DCIT (IT) 4(1)(1), MUMBAI, MUMBAI vs. ROBECO QI INSTITUTIONAL EMERGING MARKETS ENHANCED INDEX EQUITIES FUND, MUMBAI

KANT, AM appeals by the Revenue are d
20.06.2024 passed by the Ld. C
) – 58, Mumbai [in short ‘the 016-17 and 2021-22 respective aised in both the appeals, there disposed off by way of this con nience.
ised by the assessee in assessm s under:
n the facts & circumstances of the case, L ding that once the capital gains are c er India Netherlands DTAA, there would seeking adjustment of brought forward exempt capital gains.
n the facts & circumstances of the case, L appreciating that the assessable income as per provisions of the L.T. Act and ben
Articles of the DTAA has to be taken on th ated after giving effect to all the provision tion 74 of the Act.
n the facts & circumstances of the case, L in directing the A O. to allow carry forwa rt-term &Long term losses to the subs visions of section 74 of the Act as pe ard long term & short term losses have Institutioneel Emerging ets Fonds & Robeco Q1
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directed against
Commissioner of Ld. CIT(A)’] for ely. As identical efore, same were nsolidated order ment year 2016-
Ld. CIT(A) has considered as d not be any d capital loss
Ld CIT (A) has is required to nefit, if any, of he net taxable ns of the IT Act
Ld. CIT(A) has ard of brought sequent years er which any e to be set off against curre assessable fo
4. Without p alternate Ld.
(Capital gain) then as per d
Ltd (1975) 99
similar treatm carried forwa
3. We have heard the relevant materia foreign portfolio inv
Exchange Board of I
Netherlands as per
Avoidance Agreement the assessee was en
The assessee has sh other sources’. For th return of income on 2
the return of incom capital gain earned
Rs.1,65,42,777/- wh
India-Netherland DT capital gain from Rs.2,38,79,450/- an India-Netherland DTA
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ent year Long term/Short term gain or that AY as per the IT Act.
prejudice to the above grounds of app
CIT (A) has erred in not appreciating tha itself is exempted from taxation in the so decision of Hon'ble SC in case of Harpra
9 ITR 118, losses (or capital gains) sho ment (treated as exempt) & should not be ard.
rival submissions of the parti als on record. The assessee vestor (FPI) registered with th
India (SEBI). The assessee is a r Article India Netherland D t (DTAA). During the year unde ngaged in purchase and sale of own income under the head ‘ca he year under consideration, th
27.12.2021 declaring total incom me filed, the assessee has sho on transfer of equity shares hich is claimed as exempt und
TAA. The assessee also earned transfer of equity shares nd claimed as exempt under AA. The assessee also earned in Institutioneel Emerging ets Fonds & Robeco Q1
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ns which are peal & in the at if an income ource country, asad& Co. Pvt ould be given allowed to be ies and perused is a registered e Security and a tax resident of Double Taxation er consideration, f the securities.
apital gains and he assessee filed me at Rs. Nil. In own short term s amounting to der Article 13(5) d net long term amounting to Article 13(5) of ncome from long term capital gain o
Rs.13,10,67,006/- w
Act. The assessee ha long term capital loss the current year deta
Assessment Yea
A.Y.2011-12
A.Y.2012-13
A.Y.2013-14
A.Y.2014-15
A.Y.2015-16
3.1 During the yea carry forward of the The return of income assessment and stat
(in short ‘the Act’) assessment, the Asse losses was to be ad under consideration eligible for treaty adjusted the carried short term and long t consideration.
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on buy back of equity shares which is claimed as exempt u/
ad incurred short term capital s in earlier years which was bro ails of such losses is tabulated a ars
Short term capital loss brought forwar
4,86,45,424
75,17,581
82,82,795
3,00,64,911
33,79,91,711
ar under consideration, the as short term capital and long te e filed by the assessee was selec tutory notices under the Incom
) were issued and complied essing Officer held that brought djusted against the current ye and the remaining capital gain benefits. Accordingly, the As forward short term capital los term capital gain earned during
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s amounting to /s 10(38) of the loss as well as ought forward in as under:
rd (INR) ssessee claimed erm capital loss.
cted for scrutiny me-tax Act, 1961
d with. In the t forward capital ear capital gain ns would Nil be ssessing Officer sses against the g the year under 3.2 On further app
Assessing Officer obs

