Assessee, a tax resident of Mauritius, was engaged in dealing in shares. During the year, it earned long-term capital gains of Rs. 38.61 crores from the sale of shares which were acquired before 1-4-2017 (grandfathered sale) and the same was claimed as not taxable as per provisions of article 13(4) of India-Mauritius DTAA. It also incurred long-term capital loss of Rs. 24.70 crores from the sale of shares which were acquired after 1-4-2017 (non-grandfathered sale). It set off long-term capital gain of Rs. 6.74 crores against long-term capital loss of Rs. 24.70 crores and claimed carry forward of balance long-term capital loss of Rs. 17.96 crores. Assessing officer rejected the claim and also adjusted the dividend income of Rs. 5.09 crores declared by assessee under the head ‘income from other sources’ against the long-term capital loss of Rs. 17.96 crores incurred by assessee. On appeal, the CIT(A) held that the choice of Act or the treaty provisions was qua the stream of income and since\u00a0 both long term capital gains as well as the long-term capital loss from the same stream of income therefore carry forward of long-term capital loss was not permissible. On appeal, the Tribunal held that the choice of Act or Treaty is qua separate source of income and each transaction resulting in gain or loss is a distinct source of income. Since long-term capital gains earned by assessee from transactions which were grandfathered as per provisions of article 13(4) of India-Mauritius DTAA had already been accepted for exemption under provisions of treaty, therefore, both transactions were distinct and, hence, resulted in different sources of income. Further, since dividend income declared as taxable under the head ‘income from other sources’ could not be adjusted against long-term capital loss carried forward by assessee, the Assessing Officer was directed to allow carry forward of long-term capital loss to subsequent years as per provisions of section 74. (AY. 2022-23)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 74: Losses-Capital gains-Tax resident of Mauritius-Sale of shares acquired before 01.04.2017-Grandfathered sale-Non-grandfathered sale-Both transactions were distinct; assessee was entitled to claim carry forward of long-term capital loss to subsequent years-Dividend income can\u2019t be adjusted against long-term capital loss carried forward. DTAA-India-Mauritius.[S.56, 90, 245R, Art, 13 (4)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[21],"tags":[],"class_list":["post-61185","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-fUR","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/61185","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=61185"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/61185\/revisions"}],"predecessor-version":[{"id":61186,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/61185\/revisions\/61186"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=61185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=61185"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=61185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}