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Tribunal allows set-off of capital loss against current gains under Income Tax Act The tribunal ruled in favor of the assessee, allowing the set-off of the unabsorbed short term capital loss against the current year's income from short ...
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Tribunal allows set-off of capital loss against current gains under Income Tax Act
The tribunal ruled in favor of the assessee, allowing the set-off of the unabsorbed short term capital loss against the current year's income from short term capital gain. The tribunal emphasized that the provisions of the Income Tax Act allowed for the carry forward and set off of losses without specific conditions to disallow such benefits. The Assessing Officer's contention that the claim was not made during a statement recorded under section 132(4) was rejected, and the tribunal held that disallowing the set off was not justified.
Issues: Disallowance of set-off of unabsorbed short term capital loss against current year's income from short term capital gain.
Analysis: The appeal was filed against the order of the ld. CIT(A)-16, New Delhi, where the assessee raised grounds regarding the disallowance of the claim of set-off of unabsorbed short term capital loss against the current year's short term capital gain. The assessee declared short term capital gains of Rs. 15,22,00,000, which was offered for tax during search and seizure proceedings under section 132(4) of the Income Tax Act, 1961. The Assessing Officer disallowed the set-off of the brought forward short term capital loss of Rs. 49,83,312 against the short capital gain declared in the current year, citing that the claim was not made during the statement recorded under section 132(4).
The issue before the tribunal was whether the brought forward short term capital loss, allowed by the department in earlier years, is eligible to be set off against the short term capital gains of the current year. The tribunal noted that the assessment year under consideration was framed after a search action and found no merit in the Assessing Officer's contention that the assessee did not claim adjustment of the brought forward loss during the statement recorded under section 132(4). The tribunal emphasized that the Assessing Officer cannot expect the assessee to seek such set off on their own or for the authorized officer to inquire about brought forward losses during the statement recording.
The tribunal observed that the computation of income filed by the assessee was in accordance with the provisions of the Income Tax Act. Section 74 of the Act allows for the set off of short term capital losses against income assessable under the head "capital gains." Since the short term capital loss had been allowed to be carried forward till the relevant assessment year, the tribunal held that disallowing the set off against the short term capital gain earned in the current year was not justified. Therefore, the tribunal allowed the appeal of the assessee, emphasizing the statutory provisions allowing for carry forward and set off of losses without specific conditions to disallow such benefits.
In conclusion, the tribunal ruled in favor of the assessee, allowing the set-off of the unabsorbed short term capital loss against the current year's income from short term capital gain.
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