2013 (8) TMI 1018 - AT - Income Tax

Computation of short-term capital gain - Held that - Computation of capital gain prescribed under section 48 of the Act cannot be confused with the rate of tax liable to be charged on the income under section 48 of the Act could not be confused with the rate of tax liable to be charged on the income under the head Capital gains so computed. The computation of capital gain is governed by section 48 whereas the rates of tax are governed by sections 111A and 115AD of the Act. The authorities below had erred in negating the assessee s computation of short-term capital gain

Summary

Issues involved:
- Adjustment of Short Term Capital Loss against Short Term Capital Gain

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved the issue of the permissible manner of adjustment of Short Term Capital Loss (STCL) against Short Term Capital Gain (STCG) for the assessment year 2008-09. The case concerned the sequence of adjustment of STCL against STCG, specifically relating to transactions subject to different tax rates. The Tribunal considered the decision in a similar case and noted that the computation of income precedes the application of the tax rate. The Tribunal emphasized that the computation of capital gain under section 48 of the Income Tax Act should not be confused with the tax rate applicable to the income. The Tribunal upheld the assessee's claim, citing previous decisions and emphasizing that the assessee has the option to adjust the loss as per section 70. The Tribunal dismissed the Revenue's appeal, affirming the order of the first appellate authority. The judgment was pronounced on August 27, 2013, by the Tribunal consisting of Shri I. P. Bansal, JM, and Shri Sanjay Arora, AM.

In conclusion, the Tribunal's decision clarified the correct approach to adjusting Short Term Capital Loss against Short Term Capital Gain, emphasizing the assessee's discretion in such adjustments and the importance of distinguishing between income computation and tax rate application. The judgment provided a comprehensive analysis based on legal provisions and precedents, ultimately ruling in favor of the assessee and dismissing the Revenue's appeal.