TaxTMI 
TaxTMI 
2010 (10) TMI 722
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....of the IT Rules, 1962. 3. As far as this issue is concerned, the AO noted that the assessee had claimed an amount of Rs. 71,21,637 as exempt. However, the assessee had not debited any expenditure on account of earning such tax-free dividend income. Hence, the AO disallowed Rs. 5,00,000 on an estimated basis treating it to be expenditure incurred for earning dividend income as per the provisions of s. 14A. In appeal, the CIT(A), following the decision of the Tribunal, Mumbai Special Bench in the case of ITO vs. Daga Capital Management (P) Ltd. (2008) 119 TTJ (Mumbai)(SB) 289 : (2008) 15 DTR (Mumbai)(SB)(Trib) 68, remitted the matter back to the file of the AO to recompute the disallowance under s. 14A as per r. 8D of the IT Act, 19....
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....that in terms of the provisions of s. 72, which governs the carry forward and set off of business losses, so much of the carry forward losses as cannot be set off against any profits and gains of business has to be carried forward to the following year upto eight assessment years. The carry forward business losses cannot be set off against any other head of income other than profits and gains of business or profession. It was in this backdrop of these observations by the AO, that the assessee was required to show cause as to why brought forward business losses amounting to Rs. 39,85,596 should not be allowed to be set off against short-term capital gains on sale of plant and machinery and factory building. The explanation of the assessee wa....
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.... the sale of business asset has to be treated as forming part of business income. 4. In this regard, we wish to submit that the scheme of the IT Act is that income-tax is one tax. Sec. 14 of the Indian IT Act, 1961, classifies the taxable income under different heads for the purpose of computation of the net income of the assessee. Though, for the purpose of computation of the income, profit on sale of depreciable assets is separately classified, the said profit on sale of assets does not cease to be part of income from business if the assets are part of the business assets. Whether a particular income is a part of the income from a business falls to be decided not on the basis of the provisions of s. 14 but on commercial principl....
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....s income and has correctly set off brought forward the business loss of Rs. 39,85,596 against the profit realised on sale of business assets viz. "factory building/plant and machinery/furniture and fixture." 8. The AO, however, was not impressed by any of these submissions. He was of the view that the provisions of s. 72 are very clear that brought forward business losses can only be set off against profits and gains of business or profession and, therefore, brought forward business losses of Rs. 39,85,596 cannot be allowed to be set off against short-term capital gains. He, thus, declined to set off the claim of the assessee. Aggrieved by the stand of the AO, the assessee carried the matter in appeal before the CIT(A) but without....
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....contentions and perused the material on record. Sec. 72 of the IT Act, inter alia, provides that "where for any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of s. 71, so much of the loss as has not been so set off or, where he has no income under any other head, the whole loss shall, subject to the other provisions of this chapter, be carried forward to the following assessment year and,- (i) it shall be set be off against the profits and gains, if any, of any busi....
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....wami Bank Ltd. (1965) 57 ITR 306 (SC), their Lordships of the Hon'ble Supreme Court took note of this distinction and the implications of these provisions regarding carry forward and set off of business loss. It was noted by the Hon'ble Supreme Court that while one set of provisions, i.e., the nature of loss incurred by the assessee, classifies the same on the basis of income being taxable under a particular head for the purpose of computation of the net income, the other set of provisions is concerned, only with the nature of gains being from business and not with the head of tax. Their Lordships held that as long as the profits and gains are in the nature of business profits and gains, and even if these profits are liable to be taxed unde....