VANGUARD FUNDS PUBLIC LIMITED COMPANY VANG FTSE EMERGING MKTS UCITS ETF,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)-4(3)(1), MUMBAI

ITA 1280/MUM/2025Status: DisposedITAT Mumbai23 May 2025AY 2022-2324 pages
AI SummaryN/A

What did the Tribunal hold?

The Tribunal held that rights entitlements are distinct from shares and, therefore, gains from their alienation are exempt under Article 13(6) of the India-Ireland DTAA, taxable only in Ireland. It further ruled that Section 70 of the Income Tax Act does not prescribe a specific hierarchy for set-off, allowing the assessee to choose the most beneficial method for setting off STCG from non-STT paid shares against STCL from STT paid shares. The Tribunal directed the AO to delete the additions made on both counts and also addressed issues related to TDS credit, refunds, and calculation errors.

What were the facts?

The assessee, an FPI incorporated in Ireland, earned Short Term Capital Gain (STCG) from the sale of rights entitlements which it claimed as exempt under Article 13(6) of the India-Ireland DTAA. The Assessing Officer (AO), however, taxed it under Article 13(5) of the DTAA, treating rights entitlements as shares. Additionally, the AO disallowed the set-off of STCG from non-STT paid shares against STCL from STT paid shares, asserting that Section 70 of the Income Tax Act permits set-off only for similar income/losses.

What were the issues?

1. Whether STCG on sale of rights entitlements is exempt under Article 13(6) of the India-Ireland DTAA or taxable under Article 13(5) as sale of shares. 2. Whether STCG from non-STT paid shares can be set off against STCL from STT paid shares, and if the assessee has the option to choose the beneficial order of set-off under Section 70 of the Income Tax Act. 3. Rectification concerning TDS credit, refund claims, and calculation errors.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 70,Section 71,Section 74,Section 90,Section 111A,Section 115AD,Section 2(42A),Section 55(2)(aa),Section 234A,Section 234B,Section 143(2)

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE MS PADMAVATHY S, AM & SHRI RAHUL CHAUDHARY, JM Ι.Τ.Α. No. 1277/Mum/2025 (Assessment Year: 2022-23)

Vanguard Emerging Markets Stock Index Fund A Series of VISPLC, C/o Ernst & Young LLP, 14th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai-400028. PAN: AACCV3136B Appellant)

Vs. ACIT (IT)-4(3)(1), Kautilya Bhavan, G Block, Bandra Kurla Complex, Maharashtra-400051. : Respondent) Ι.Τ.Α. No. 1278/Mum/2025 (Assessment Year: 2022-23) VFTC- Institutional Total International Stock Market Index Trust II, C/o Ernst & Young LLP, 14th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai-400028. PAN: AADTV1640C ACIT (IT)-4(3)(1), Kautilya Bhavan, G Block, Bandra Kurla Complex, Vs. Maharashtra-400051.

Appellant) : Respondent) Ι.Τ.Α. No. 1279/Mum/2025 (Assessment Year: 2022-23)

Vanguard Emerging Markets Stock Index Fund A Series of VIEIF, C/o Ernst & Young LLP, 14th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar (West), Mumbai-400028.

Vs. ACIT (IT)-4(3)(1), Kautilya Bhavan, G Block, Bandra Kurla Complex, Maharashtra-400051. PAN: AAATY0918K Appellant) : Respondent) 2 ITA 1277 to 1283/Mum/2025 Vanguard Emerging Ma

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