Capital loss from STT paid transactions can offset gains from non-STT ones.

The Tribunal held that short term capital loss from STT paid transactions could be set off against short term capital gain from non-STT transactions, emphasizing that income computation precedes tax rate application. The decision, based on relevant provisions and case laws, affirmed the assessee's entitlement to the set off, dismissing the revenue's appeal.

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Issues:
Set off of short term capital loss from STT paid transactions against short term capital gain from non STT transactions.

Analysis:
The appeal dealt with the issue of whether short term capital loss from Security Transaction Tax (STT) paid transactions could be set off against short term capital gain from non-STT transactions. The Assessing Officer (AO) disallowed the set off, citing different tax rates for the transactions. The assessee, a Foreign Institutional Investor (FII), argued that there was no restriction on set off under Section 70(2) and referred to relevant case laws supporting their position. The Commissioner of Income Tax (Appeals) agreed with the assessee, emphasizing that income computation precedes tax rate application. The Tribunal also considered previous decisions, including the case of First State Investments (Hong Kong) Ltd. vs. ADIT, and held that short term capital loss from STT paid transactions could indeed be set off against short term capital gain from non-STT transactions. The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.

In summary, the Tribunal's judgment clarified that short term capital loss from STT paid transactions can be set off against short term capital gain from non-STT transactions, as both types of income arise from a similar computation process. The decision was based on the interpretation of relevant provisions and previous case laws, ultimately affirming the assessee's entitlement to the set off.

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