“6.1 The asse
26.07.2016 d
Netherlands investor. Dur earned short exemption u assessee ha
Rs.13,10,67,0
Act. Further, capital loss o years. The A losses for A.Y
17 were the A.Y.2015-16. A.Y.2016-17
arisen during short term br relief under t benefit is to b as per dome forward of ca assessee was forward losse capital gains laws submitte
Rs.41,64,39,4
carry forwar assessee HAS 6.2 During th relied on the Flagship Ind
Director of In Robeco I
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peal, the Ld. CIT(A) rejected the serving as under:
essee has filed its return of income for A declaring income of Nil. The assessee is t and it is registered with SEBI as for ring the year under consideration, the term capital gain of Rs.1,60,63,007/- an nder Article 13 of India-Netherland as also earned
Long term capit
006/- which is claimed as exempt u/s.10
the assessee has claimed brought forwa of Rs.43,25,02,482/- to be carried forw
AO in the assessment order has mentio
Y.2011-12 to A.Y.2015-16 brought forward same as the losses incurred during A The AO further has mentioned that the has sought treaty benefit for short term g A.Y.2016-17 and for claiming the car rought forward capital loss, the assess the IT Act. The AO has mentioned that t be given to the assessee after computing estic act. The AO further mentioned t arry forward loss is not denied to the asse s only allowed to carry forward, recomp es after taking into account set off for t earned during A.Y.2016-17. The AO has ed by the assessee and he has allowed
475/- to be carry forward to A.Y.2017-1
rd loss of Rs.43,25,02,482/- as cla
S he course of appellate proceedings, the e judgment of Hon’ble ITAT Mumbai in ian Investment Co. (Mauritius) Ltd. vs ncome Tax [2010] 38 SOT 426 (Mum) in Institutioneel Emerging ets Fonds & Robeco Q1
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e finding of the .Y.2016-17 on tax resident of reign portfolio assessee has d has claimed d DTAA. The tal gain of 0(38) of the IT ard short-term ward to future oned that the d to A.Y.2016-
A.Y.2011-12 to e assessee in m capital gain rry forward of ee is claiming the treaty/act g total income that the carry essee and the puted brought the short-term s rejected case d total loss of 18 as against aimed by the assessee has n the case of s. Assistant which it was held that the forward of br year and, the claim. Releva under-
“6. We have parties and p the facts are n assessee is a capital gains assessee has in the return f same to be c
However, it capital gains the Treaty, he carry forward the ld. CIT(A) deals with th losses. Sec.15
assessment o that a loss of have set off u the assessee him for the amount of bro be carried for intimation u/
e assessee was fully justified in cla rought forward losses of earlier years t erefore, lower authorities had erred in d ant portion of the order of the ITAT is r e carefully considered the submissions perused the material available on record not in dispute inasmuch as there is no di a non- resident company and not subjec s in this year in India. It is also not in di s shown capital losses amounting to Rs.8
for the Assessment Year 2002-03 and ha carried forward to the subsequent Asses was denied by the AO on the ground t earned by the assessee was exempt fr ence, the assessee is not entitled to have d of brought forward losses of earlier yea
) upheld the view of the AO . Section e provisions for carry forward and set o
57 of the Act provides that "when, in the of the total income of any assessee, it i profits or gains has taken place which h under provisions of this section, the AO by order in writing the amount of loss as purposes of this section". In the case ought forward loss of A.Y:05-06 Rs.87,0
rward for subsequent years is not in di s. 143(1) of the Act for the Assessment Y pute is as to whether the set off can be ave been considered in the year under co allowed to be carried forward to the Years.
Mohan Das (1966) 59 ITR 699 the Hon eld (page 700 headnotes) as under :
s following a vocation and his remunera nder section 10 and the loss of profits su
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aiming carried to subsequent disallowing its reproduced as s of the rival d. We find that ispute that the cted to tax on ispute that the 7,06,49,335/- as claimed the ssment Years.
that the entire rom tax under the benefit of rs. On appeal,
72 of the Act off of business e course of the is established he is entitled to shall notify to s computed by before us the 06,49,335/- to ispute as per
Year 2002-03. considered or onsideration or e subsequent n'ble Supreme
"(iv) That the tion had to be uffered in that vocation in an set off agains in any year m against the p
24(2) has to with the asse by the incom year that the subsequent y
8. In CIT vs.
517(SC) Their
Das (supra), headnotes):
ITR 498) tha assessee was tax Act, 1922
for the asses pecuniary ad the head "Inco carry forward advantage th question and reassessed u and, therefore to 1953- 54 c arising in the relating to the appeals to th appeals aff quantification prescribed pr the principle the determina the loss can o of the determi
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ny year could be carried forward to the n st the profits of the succeeding year. Wh may be carried forward to the following ye profits and gains of the subsequent year be determined by the Income tax offic essment of the subsequent year. A decis me tax Officer who computes the loss in e loss cannot be set off against the i ear is not binding on the assessee".
Western India Oil Distributing Co. Ltd. (2
r Lordships following the decision in C have observed and held as under "From the decision of the High Court (se at, since the Tribunal had found that the s assessable under section 10 of the In 2, for the assessment years 1943-44 to ssment year 1954-55, the assessee ha dvantage by reason of its income being as ome from other sources", and for that rea d was denied to the assessee, while he assessee could not be permitted to d submit that the income for that ye under the correct head "Business" unde e, the unabsorbed depreciation for the y could be allowed to be set off against bu assessment years 1959-60 to 1962- 63
e assessment year 1954-55, the Departm he Supreme Court. The Supreme Court d firming the decision of the High Cour n of loss is properly and duly notified by rocedure, such quantification may be im of finality, but the principle of finality di ation of the source of income and to a dec or cannot be allowed to be carried forwa ination of the source."
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ee [1980] 126
income of the ndian Income-
1953-54, but ad secured a ssessed under ason benefit of retaining that reagitate that ar had to be er section 10, years 1943-44
usiness income
3, but not that ment preferred dismissed the rt that if the y following the mpressed with id not apply to cision whether ard by reason

