2022 (4) TMI 1222 - AT - Income Tax

ITAT allows set off of STCL against STCG, dismissing Revenue's appeal.

The ITAT upheld the CIT(A)'s decision to allow the set off of Short Term Capital Loss (on which STT was paid) against Short Term Capital Gain (on which ... Short Term Capital Loss (on which STT was paid) set off against the Short Term Capital Gain (on which STT is not paid) - Assessee adjusted the aforesaid Short Term Capital Loss which was chargeable to tax under section 111A @ 15% against Short Term Capital Gain which was chargeable to tax at the normal rate. HELD THAT:- As per the section 70(2) provision the Short Term Capital Loss can be set off against gain from any other capital asset. Section 70(2) of the Act does not make any further classification between the transactions where STT was paid and the transactions where STT was not paid. The emphasis of the Assessing Officer on the term “similar computation” also only refers to the computation as provided under section 48 to 55 of the Act. As relying on M/s Mac Charles India Ltd [2015 (1) TMI 1232 - ITAT BANGALORE] and Ashok K. Shah [2014 (8) TMI 1225 - ITAT MUMBAI] we find no infirmity in the impugned order passed by the learned CIT(A) allowing set off of Short Term Capital Loss (on which STT was paid) against Short Term Capital Gain (on which STT was not paid). Accordingly, only ground raised by the Revenue in present appeal is dismissed. Issues:- Whether Short Term Capital Loss (on which STT was paid) can be set off against Short Term Capital Gain (on which STT is not paid).Analysis:The appeal was filed by the Revenue against the order passed under section 250 of the Income Tax Act, 1961 by the Commissioner of Income Tax-4, Mumbai, for the assessment year 2014-15. The main issue revolved around the allowance of short term capital loss arising from STT paid transactions against short term capital gain arising from non-STT paid transactions. The deceased assessee had earned income from professional services, capital gains, and other sources. The Assessing Officer disallowed the set off of short term capital loss against short term capital gain, citing section 70(3) of the Act. However, in the appeal before the CIT(A), the assessee argued that section 70(2) was applicable instead. The CIT(A) allowed the appeal based on judicial precedents supporting the set off. The Revenue challenged this decision before the ITAT.In the detailed analysis, the ITAT considered the facts of the case where the assessee had various transactions involving shares of different companies. The ITAT examined the provisions of section 70(2) of the Act, which allows the set off of short term capital loss against gain from any other capital asset without distinguishing between transactions with or without STT paid. The ITAT referred to previous decisions by the Co-ordinate Bench of Tribunal, such as ACIT v/s M/s Mac Charles India Ltd. and ACIT v/s Ashok K. Shah, where set off of short term capital loss against short term capital gain was allowed. The ITAT also cited other decisions in favor of taxpayers on similar issues.The ITAT found no reason to deviate from the judicial precedents and upheld the CIT(A)'s decision to allow the set off of Short Term Capital Loss (on which STT was paid) against Short Term Capital Gain (on which STT was not paid). The Revenue's appeal was dismissed, confirming the order of the CIT(A). The ITAT pronounced the order in the open court on 21/04/2022.