ISHARES MSCI INDIA UCITS ETF ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION )-2(2)(2), MUMBAI

ITA 2147/MUM/2025Status: DisposedITAT Mumbai11 June 2025AY 2022-2358 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal allowed the appeals in part for statistical purposes. Regarding the set-off of short-term capital losses (Issue 1), the Tribunal directed the AO to accept the assessee's methodology for computing capital gains, thereby allowing grounds 2 to 6. Concerning the set-off of brought forward long-term capital loss against exempt long-term capital gains (Issue 2), the Tribunal directed the AO to allow exemption of grandfathered long-term capital gains under Article 13(4) of the India-Mauritius DTAA and to allow set-off of brought forward long-term capital loss against net long-term capital gains from non-grandfathered sales, setting aside the impugned order on this issue and allowing grounds 7-10. For arithmetical errors in the computation sheet (Issue 3), the Tribunal directed the AO to correctly compute the income in accordance with law after considering the Tribunal's directions, allowing grounds 11-14 for statistical purposes, noting that rectification applications were pending. Regarding short grant of TDS credit (Issue 4), the issue was restored to the AO with directions to grant credit after verification, allowing ground 15 for statistical purposes, also noting a pending rectification application. The levy of interest under Section 234C (Issue 5) was considered consequential and not requiring separate adjudication. The initiation of penalty proceedings under Section 270A (Issue 6) was dismissed as premature. The Tribunal consolidated all appeals and decided them as partly allowed for statistical purposes.

What were the facts?

The appeals were filed by various ETF assessees against final assessment orders for Assessment Year 2022-23. These orders were passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961, following directions from the Dispute Resolution Panel (DRP). The assessees are iShares MSCI India UCITS ETF, iShares MSCI EM UCITS ETF, iShares Core MSCI EM IMI UCITS ETF, iShares India 50 ETF, iShares Core MSCI Total International Stock ETF, iShares MSCI Emerging Markets ETF, iShares Core MSCI Emerging Markets ETF, iShares MSCI India ETF, and iShares MSCI All Country Asia Ex Japan ETF. The common issue across these appeals relates to the computation of capital gains and the set-off of losses. The specific facts for ITA No. 2147/Mum/2025 were elaborated for brevity, but the issues were similar across all appeals.

What were the issues?

The Tribunal had to decide the following issues: 1. (Question of Law/Mixed Law and Fact) Whether the Assessing Officer (AO)/DRP erred in rejecting the hierarchy of set-off of short-term capital losses adopted by the assessee, specifically concerning transactions on the sale of shares not chargeable to Securities Transaction Tax (STT), contrary to Section 70(2) of the Act? - Assessee's Contention: The assessee argued that Section 70 does not provide a hierarchy for set-off, and short-term capital loss from STT-paid shares can be set off against short-term capital gains from non-STT securities, citing jurisdictional Tribunal decisions. - Revenue's Contention: Not recorded in the judgment. 2. (Question of Law/Mixed Law and Fact) Whether the AO/DRP erred in setting off taxable (non-grandfathered) brought forward long-term capital loss against exempt (grandfathered) long-term capital gains, contrary to the provisions of Article 13(4) of the India-Mauritius DTAA? - Assessee's Contention: The assessee contended that grandfathered gains are not taxable in India as per the treaty and do not form part of total income, thus set-off of losses against them is not permissible. - Revenue's Contention: Not recorded in the judgment. 3. (Question of Fact) Whether there were arithmetical errors in the computation of gross total income, capital gains, business income, total income, income taxable at special rates, and the set-off of brought forward losses in the computation sheet? - Assessee's Contention: The assessee pointed out specific discrepancies in the computation sheets and stated that rectification applications were filed. - Revenue's Contention: Not recorded in the judgment. 4. (Question of Fact) Whether there was a short grant of credit for taxes deducted at source (TDS)? - Assessee's Contention: The assessee claimed a higher TDS credit than what was granted and mentioned filing a rectification application. - Revenue's Contention: Not recorded in the judgment. 5. (Question of Law) Whether interest under Section 234C of the Act was correctly levied? - Assessee's Contention: Not explicitly stated, but implied as an error in the grounds of appeal. - Revenue's Contention: Not recorded in the judgment. 6. (Question of Law) Whether penalty proceedings under Section 270A of the Act were validly initiated? - Assessee's Contention: The assessee argued that the initiation was premature. - Revenue's Contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(5),Section 111A,Section 115AD,Section 70,Section 70(2),Section 45,Section 55A,Section 234C,Section 270A

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

ITA No.2134/MUM/2025
ITA No.2147/MUM/2025
ITA No.2148/MUM/2025

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL “I BENCH, MUMBAI

BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER Assessment Year : 2022-23)

Schwab Emerging Markets Equity ETF, C/o Ernst & Young LLP, 14th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra - 4000250 ha aeeen teeta Appellant PAN : AAITS7338F v/s

DCIT (International Taxation) — 4(2)(1), Kautilya Bhavan, Bandra Kurla Complex,

eee eee eee eee aeeenene Respondent Mumbai - 400051 Assessment Year : 2022-23)

iShares MSCI India UCITS ETF, C/o Ernst & Young LLP, 17th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai, Maharashtra - 400028 hasbeen teeta Appellant PAN : AAECI8727K v/s

DCIT (International Taxation) — 2(2)(2), Kautilya Bhavan, Bandra Kurla Complex,

a EE Respondent Mumbai - 400051 Assessment Year : 2022-23)

iShares MSCI EM UCITS ETF, U DIST

C/o Ernst & Young LLP, 17th Floor, The Ruby,

29, Senapati Bapat Marg, Dadar (West),

Mumbai, Maharashtra - 400028 hasbeen teeta Appellant PAN : AADCI3487K

ITAs No. 2085, 2134, 2147, 2148, 2149, 2150, 2151, 2152, 2153,

v/s

DCIT (

The order continues below.

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