Law:

Section:

Section 115AD, read with sections 48, 112 and 115-I, of the Income-tax Act, 1961 - Foreign institutional investors - Tax on income of - Assessment years 1999-2000 to 2003-04 - Whether provisions of section 115AD would apply to an assessee who has suffered capital losses on transfer of securities - Held, yes - Applicant is a tax resident of UK and is registered in India as foreign institutional investor (FII) with SEBI and has been investing in securities in India - For assessment years 1999-2000 to 2003-04, applicant filed returns of its income from investment in India as a FII by applying provisions of section 115AD - In accounting year relevant to assessment year 2003-04, applicant incurred long-term capital losses - Whether section 115AD is an inclusive provision contain ing, inter alia, mode of computation of tax and concessional rate of tax and its application does not depend upon result of computation - Held, yes - Whether applicant would not be entitled to opt out of provisions of section 115AD and it cannot claim to be covered by section 48, read with section 112, together with indexation provisions for computing capital gains/losses arising to it from its investment activities in India - Held, yes FACTS The applicant is a tax resident of the U.K. and is registered in India as Foreign Institutional Investor (FII) with the SEBI and it has been investing securities in India. For the assessment years 1999-2000 to 2003-04, the applicant filed returns of its income from investment in India as a FII by applying provisions of section 115AD. In the accounting year relevant to the assessment year 2003-04, the applicant incurred long-term capital losses of Rs. 12,94,46,340. The case of the applicant that had it the option of computation under the second proviso to section 48 as against section 115AD(3), capital loss would have worked out to Rs. 17,38,75,450 and, thus, the loss would have been more. The applicant filed an application seeking advance ruling of the authority on the questions as to (i) whether it be entitled to opt out of the provisions of section 115AD and would be covered by section 48, read with section 112, together with indexation provisions for…

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