DCIT 1(1)(2), MUMBAI vs. HOUSING DEVELOPMENT FINANCE CORPORATION LTD, MUMBAI

“On the facts and in the circumstances of the case, Whether the ld. CIT(A) is justified in allowing set off of short term capital loss (STT paid) of Rs. (-) 124577151 on account of transaction in Equity shares against short capital gain (Non STT paid) Rs. 146897304 on account of transaction in Mutual fund and Venture fund instead of setting off against short term capital gain (STT paid) of Rs. 148800054 on account of transaction in Mutual fund, which is available 16 & C.O. 44/M/18 M/s Housing Development Finance Corporation Ltd. and similar transaction. Reliance is also placed on the fact that on identical facts the Hon/ Karnataka High Court has admitted substantial question of law on this issue, in the case of CIT Vs Charles India Ltd in ITA 338/2015 and ITA 337/2015 ”.

Thereafter, the Assessing Officer passed order under section 154 of the Act on 21.11.2011. The Assessing Officer while passing the order under section 154 held that out of total Short Term Capital Gain (STCG) of Rs. 57,05,27,789/-, Rs. 24,22,29,033/- pertains to STCG on which Security Transaction Tax (STT) has been paid, hence, should have been taxed @ 10%. The remaining STCG of Rs. 54,63,04,976/- should have been taxed at the normal rate applicable for relevant Assessment Year. Aggrieved by the order passed by assessing officer under section 154, the assessee filed appeal before the ld. CIT(A), the assessee urged that there was no mistake apparent in the assessment order and that the Assessing Officer erred in rectifying the set off of Short Term Capital Loss (STT paid) than first against STCG (STT paid) instead of STCG (non-STT paid) without appreciating the fact that the same cannot be rectified under section 154 which is debatable issue and not a mistake apparent on record.

(36 SOT 22) (Mum ITAT), ADIT v. Legg Mason Asia (Ex Japan) Analyst Fund [2013] 38 taxmann.com 12 (Mum Trib.) held that the ratio laid down in the decisions the assessee is entitled for set off of Short Term Capital Loss (STT paid) against STCG (non-STT paid), transaction as computed during the year and directed the Assessing Officer to allow the set off of Short Term Capital Loss of Rs. 12,45,77,151/- (STT paid) as against STCG of Rs. 14,68,97,304/- (non-STT paid) thereby granted partial relief to the assessee. Therefore, aggrieved by the order of ld. CIT(A), the Revenue has filed the present appeal before the Tribunal.

(Mum ITAT), ADIT v. Legg Mason Asia (Ex Japan) Analyst Fund [2013] 38 taxmann.com 12 (Mum Trib.). The ld. AR of the assessee filed copy of the decision in the form of legal paper book. It was further submitted that the Cross Objection is filed by assessee in support of order of ld. CIT(A) and incase the appeal of the revenue is dismissed the ground raised in Cross Objection by assessee would become academic. On the hand the ld. DR for the revenue relied on the order of the assessing officer. 16 & C.O. 44/M/18 M/s Housing Development Finance Corporation Ltd.

5. We have considered the rival submissions of the parties and have gone through the orders of the authorities below. The assessing officer on his observation held that the assessee cannot set off the short term capital gain (Non STT paid) against the short term capital loss of STT related transaction because the STCG earned on account of Non STT paid chargeable to tax @30% whereas assessee opted to set off STT paid STCL liable to tax@10% under section 111A against the STCG earned on account of non STT paid which is chargeable to tax @30% under the Act.

However, the ld CIT(A) by following the decision in case of First State Investments (Hongkong) Ltd. v. ADIT (supra), Fidelity Investment Trust Fidelity Overseas Fund v. ADIT (supra) and ADIT v. Legg Mason Asia (Ex Japan) Analyst Fund (Supra) held that the assessee is entitled to set off STCL (STT paid) against STCG (non STT paid) transaction as computed during the year. Therefore, the assessing officer is directed to allow set off the STCG of Rs. 14,68,97,304/- earned on (non STT) transaction. We have noted the ld CIT(A) passed order by following the various orders of Tribunal, hence, we do not find any reasons to interfere with the order. No contrary decision was brought to our notice. Therefore, the ground of appeal raised by revenue is dismissed.

6. In the result the appeal filed by the revenue is dismissed. 16 & C.O. 44/M/18 M/s Housing Development Finance Corporation Ltd.

7. As we have dismissed the appeal of the revenue, therefore, discussion on the grounds of raised by assessee in its Cross Objection have become academic.

Order pronounced in the open court on 19 .06.2018.