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Issues:
Interpretation of provisions related to set off of short term capital loss against income from other sources, applicability of sections 70(2)(i) and 71(3) of the Income-tax Act, and conflicting views of the Income-tax Officer and Commissioner (Appeals). Analysis: The judgment by the Appellate Tribunal ITAT Jaipur involved a dispute regarding the set off of short term capital loss against income from other sources for the assessment year 1985-86. The assessee, a limited company, had incurred a short term capital loss of Rs. 29,700, long term capital gain of Rs. 17,178, and income from other sources amounting to Rs. 1,77,618. The Income-tax Officer applied section 70(2)(i) to set off the short term capital loss against long term capital gain, contrary to the assessee's claim under section 71(3) to set it off against income from other sources. The Commissioner (Appeals) upheld the Income-tax Officer's decision, emphasizing the provisions of section 70(2)(i) and 70(2)(ii) which dealt with set off of short term and long term capital losses, respectively. Upon appeal, the Appellate Tribunal analyzed the relevant provisions, specifically section 70(2)(i) and 71(3). It interpreted the language of section 70(2)(i) to allow the set off of short term capital loss against short term capital gain from another asset under the same head of income. The Tribunal referred to the Calcutta High Court's decision in B.K. Birla, which supported this interpretation. Additionally, the Tribunal examined section 71(3) and concluded that it enabled the assessee to set off short term capital loss against income from other sources if it couldn't be set off against long term capital gains as per section 70(2)(i). The Tribunal emphasized that the provisions of section 70(2)(i) and section 71(3) conferred separate rights on the assessee, and in case of ambiguity, the interpretation beneficial to the assessee should be adopted. Citing the Calcutta High Court's decision in Punjab Produce & Trading Co. Ltd., the Tribunal ruled in favor of the assessee, allowing the set off of short term capital loss against income from other sources instead of against gains from assets other than short term capital. Consequently, the appeal filed by the assessee was allowed, overturning the decisions of the lower authorities.
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