Sikha Sanjaya Sharma v. Dy. CIT

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The Tax Publishers2022 TaxPub(DT) 2638 (Ahd-Trib) : (2022) 195 ITD 0178

INCOME TAX ACT, 1961

Section 70

Exempted long-term capital loss under section 10(38) does not enter into computation of total income and, therefore, such loss cannot be set-off against taxable income. Likewise exempted long-term capital gain under section 10(38) does not enter into computation of total income and, therefore, taxable loss cannot be set-off against such exempt income. Therefore, AO was not justified in setting off losses against exempted long-term capital gain, thereby reducing the quantum of carry forward of losses claimed by assessee.

Loss - Set-off - AO set-off long-term capital loss arising on sale of shares, not subject to STT against long-term capital gain arising from sale of shares subjected to STT -

AO set-off long-term capital loss aggregating to Rs. 15,41,625 arising on sale of shares not subject to STT against long-term capital gain arising from sale of shares subjected to STT and accordingly exempt under section 10(38) and thus AO reduced the quantum of carried forward losses. Assessee challenged this. Held: Exempted long-term capital loss under section 10(38) does not enter into computation of total income and, therefore, such loss cannot be set-off against taxable income. Likewise exempted long-term capital gain under section 10(38) does not enter into computation of total income and, therefore, taxable loss cannot be set-off against such exempt income. Therefore, AO was not justified in setting off losses against exempted long-term capital gain, thereby reducing the quantum of carry forward of losses claimed by assessee.

Relied:Kishorbhai Bhikhabhai Virani v. Asstt. CIT (2014) 367 ITR 261 (Guj-HC) : 2014 TaxPub(DT) 3879 (Guj-HC), G.K. Rammurthy v. Jt. CIT (2010) 2 ITR (T) 139 (Mum-Trib) : 2010 TaxPub(DT) 1483 (Mum-Trib) and Nikhil Sawhney (2020) 119 Taxmann.com 372 (Del-HC) : 2020 TaxPub(DT) 3194 (Del-Trib). Overruled:Raptakos Brett & Co. Ltd. [ITA No. 3317/Mum/2009 & 1692/Mum/2010, dated 10-6-2015] (Mum-Trib) : 2015 TaxPub(DT) 2490 (Mum-Trib.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

IN THE ITAT, AHMEDABAD 'D' BENCH