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TMI Blog1998 (4) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gains relating to the assessment year 1975-76 ? 2. Whether the Appellate Tribunal's view that the loss sustained by the assessee in the assessment year 1972-73 was a loss under the head "Capital gains" and that there was a transfer within the meaning of section 2(47) of the Act is sustainable in law? (3) Whether, on the facts and in the circumstances of the case and having regard to the provision of section 74 of the Income-tax Act, the assessee was entitled to set off the loss of Rs. 20,000 of the assessment year 1972-73 alleged to be a loss under the head "Capital gains" (short-term) against the long-term capital gains relating to the assessment year 1975-76 ?" The assessment year involved is 1975-76. The assessee claimed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the law. Accordingly, the assessee claimed that the loss which arose in the assessment year 1972-73 should be carried forward and set off against the capital gains for the assessment year 1975-76. Mr. C. V. Rajan, learned counsel for the Revenue, submitted that the loss was not a capital loss within the meaning of section 45 of the Act and when it is not a capital loss, the assessee cannot claim the benefit of carry forward of the loss. His further submission was that the order of the Commissioner also did not entitle him to carry forward the alleged loss. Mr. Janakiraman, learned counsel for the assessee, on the other hand, submitted that the loss incurred by the assessee was a capital loss and further, when the Commissioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought about, and whatever the mode by which the transfer was brought about, the existence of the asset during the course of transfer was a pre-condition and unless the asset existed in fact, there could not be a transfer of it. Applying the principles laid down by the apex court to the facts of the case, it is apparent that there was no transfer of capital assets as contemplated in section 2(47) of the Act and when there is no transfer, the loss, even assuming that there was a loss to the assessee, cannot be said to have arisen by the transfer of a capital asset within the meaning of section 45 of the Act. The order of the Appellate Tribunal holding that the loss arose within the meaning of section 2(47) of the Act is unsustainable in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not permit the carry forward of loss, it is impermissible for the assessee to fall back upon the order of the Commissioner of Income-tax and to claim that the loss should be carried forward. It cannot be predicated that the Commissioner had permitted the carry forward of loss de hors the express statutory provision of carry forward of the loss. It was held by this court in C. A. Natarajan v. CIT [1973] 92 ITR 347, that the act of writing off of the loss in the books of the assessee might suggest the opinion of the assessee that he was not able to recover the money from the debtor, but that would not amount to a relinquishment of debt, and this court held that it is not as if every capital loss sustained by the assessee could be claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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