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TMI Blog2017 (11) TMI 1940X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 154 of the Income Tax Act, 1961 (for short 'the Act'). ITA No. 726/MUM/2016 (Assessment Year: 2005-06) 2. Brief facts of the case are that the assessee company engaged in the business of manufacturing of generic pharmaceuticals and other nutritional products, filed its return of income for the assessment year 2005-06 declaring the total income of Rs. 12,21,74,987/-. Assessment was completed u/s 143 (3) of the Act determining the total income of Rs. 38,29,29,330/-. Later on, vide rectification order passed u/s 154 the Act, AO computed the total income of the assessee at Rs. 14,64,61,665/-. 3. During the financial year 2004-05, the appellant sold a portion of the investment in BDH Industries Ltd. for a total consideration of Rs. 32,89, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and in the circumstances of the case and in law, the Ld. CIT (A) was justified in directing to allow the Long Term Capital Loss of Rs. 1,19,32,012/- to be carried forward on the ground that the transaction is covered with purview of provision of section 10(38) of the Act." 6. Before us, Departmental Representative (DR) submitted that the impugned order passed by the Ld. CIT(A) is contrary to the expressed provisions of law and the judgment of the Hon'ble Gujarat High Court passed in Kishorebhai Bhikhabhai Virani vs. ACIT 367 ITR 261 (Guj). The Ld. DR further submitted that the Hon'ble Court has decided the identical issue against the assessee holding that loss arising on sale of capital assets covered u/s 10 (38) would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable income and if it falls under the provisions of section 10(38) of the Act, it would be exempt, however, there is no provision which states that loss from similar transaction should also be carved out. The Ld. counsel further submitted that the ITAT, Bombay in the case of Raptakos Becott & Company Ltd. Vs. DCIT (TS-326-ITAT-2015-Mum) has decided the similar issue in favour of the assessee. Since, the decision of the Mumbai Tribunal is based on the judgment of the Hon'ble Kolkata High Court passed in the case of Royal Calcutta Tuff Club vs. CIT 144 ITR 709, there is no infirmity in the order of the Ld. CIT(A) to interfere with the same. 8. We have heard the rival submissions and also gone through the entire material on record including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal. If this is available for set off the Tribunal rightly relied on the decision in the case of Harprashad & Co. (P.) Ltd. (supra) to come to a conclusion that the term "income" under section 10(38) of the Act would also include the loss. In the said decision, the apex court observed that the concept of carry forward of loss does not stand in vacuo. It involves the notion of set off it postulates permissibility and possibility of the carried forward loss being absorbed or set off against the profits and gains profit to reduce the tax demand. It was held that if such set off is not permissible or possible owing to the income or profits of the subsequent year being from a non-taxable source, there would be no point in allowing l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to a specific category of income under a source and not the source or the head of income itself. 3. The Ld. AO failed to appreciate that pursuant to insertion of section 10 (38) of the Act, no exception has been provided in section 2(140 of the Act for excluding such equity shares from the definition of a capital asset. Further, under section 70, 71 and 74 of the Act which deals with the set-off and carry forward of losses, no exception has been made with regard to long term capital gains/losses arising on sale of equity shares on which Security Transaction Tax has been paid. 4. The Respondent prays such Long Terms capital loss Rs. 11,932,012/- should be allowed to be carried forward fro set-off in the subsequent years." 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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