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TMI Blog2011 (4) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Loss only due to the deeming provisions of section 50. 3. The facts of the case in brief are that the assessee company is engaged in the business of investment, finance and brokerage. The Assessing Officer noted that the assessee has shown to have derived income from capital gain amounting to Rs. 53,16,397 on account of sale of office premises owned by it on which depreciation was claimed. He noted that there is a business loss in the year at Rs. 11,46,422. The assessee has also brought forward long term loss of Rs. 47,13,107. The assessee has set off the capital gain of this year with the business loss of the year and brought forward capital loss of the earlier year. He noted that due to the sale of the office premises the block of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the asset itself does not become short term and hence, no privilege, be it exemption under section 54/54EC or of set off losses as per provisions of section 74(1)(b) be denied to the appellant. Section 74(1)(b) does not use the term short term capital gain per se. Thus, the intention of the Legislature has to be that of a gain in respect of an asset which is not a short term or otherwise. Thus, what is important is the asset being short term or other than short term and not the gain which is short term, deemed short term or long term. Attention was also drawn to the case of Dr. (Mrs.) Sudha S. Trivedi v. ITO [2009] 31 SOT 38 (Mum.). It was stated that the case of Ace Builders (P.) Ltd. (supra) applied to the appellant on account of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions section 50 would treat such assets also as short term asset. Thus, once the asset has been treated as short term and the resultant gains/loss short term, there is absolutely no basis for claiming the benefit of set off against long term capital loss in terms of section 74. Therefore, action of the Assessing Officer in denying the set off is upheld." 8. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before us. 9. We have considered the rival submissions made by both the sides, perused the order of the Assessing Officer and ld. CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee, during the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear in respect of any other capital asset not being a short-term capital asset." 10.1 We find the CBDT vide Circular No. 8/2002, dated 27-8-2002 has explained as under :- "40. Modifications of provisions relating to set off of long-term capital loss. 40.1 The existing provision contained in section 70 of the Income-tax Act provides that where the net result for any assessment year in respect of any source falling under any head of income is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head. Further, section 74 of the Income-tax Act provides that a loss under the head "Capital gains" can be carried forward and set off against capital gains in the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and not to the exemption provisions. In other words, where the long-term capital asset has availed of depreciation, then the capital gain has to be computed in the manner prescribed under section 50 and the capital gains tax will be charged as if such capital gain has arisen out of a short-term capital asset but if such capital gain is invested in the manner prescribed in section 54E, then the capital gain shall not be charged under section 45 of the Income-tax Act. To put it simply, the benefit of section 54E will be available to the assessee irrespective of the fact that the computation of capital gains is done either under sections 48 and 49 or under section 50. The contention of the Revenue that by amendment to section 50 the long-ter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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