9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 1038 - AT - Income TaxDisallowance of set off and carry forward of Long Term Capital Loss of sale of quoted equity shares (STT paid) against Long Term Capital Gain arising on sale of property - whether set-off of LTCL on sale of quoted equity shares would be allowable to the assessee against LTCG earned on sale of properties keeping in view the fact that LTCG on similar transactions of sale of quoted equity shares were exempt from tax u/s 10(38)? - HELD THAT - Concept of income including losses would apply only when the entire source was exempt from tax and not in cases were only one particular stream of income was falling in exempt provisions. The income contemplated u/s 10(38) was only a part of the source of capital gains on shares and only a limited portion of source was treated as exempt and not the entire capital gains. In the above background we find that various coordinate benches of Tribunal has chosen to take a view favorable to the assessee and therefore respectfully following the same we prefer to take similar view. Accordingly we hold that the assessee would be entitled for set-off of Long-Term Capital Losses against aggregate Long-Term Capital Gains and entitled to carry forward unutilized losses.
Issues Involved:
1. Disallowance of setoff and carry forward of Long-Term Capital Loss (LTCL) against Long-Term Capital Gains (LTCG). Issue-wise Detailed Analysis: 1. Disallowance of Setoff and Carry Forward of Long-Term Capital Loss: Facts and Background: The appellant, a corporate entity engaged in software development, was assessed for AY 2013-14. The income was determined at ?162.39 Lacs after adjustments, against the returned income of ?34.72 Lacs. The appellant earned LTCG of ?127.67 Lacs on the sale of properties and claimed exemption u/s 10(38) for LTCG of ?48.94 Lacs on the sale of quoted equity shares. Simultaneously, the appellant incurred LTCL of ?311.80 Lacs on similar transactions and sought to set off this loss against the aggregate LTCG of ?176.62 Lacs, carrying forward the balance of ?135.18 Lacs. Assessment Proceedings: The Assessing Officer (AO) denied the set-off and carry forward of LTCL, reasoning that since LTCG on quoted equity shares was exempt u/s 10(38), similar losses could not be adjusted. The AO relied on the principle that income includes losses, applying the logic that if income is exempt, so are the losses from the same source. CIT(A) Decision: The CIT(A) upheld the AO's decision, emphasizing that Section 10(38) excludes both income and losses from computation. The CIT(A) referenced multiple case laws, including CIT v. Harprasad & Co. (P.) Ltd. [1975] 99 ITR 118 (SC), which established that income includes losses, and thus, exempt income implies exempt losses. Tribunal's Analysis: The Tribunal reviewed the relevant legal provisions and case laws. It noted that the primary issue was whether LTCL on sale of quoted equity shares could be set off against LTCG on the sale of properties, given that LTCG on similar transactions was exempt u/s 10(38). Key Judicial Pronouncements Considered: - CIT v. Harprasad & Co. (P.) Ltd. [1975] 99 ITR 118 (SC): The Supreme Court held that income includes losses, so exempt income implies exempt losses. - Kishorebhai Bhikhabhai Virani v. ACIT [2015] 55 taxmann.com 91 (Gujarat): The Gujarat High Court held that losses from exempt income sources are not includable in total income computation. - Royal Calcutta Turf Club v. CIT [1983] 144 ITR 709 (Cal.): The Calcutta High Court allowed set-off of losses from exempt sources against taxable income, distinguishing between the entire source being exempt and only a part of the source being exempt. Tribunal's Conclusion: The Tribunal favored the appellant, distinguishing between the entire source of income being exempt and only a part of it. It concluded that Section 10(38) exempts only the income from LTCG on equity shares, not the entire source of capital gains from shares. Thus, LTCL from the sale of shares could be set off against LTCG from the sale of properties. Final Decision: The Tribunal allowed the appeal, permitting the set-off of LTCL of ?311.80 Lacs against LTCG of ?176.62 Lacs and the carry forward of unutilized losses of ?135.18 Lacs. Order Pronounced: The appeal was allowed, and the order was pronounced in open court on December 20, 2019.
|
