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(5) The Commissioner (Appeals) erred in upholding of taxing the Capital Gain of Rs.10,69,688/-pertaining to DBS FII operations in India as "business income" in the hand of appellant.

(6) (a) In alternative, the assessee raised plea that in the event of loss of Rs.

6,74,26,015/- for AY 2005-06 is disallowed, the same may be reduced while computing the total income for the Assessment Year 2006-07, being the year of reversal.

(b) Further in alternative, the assessee tastefully that in the event of loss of Rs. 9 519 9815/-being loss on revaluation of unmatured foreign forex exchange contract as on 31st of March 2004 pertaining to the Assessment Year 2004-05 is disallowed, the same may be reduced while computing the total income for the Assessment Year 2005-06, being the year of reversal.

12. Ground No.5 relates to taxability of Capital Gain of Rs. 10,69,688/- pertaining to DBS FII operation in India as business income. The learned and AR of the assessee argued that DBS is separately registered with security and exchange board of India (SEBI) as a Foreign Institutional Investors (FII) vide registration No (IN-SG-FD -0940-04). DBS investment into Indian securities under its FII registration are undertaken directly from Singapore office and are entirely dependent on the operation of 'DBS' branch in India. The income earned by DBS in the capacity of an FII do not form part of business property of its branch in India, thus, the income and by DBS in the capacity of an FII is not directly or indirectly attributable to the branch in India as per the provisions of India- Singapore Double Taxation Avoidance Agreement (DTAA) Capital Gains on FII CO No.250/M/2012 D.B.S. Bank Ltd.

investment is not chargeable to tax in India. The ld AR of the assessee further submitted that activities of the Indian Permanent Establishment (PE) are independent of the activities of FII. Hence, it is erroneous to conclude that because of the Indian branch is also holding investments and is showing business income, Gain on investment made by FII would also be taxable in the hands of Indian branch as 'business income'. In support of the submission the ld AR of the assessee relied upon the registration certificate obtained by FII and Article 13 of India-Singapore DTAA. It was also argued that as per SEBI Regulations 1995, FIIs can only make investment in Indian securities and so cannot and business income. The RBI guidelines also provide that a FII should use their funds for purpose as enumerated in the SEBI Regulations. The ld AR of the assessee finally submits that the DRP vide order dated 16 September 2010 for assessment year 2006-07 and the assessing officer vide orders dated 14th Feb 2011 for assessment year 2007-08 dated 2nd Feb 2012 for assessment year 2008- 09 dated 26 March 2014 for the assessment year 2010-11 dated 18th March 2016 for assessment year 2012-13, in assessee's own case have decided this issue in favour of the assessee and held that Capital Gains arising on the sales of securities by DBS FII is not taxable in India as per article 13 of DTAA. On the other hand the ld DR for the assessee honestly supported the order of authorities below.

13. We have considered the rival contention of the parties. Further, we have considered the contention of ld AR of the assessee that DRP vide order dated 16 September 2010 held that Capital Gain arising on the sale of securities by DBS FII is not taxable in India as per Article 13 India-Singapore DTAA. Further, the revenue has not tax the Capital Gains on sale of securities by DBS FII for Assessment Year 2006-07 to 2012-13. Considering, the factual position narrated above, we direct the assessing officer to allow the similar relief to the assessee after verification if the Capital Gain on sale of securities by DBS FII is not tax for Assessment Year 2006-07 to 2012-13. Hence, this ground of appeal is allowed in favour of assessee.