{"id":6869,"date":"2013-05-29T15:52:32","date_gmt":"2013-05-29T10:22:32","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=6869"},"modified":"2013-12-05T08:06:38","modified_gmt":"2013-12-05T02:36:38","slug":"platinum-investment-management-ltd-vs-ddit-itat-mumbai-s-115ad-fiis-securities-transactions-profits-not-assessable-as-business-profits","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/platinum-investment-management-ltd-vs-ddit-itat-mumbai-s-115ad-fiis-securities-transactions-profits-not-assessable-as-business-profits\/","title":{"rendered":"Platinum Investment Management Ltd vs. DDIT (ITAT Mumbai)"},"content":{"rendered":"\n\n
Click here to download the judgement (Platinum_LG_Asian_FII_Securities_gains.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nS. 115AD: FII’s securities transactions’ profits not assessable as “business profits’
\n<\/strong><\/p>\n

The assessee, a Foreign Institutional Investor (\u201cFII\u201d), suffered a loss of Rs. 41 crore on account of derivative transactions. The AO & CIT(A) relied on the AAR Ruling in Royal Bank of Canada<\/a><\/strong> 323 ITR 380 and held that as the said loss arose out speculative transactions, it had to be treated as a business loss and could not be set-off against STCG. On appeal by the assessee to the Tribunal HELD allowing the appeal:<\/p>\n

Under the policy of the Central Government and the SEBI (FII) Regulations, 1995 a FII can only \u201cinvest<\/em>\u201d in securities and cannot do \u201cbusiness<\/em>\u201d in securities. S. 115AD also provides that all income arising to a FII from securities, whether from their retention or from their transfer, is taxable as a capital gain. This is also the view expressed in Press Note F. No. 5(13)SE\/91-FIV dated 24.03.1994 issued by the Ministry of Finance. If the Revenue is permitted to make a distinction between the securities held by a FII by classifying them as a capital asset or as stock in trade, s. 115AD will become otiose. The result is that all income arising to a FII, including from dealings in derivatives has to be assessed as capital gains. The contrary view of the AAR in Royal Bank of Canada<\/a><\/strong> cannot be followed (LG Asian Plus Ltd<\/strong> 46 SOT 159 followed)<\/p><\/blockquote>\n

\nNote: In ABC Equity Fund<\/strong> 250 ITR 194, Fidelity Advisor Series VII<\/strong> 271 ITR 1, General Electric Pension Trust<\/strong> 280 ITR 425, Fidelity Northstar Fund<\/a><\/strong> 288 ITR 641 and Royal Bank of Canada<\/a><\/strong> 323 ITR 380 contrasting views have been taken on the issue<\/div>\n","protected":false},"excerpt":{"rendered":"

Under the policy of the Central Government and the SEBI (FII) Regulations, 1995 a FII can only \u201cinvest<\/em>\u201d in securities and cannot do \u201cbusiness<\/em>\u201d in securities. S. 115AD also provides that all income arising to a FII from securities, whether from their retention or from their transfer, is taxable as a capital gain. This is also the view expressed in Press Note F. No. 5(13)SE\/91-FIV dated 24.03.1994 issued by the Ministry of Finance. If the Revenue is permitted to make a distinction between the securities held by a FII by classifying them as a capital asset or as stock in trade, s. 115AD will become otiose. The result is that all income arising to a FII, including from dealings in derivatives has to be assessed as capital gains. The contrary view of the AAR in Royal Bank of Canada<\/strong> cannot be followed (LG Asian Plus Ltd<\/strong> 46 SOT 159 followed)<\/p>\n

Read more ›<\/a><\/div>\n

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