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TMI Blog1992 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... 75 of Mahendra Kanaiyalal (Hindu undivided family), a question arose as to whether the assessee was entitled to set off short-term capital loss of Rs. 1,790 against other income or whether it was to be set off against capital gains, whether short-term or long-term. The contention of the assessee was that it was entitled to set off short-term capital loss against other income, i.e., income other than capital gains. The Income-tax Officer rejected this claim. The assessee, however, succeeded in the appeal to the Appellate Assistant Commissioner. Thus, the assessee was held entitled to set off the short-term capital loss against its other income. Long-term capital gain was below Rs. 5,000 and, therefore, was held not taxable. The Revenue, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal with various heads of income and permissible deductions under those heads. In this case, we are not concerned with deductions as such. For claiming set off, or to carry forward loss, separate provisions have been made in Chapter VI of the Act. Therefore, when a claim is made for set off or carrying forward loss, we have to consider those provisions only and find out whether the claim based upon those provisions is justified or not. Section 70 provides for set off of loss under one source of income from another source under the same head of income. Section 71 provides for set off of loss from one head against income from another. Thus, the scheme adopted by the Legislature for the purpose of claiming set off of loss is quite different. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions relating to short-term capital loss were to assimilate such a loss to a loss under any other head of income. It is only long-term capital loss that operates in a restricted field and is set off in a restricted fashion. While the short-term capital loss can be set off under section 71(3) against income under any other head, long-term capital loss can be set off only against the long-term capital gains. Since short-term capital loss is likened to a loss under any other head of income for purpose of set off by the Legislature and long-term capital loss has been allowed to be set off only in a restricted fraction, it would not be proper to restrict the operative field of "set off" for short-term capital loss by reading section 70(2)(i) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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