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TMI Blog2016 (6) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... e entitled to set off such loss against his income which is assessable for that assessment year under any other head including income assessable under the head ‘Capital gains’. The ITAT, Pune Bench decision in case of Coated Fabrics (P.) Ltd. Vs. JCIT [2006 (1) TMI 228 - ITAT PUNE-A] is applicable in the present case as facts are similar in both the matter as relates to whether option is available to an assessee for set off of any head of loss against any head of income including capital gain assessable for that assessment year. The said question was answered in favour of the assessee therein. The CIT(A) while dismissing the appeal of the assessee, mis- interpreted the said order of the Appellate Tribunal which is binding on the CIT(A) and has to be followed by the CIT(A) being superior appellate authority. - Decided in favour of assessee - I.T.A. No. 225/DEL/2014 - - - Dated:- 9-6-2016 - Shri G. D. Agrawal, Vice President And Smt Suchitra Kamble, Judicial Member For the Appellant : Sh. Vinay Kumar, CA For the Respondent : Sh. P. Dam. Kanunjna, Sr. DR ORDER Per Suchitra Kamble, JM This appeal is filed by the assessee against the order dated 10/10/2013 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in allowing the set off of business loss against long term capital gain first and the remaining loss, if any, against interest income. 6. The Ld. AR submitted that in view of Section 71 of the Act, the assessee is entitled to set off of business loss against its long-term capital gains and as the assessee carried on business during the year under consideration it was entitled to the set off of the business loss against its other income . The Ld. AR further submitted that the business loss should have been adjusted first, by the Assessing Officer. 7. The Ld. DR relied upon the order of the CIT (A) and assessment order u/s 153(3) as well as rectification order u/s 154. 8. We have perused all the records and heard both the parties. Section 71(2) makes it clear that in respect of any assessment year, when the net result of the computation under any head of income, other than Capital gains , is a loss and the assessee s income is assessable under the head Capital gains , the assessee would be entitled to the set off such loss against his income, assessable for that assessment year under any other head including income assessable under the head Capital gains . The Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the loss under Section 71 appears to be headwise. This is the basic principle laid down as far asSection 70 compared with Section 71 is concerned. However, as far as the issue in hand is concerned, we are confined to Section 71 of Income-lax Act. If at all, we have to examine the sequence, then the guiding factor is inbuilt in Section 71 itself because Sub-section (1) of Section 71 specifies that in respect of any assessment year, if the net result of the computation under any head of income, other than the capital gain, is a loss and the assessee has no income under the head Capital gains , he shall be entitled to have the amount of such loss set off against his income assessable for that assessment year under any other head. So, the first step is that in case assessee has no income under the head 'Capital gains', then a loss under any head of income is subject to set off against income under any other head. Next comes into operation is Sub- section (2) which is applicable in such cases where the assessee has income assessable under the head Capital gains . In the present appeal, Sub-section (2) is applicable because the assessee has a positive income under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e general rule to be followed in all fiscal enactments is that where words used are neutral in import, a construction most beneficial to the assessee should be adopted]. The words he shall be entitled to have the amount of loss set- off occurring in Section 24(1), would seem to be consistent with the conferment of a benefit on the assessee which he can claim as of right. Hence, in the above illustration, the assessee's contention should prevail and the department should adopt that mode which will give the assessee the maximum benefit. 2.2 Further, our view is strengthened by a decision of 1TAT Bombay Bench in the case of XYZ v. ITO [1982] 13 TTJ 93 wherein the said Circular No. 26(LXXVI-3)[F.No. 4(53)-IT/54] (supra) was duly considered and it was finally held that the above circular had given a clue that where there is an ambiguity in the matter of set off of loss against income under various heads, it should be done in a manner without doing violence to the language of the section and also in a manner which gives maximum benefit to the assessee. So, it was held by the Tribunal that the assessee had the option to get the short-term loss set off either against the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X
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