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TMI Blog2018 (8) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... bed business losses can be set off against such income. Following the decision in the case of Digital Electronics Ltd.vs. Addl. CIT [2010 (10) TMI 722 - ITAT, MUMBAI], Decided in favor of assessee. - I.T.A. No. 1332/Ahd/2015 - - - Dated:- 31-7-2018 - Shri Pramod Kumar Accountant Member And Ms. Madhumita Roy, Judicial Member Appellant by : Shri Hardik Vora, AR Respondent by : Shri Saurabh Singh, Sr.DR ORDER Per Ms. Madhumita Roy JM The instant appeal has been filed before us by the assessee against the order dated 27.02.2015 passed by the Commissioner of Income Tax(Appeals), Ahmedabad-5, [Ld.CIT(A) in short] for Assessment Year (AY) 2011-12 with the following grounds:- 1.1. That the order passed by Ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion totalling to ₹ 5,57,265/- from the sale consideration of ₹ 10,70,000/- the STCG has been worked out at ₹ 7,12,735/- under the provisions of section 50 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Further that the assessee claimed set off of the unabsorbed carried forward business loss of ₹ 3,81,997/- under the head income from capital gains out of the aforesaid STCG of ₹ 7,12,735/- remaining amount of ₹ 3,30,738/- was offered for taxation as STCG in the computation of total income. 3. The CPC while processing the return of income u/s.143(1) of the Act calculated the STCG at ₹ 7,12,735/- instead of ₹ 3,30,738/- as worked out by the assessee rejecting the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(A) that he has not raised any question about the STCG of ₹ 7,12,735/- which was offered u/s.50(2) under the head income from capital gains , however, the Ld.CIT(A) has not considered the claim of setting off of the carried forward business loss against such capital gain for the year under consideration in terms of the provisions of section 72(1)(i) of the Act. According to him, such business losses of preceding years carried forward in the year under consideration for set off against the income from capital gain of this year is not permissible in the eyes of law. He further observed that the unabsorbed business losses could only be set off against the business income/gains and not from other sources/heads of income. Once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of s. 71, so much of the loss as has not been so set off or, where he has no income under any other head, the whole loss shall, subject to the other provisions of this chapter, be carried forward to the following assessment year and,-(i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year .......... . It is thus clear that s. 72 of the Act provides that where for any assessment year, the net result of the computation under the head Profits and gains of business or profession is a loss to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the nature of loss incurred by the assessee, classifies the same on the basis of income being taxable under a particular head for the purpose of computation of the net income, the other set of provisions is concerned, only with the nature of gains being from business and not with the head of tax. Their Lordships held that as long as the profits and gains are in the nature of business profits and gains, and even if these profits are liable to be taxed under a head other than income from business and profession, the loss carried forward can be set off against such profits of the assessee. In this view of the matter, the objection raised by the authorities below, in our humble understanding, are devoid of any legal substance. Coming to the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief accordingly. 8. The facts of the case of that judgment is identical to that of the assessee here and the case is squarely covered by the said judgment of the Co-ordinate Bench where the carried forward business losses were allowed to be set off against the capital gains out of the business income earned in the year under consideration although not taxable as profits and gains from business or profession . We therefore respectfully following the ratio laid down in the aforesaid judgment of the Co-ordinate Bench, allow the appeal preferred by the assessee holding the assessee has rightly claimed the set off of business loss of ₹ 3,81,997/- against the income of capital gains of ₹ 7,12,735/- as worked out by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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