has also clarified the stand taken by the 22 of 1944 dated 29.7.1944, para-2 (p rcular Income tax by Chaturvedi & Pithis
Edition) (10th Vol.)as under :
t's Indian loss to be carried forward an gn income 'Total income' is defined as the rofits and gains referred to in the sub- mputed in the manner laid down in the A sident, his foreign income is not include h is to be computed subject to the provisi otal income' is a loss, it has to be car e provisions of section 24(2)* and cann income which does not form part of the non-resident would not get any A.Y:0
on on account of the loss incurred by him
) the ratio of the law laid down by the Th of the present case and keeping in vi ra), we find that it is not the case of the has no brought forward losses to be carr ent year or the same have already been the matter we are of the view that the a d in claiming the carried forward of brou earlier years to the subsequent years an A) have erred in not allowing the sam allow the carry forward of brought for to the subsequent years according to law assessee is, therefore, allowed.”
the assessee has also relied on decisi i in the case of Swiss Finance Corporati
CIT (IT)-4(2)(2) [2022] and Goldman Sach mited v Deputy Commissioner of Income-t m 23, ITAT Appeal No. 2201 (Mum) of 201
placing reliance on Flagship Indian In Ltd (supra) held that once the capita s exempt under the relevant tax treaty, th
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e revenue vide
(page 1408 of saria's Income nd not set off e total amount section(1) of Act. In the case ed in his 'total ions of section rried forward not be set off
'total income'.
05-06 relief in in India." (* of heir Lordships, iew the CBDT revenue that ried forward to n adjusted. In assessee was ught forward nd the AO and me. The AO is rward loss of w. The ground ion of Hon’ble ion (Mauritius) hs Investments tax [2020] 120
7 wherein the nvestment Co.
al gains are here would not be any occas term capital lo
6.4 In view juri ictional forward loss
A.Y.2017-18
assessee are assessee are 3.3 We have heard the relevant materia followed the binding
Tribunal in the case
(supra) and Goldma along with the decisi case of Flagship Indi view of the above, w
Ld. CIT(A) on the i
Revenue are accordin
4. In assessment y under:
1. Whether on erred in hold exempt unde occasion for against such Robeco I
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sion for seeking adjustment of brought f oss against such exempt capital gains.
of the facts of the case and deci
ITAT referred above, the assessee is all s of Rs. 43,25,02,482/- as claimed and thus, grounds of the appeal ra allowed. Accordingly, grounds of the allowed.”
rival submissions of the parti als on record. We find that the g precedent of the Co-ordinate e of Swiss Finance Corporate an Sachs Investment (Mauritiu ion of Co-ordinate Bench of the ian Investment Co. (Mauritius) we do not find any infirmity in t ssue in dispute. The grounds ngly dismissed.
year 2021-22 identical grounds n the facts & circumstances of the case, L ding that once the capital gains are c er India Netherlands DTAA, there would seeking adjustment of brought forward exempt capital gains.
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forward short- isions of the lowed to carry by it to the aised by the appeal of the ies and perused e Ld. CIT(A) has e Bench of the (Mauritius) Ltd.
us) Ltd. (supra)
Tribunal in the Ltd. (supra). In the order of the s raised by the s have raised as Ld. CIT(A) has considered as d not be any d capital loss

n the facts & circumstances of the case, L appreciating that the assessable income as per provisions of the 1.T. Act and ben
Articles of the DTAA has to be taken on th ated after giving effect to all the provision tion 74 of the Act.
n the facts & circumstances of the case, L in directing the A O. to allow carry forwa rt-term &Long term losses to the subs visions of section 74 of the Act as pe ard long term & short term losses have ent year Long term/Short term gain or that AY as per the IT Act.
prejudice to the above grounds of app
CIT (A) has erred in not appreciating tha itself is exempted from taxation in the so decision of Hon'ble SC in case of Harpra
9 ITR 118, losses (or capital gains) sho ment (treated as exempt) & should not be ard aised in the assessment yea raised in assessment year 201
g in assessment year 2016-1
ue are also dismissed.
oth the appeals of the Revenue a nced in the open Court on 29
d/-
S
AR SINGH)
(OM PRAK
MEMBER
ACCOUNTA
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Ld CIT (A) has is required to nefit, if any, of he net taxable ns of the IT Act
Ld. CIT(A) has ard of brought sequent years er which any e to be set off ns which are peal & in the at if an income ource country, asad& Co. Pvt ould be given allowed to be ar 2021-22 are 6-17, therefore,
7, the grounds are dismissed.
/01/2025. KASH KANT)
ANT MEMBER

Mumbai;
Dated: 29/01/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

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ded to :

BY ORDER

(Assistant Re

ITAT, Mu

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R, gistrar) umbai