https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=421021 https://www.taxtmi.com/caselaws?id=421021 Revision u/s 263 by CIT - Wrong claim of carry forward of long term capital loss - As per AO exempt income does not form part of the total income, therefore, it should not be considered for set off losses - PCIT observed that provision of section 74(1)(b) and 74(1)(c) of the Act clearly provide that loss relating to any long term capital asset shall be set off against income relating to any other long term capital asset, assessable for that assessment year and if the loss cannot be wholly so set off, then the amount of loss not so set off shall be carried forward to the following assessment year and so on - HELD THAT:- Assessee earned long term capital gain to the tune of Rs. 35,49,832/- which is exempted under section 10(38) of the Act, therefore, current year long term capital loss and previous year`s long term capital loss should not be set off against such exempted long term capital gain (LTCG) under section 10(38) of the Act. We note that provisions of law as envisaged in section 74(1)(b) and 74(1)(c) of the Income Tax Act are clear and unambiguous leaving no scope for more than one interpretation. The provisions of section 74(1)(b) and 74(1)(c) of the I.T. Act clearly provide that loss relating to any long term capital asset shall be set off against income relating to any other long term capital asset, assessable for that assessment year and if the loss cannot be wholly so set off, then the amount of loss not so set off shall be carried forward to the following assessment year and so on. However, we note that current year`s long term capital gain earned by the assessee was exempt under section 10(38) of the Act. Therefore, the long term capital gain, which is exempted under section 10(38) of the Act, would not enter in the computation of total income of the assessee, therefore, assessee cannot set off its current year and previous year`s long term capital loss against such long term capital gain, which is exempted under section 10(38) of the Act, therefore, the stand taken by the ld PCIT is wrong. Assessing officer, having examined the assessee`s claim has not allowed the assessee`s current year and previous year`s long term capital loss against such long term capital gain, which is exempted under section 10(38) of the Act. Hence, view taken by the assessing officer is sustainable in law. We note that assessee is trading in shares and securities, which were exempted from tax under section 10(38) of the Act, therefore the capital gain exempted from tax, will not form part of total income and it is also not considered for set off of long term capital losses. Therefore, stand taken by the assessing officer that assessee should not utilize the exempt income to set off the losses, is correct. Since the exempt income does not form part of the total income, therefore, it should not be considered for set off losses and therefore, order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue - Decided in favour of assessee. Case-Laws Income Tax Wed, 13 Apr 2022 00:00:00 +0530