JS Capital LLC Vs ACIT (ITAT Mumbai)
STCL Taxable at 15% Can Offset STCG Taxable at 30% under Sections 111A and 115AD
In the case of JS Capital LLC vs. ACIT, Mumbai, the Income Tax Appellate Tribunal (ITAT) addressed an appeal against the order passed by the ACIT for the Assessment Year 2020-21. The appellant, a non-resident entity registered as a Foreign Portfolio Investor (FPI), contested the disallowance of set-off of Short-Term Capital Loss (STCL) against Short-Term Capital Gain (STCG) earned from the sale of derivatives.
The appellant claimed STCG on the sale of derivatives taxable at 30% and also claimed STCL taxable at 15%. The Assessing Officer (AO) disallowed the set-off, stating that STCG on derivatives was in the nature of speculative gain and attracted tax liability at 30%. Therefore, the AO proposed an addition to the total income.
The appellant argued that the mere difference in the rate of taxation should not disallow the set-off, as both STCG and STCL were under similar computation. They referred to various judicial pronouncements supporting their contention.
The ITAT reviewed the case and found that under Section 70(2) of the Income Tax Act, STCL arising from any asset can be set off against STCG arising from any other asset under similar computation, irrespective of the difference in tax rates. The ITAT cited previous decisions of the Tribunal and the High Court to support this interpretation.
