IN THE INCOME TAX APPELLATE TRIBUNAL, ‘I’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER &

SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER (Assessment Year :2023-24 GS Strategic Investments Vs. Assistant Commissioner of Limited Income Tax, International C/o. Sehajpreet Kaur Tax Circle- 2(3)(2), BBSR & Associates Mumbai

14^th Floor, Central Wing Tower 4, Nesco Centre Western Express Highway Goregaon (E)

Mumbai – 400 063 PAN/GIR No.AAFFC0912J (Appellant) .. (Respondent Assessee by Shri Ajit Jain Revenue by Shri Krishna Kumar, Sr. DR Date of Hearing 25/11/2025 Date of Pronouncement 30/12/2025 / O R D E R आदेश PER AMIT SHUKLA (J.M):

This appeal by the assessee is directed against the final assessment order dated 14 July 2025 passed by the Assessing Officer under section 143(3) read with section 144C(13) of the Income-tax Act, 1961, in pursuance of the directions issued by the Ld. Dispute Resolution Panel-1, Mumbai, dated 27 June 2025 for the assessment year 2023-

24.

2. At the threshold, we deem it appropriate to crystallise, with precision, the controversy which travels to us in the present appeal, for the dispute is not one of arithmetical computation but of the legal architecture governing chargeability, treaty allocation of taxing rights, and the statutory mechanism of carry forward and set-off of losses. The core issue is whether the Assessing Officer was justified in law in directing the set-off/adjustment of brought forward long-term capital losses against long-term capital gains which are admittedly not chargeable to tax in India by virtue of Article 13(4) of the India–Mauritius Double Taxation Avoidance Agreement as amended by the 2016 Protocol, and, in consequence, in restricting the carry forward of such losses. In particular, the impugned adjustment/addition is the action of the Assessing Officer in setting off brought forward long-term capital losses of ₹156,47,32,628 against the long-term capital gains of ₹442,23,11,492 claimed by the assessee as not chargeable to tax in India under the Treaty, thereby permitting carry forward only of the balance losses and, in substance, compelling a “netting” of exempt gains with brought forward losses.

3. The material facts are largely undisputed. The assessee, GS Strategic Investments Limited, is a company incorporated in Mauritius on 20 December 2005 and governed by the Mauritian Companies Act, 2001. The assessee is primarily engaged in investment holdings in Asian countries and has invested in India under the Foreign Direct Investment route. The assessee is a tax resident of Mauritius and holds a valid Tax Residency Certificate, which has not been controverted by the Revenue.

4. During the financial year ended 31 March 2023, relevant to the assessment year 2023-24, the assessee earned (i) long- term capital gains from sale of shares of an Indian company, National Stock Exchange of India Limited, amounting to ₹442,23,11,492, and (ii) dividend income from NSE Limited amounting to ₹8,29,50,000. The assessee filed its return of income electronically declaring total income of ₹8,29,50,000 (representing dividend income) and discharged tax thereon. As regards the long-term capital gains of ₹442,23,11,492, the assessee claimed the same as not chargeable to tax in India under Article 13(4) of the India–Mauritius DTAA as amended, on the premise that gains from alienation of shares acquired prior to 1 April 2017 in a company resident in India are taxable only in Mauritius.

5. The factual foundation for invoking Article 13(4) is also not in dispute. The assessee had acquired a total of 22,50,000 shares in NSE Limited by way of purchase from various sellers on 30 March 2007, i.e., much prior to 1 April 2017. Subsequently, NSE Limited undertook subdivision of shares in November 2016, whereby equity shares of face value ₹10 each were sub-divided into equity shares of face value ₹1 each, resulting in the assessee holding 2,25,00,000 shares post-split. Out of these holdings, the assessee sold 19,75,000 s