iShares Core MSCI Emerging Markets ETF v. Deputy Commissioner of Income Tax

Parties Involved

Facts Summary

The assessee, iShares Core MSCI Emerging Markets ETF, is a company incorporated in Mauritius and registered with the Securities and Exchange Board of India as a Foreign Portfolio Investor. It makes portfolio investments in Indian securities in accordance with SEBI regulations. For the assessment year 2023-24, the assessee filed its return of income declaring a total income of Rs. 237,52,93,55,610. The return was selected for scrutiny, and notices were issued. During the assessment proceedings, the assessee's methodology for computing short-term capital gains was questioned, particularly regarding the set-off of short-term capital losses against gains. The Assessing Officer (AO) disagreed with the assessee's methodology and proposed a different computation of net short-term capital gains. The assessee filed objections, which were rejected by the Dispute Resolution Panel (DRP). The AO then passed the final assessment order, leading the assessee to appeal before the Tribunal. The appeal primarily concerns the set-off of short-term capital losses against gains and the set-off of long-term capital losses against exempt long-term capital gains under the India-Mauritius Double Taxation Avoidance Agreement (DTAA).…

Legal Issues

• 1. Whether the short-term capital loss (on which Securities Transaction Tax (STT) was paid) can be set off against short-term capital gains (on which STT was not paid).
• 2. Whether the long-term capital loss can be set off against the exempt long-term capital gains under the India-Mauritius DTAA.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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