707\nLess. Brought Forward Short-Term Capital Loss\n(31,96,04,829)\nNet Short-Term Capital Gains Chargeable to Tax\n95,83,54,878\n[Offered to tax as STCG subject to STT and taxable as per section\n115AD read with section 111A of the Act at the rate of 15%]\n36. However, the Assessing Officer and DRP did not accept the\nAssessee's treatment and recomputed the assessable capital\ngain as under :\nShort-term capital gains/ (loss)\nTaxable at 15%\n(STT paid)\nTaxable at 30%\n(Non-STT paid)\nShort-Term Capital Gains\n1,59,56,97,823\n1,00,15,252\nShort-Term Capital Losses other\nthan those covered under Section\n111A of the Act\nNil\nNil\nLess: Short-Term Capital Losses\n(32,77,53,368)\nNil\nNet Short-Term Capital Gains\n1,26,79,44,455\n1,00,15,252\n37. Accordingly, the Assessing Officer passed the Final Assessment\nOrder, dated 15/01/2025, holding that STCG of\nINR.1,26,79,44,455/- was taxable at the rate of 15% under\nSection 115AD read with Section 111A of the Act and the\nbalance amount of INR.1,00,15,252/- was taxable at the rate of\n30% as per Section 115AD of the Act. Further, the Assessing\nOfficer did not grant the set-off of the brought Forward Short-\nTerm Capital Losses of INR.319,604,829/- against the Short-\nTerm Capital Gains of the year under consideration.\n38. Being aggrieved, the Assessee has preferred the present appeal\nbefore the Tribunal on the grounds reproduced in paragraph 44\nabove.\n39. We have considered the rival submissions and have perused the\nmaterial on record. During the course of hearing both the sides\nhad agreed that our findings/adjudication in the case of Fidelity\nRutland Square Trust II Strategic Advisers FID EMG Markets\nFund for the Assessment Year 2022-2023 [ITA\nNo.2125/Mum/2025] shall apply mutatis mutandis to the present\nappeal. Accordingly, keeping in view identical facts and\ncircumstances, and adopting the reasoning given while\nadjudicating ITA No.2125/Mum/2025 hereinabove, we proceed\nto adjudicate the ground raised in the present appeal.\n40. Ground No.1 to 7:\nGround No.1 to 7 raised by the Assessee pertained to re-\ncomputation of net Short Term Capital Gains Tax liability and set\noff of the Brought Forward Short Term Capital Losses. In view of\nParagraph 3 to 16 above, we direct the Assessing Officer to\naccept the Net Short Term Capital Gains as offered to tax by the\nAssessee in the return of income. Further, the Assessing Officer\nis also directed to grant the benefit of set off of brought forward\nShort Term Capital Loss of INR.31,96,04,829/-. The additional\ndemand raised on the Assessee on account of re-computation of\ncapital gains by the Assessing Officer is deleted and the\nAssessing Officer is directed to re-compute the tax liability\n(including surcharge) as per law accordingly. The Assessing\nOfficer is directed to re-compute the tax liability and surcharge\npayable by the Assessee accordingly. In terms of the aforesaid,\nGround No.1 to 7 raised by the Assessee are allowed.\n41. Ground No.8 & 9:\nGround No.8 & 9 raised by the Assessee pertains to levy of\ninterest under Section 234B and 234C of the Act and the same is\ndisposed off as being consequential in nature.\n42. Ground No.10:\nGround No.10 raised by the Assessee pertains to initiation of\npenalty proceedings under Section 270A of the Act and the same\nis dismissed as being premature in nature.\n43. In result, appeal preferred by the Assessee is partly allowed.\nConclusion\nIn result, all the appeals are partly allowed.\nOrder pronounced on 13.06.2025.\nSd/-\n(Narendra Kumar Billaiya)\nAccountant Member\nSd/-\n(Rahul Chaudhary)\nJudicial Member\nमुंबई Mumbai; दिनांक Dated : 13.06.2025\nMilan, LDC\n28\nआदेशकीप्रतिलिपिअग्रेषित/