TaxTMI 
TaxTMI 
TaxTMI 
2007 (10) TMI 441
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....ces of the case and in law, the learned CIT(A) erred in failing to appreciate that for the purpose of grant of deduction under Chapter VI-A, the gross total income should be reduced by any income arising from transfer of long term capital assets, in terms of section 112(2) of the Income-tax Act, and the provision construed in a manner harmonious with the other relevant provisions of the Act. 3.The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 2. The brief facts of the case are that the assessee is a company whose return of income was filed on 30-12-1993 declaring total income at Rs. 60,28,130 which was initially accepted under section 143(1)(a) of the Act. Subseq....
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....apital gains. The assessee also relied upon the circular No. 721 dated 13-9-1995 issued by the CBDT in support of his contentions. The Assessing Officer, however, was not satisfied with the assessee's explanation and held that as per the provisions of section 112(2) of the Income-tax Act, as operative from the assessment year 1993-94, the long term capital gains shall not form part of gross total income for the purpose of allowing deduction under Chapter VI-A i.e., where the gross total income of an assessee includes any income arising from the transfer of long term capital asset, the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed, as if the gross total income as so red....
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....l income of the assessee. He submitted that the provisions of law are very clear that the deduction under section 80M is to be given only against the income other than the long term capital gains. He also drew our attention to the provisions of section 80AB, wherein it is provided that where any deduction is required to be made or allowed under any section included in this Chapter under the heading "C-Deductions in respect of certain incomes" in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accor....
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....r under any head of income including the head 'capital gains' (whether relating to short term capital assets or any other capital assets). He also placed reliance upon the decision of this Tribunal in the case of ITO v. V.R. Nimbkar [1986] 19 ITD 714 (Bom.), wherein it was held that the short term capital loss should be allowed to be set off against the heads of income other than the head 'capital gains'. He also placed reliance on the decision of the Special Bench in the case of Jt. CIT v. Montogomery Emerging Markets Fund [2006] 100 ITD 217 (Mum.) and also the decision of the 'A' Bench of the Tribunal at Pune in the case of Coated Fabrics (P.) Ltd. v. Jt. CIT [2006] 101 ITD 297 in support of his contentions. 6. Having heard both the part....
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....f any assessment year, the net result of the computation under any head of income, other than 'capital gains', is a loss and the assessee has income assessable under the head 'capital gains', such loss may, subject to the provisions of this Chapter, be set off against his income if any, assessable for that assessment year under any head of income including the head "capital gains" [whether relating to short term capital assets or any other capital assets]. A plain reading of this sub-section clearly shows that the assessee is entitled to set off all loss under any head of income from the income under the head 'capital gains'. After the set off of losses of the relevant assessment year, the assessee is also entitled to set off of carry forwa....