TaxTMI 
TaxTMI 
2016 (6) TMI 530
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....Capital Gains only, as against the contention of the assessee company for adjustment of business loss first against the interest Income and then against the Long Term Capital, thereby leaving only LTGC to be taxed at 20% as applicable on it. 2. It is prayed that the aforesaid adjustment so made in the rectification order be revised as per applicable law and the excess tax liability of the assessee company be deleted. 3. The assessee company is in the business of Property Development and Share Trading, beside this assessee company also earned interest income under the income from other sources. The assessee filed return of income declaring Rs. 1,12,19,604/-. The assessee declared loss from business amounting to Rs. 70,32,63,487/-, income ....
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.... view of Section 71 of the Act, the assessee is entitled to set off of business loss against its long-term capital gains and as the assessee carried on business during the year under consideration it was entitled to the set off of the business loss against its 'other income'. The Ld. AR further submitted that the business loss should have been adjusted first, by the Assessing Officer. 7. The Ld. DR relied upon the order of the CIT (A) and assessment order u/s 153(3) as well as rectification order u/s 154. 8. We have perused all the records and heard both the parties. Section 71(2) makes it clear that in respect of any assessment year, when the net result of the computation under any head of income, other than 'Capital gains', is a loss an....
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.... "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). As the heading of the section indicates i e., "set off of loss from one head against income from another", the option is left open as far as Sub-section (2) is concerned. Contrary to this, the heading of Section 70 is restrictive in nature i.e., "set off of loss from one source against income from another source under the same head of income". So, the first thing is, if the losses from one source can be set off against income from another source under the ....
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....ns". In the present appeal, Sub-section (2) is applicable because the assessee has a positive income under the head "Capital gains". On careful reading of Sub-section (2) it is apparent that there is no such restriction imposed on exercising the option of setting off of business loss against income under any other head other than income under the head "Capital gains". The expression used in Sub- section (2) simply enables an assessee to set off business loss under any head of income including the head "Capital gains". So, it appears that the Legislature has given a choice to a tax payer in respect of loss arising from any other head except capital gain to set off the same either against the income under any head of the income or against the....
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....artment should adopt that mode which will give assessee the maximum benefit" unquote, relevant portion reproduced: There is nothing in Section 24(1) to indicate that a particular mode of set- off shall be followed. [In the absence of any such indication, the general rule to be followed in all fiscal enactments is that where words used are neutral in import, a construction most beneficial to the assessee should be adopted]. The words "he shall be entitled to have the amount of loss set- off" occurring in Section 24(1), would seem to be consistent with the conferment of a benefit on the assessee which he can claim as of right. Hence, in the above illustration, the assessee's contention should prevail and the department should adopt that....
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....trued as beneficial to the assessee. 3. To sum up, we hereby direct the Assessing Officer to first set off the business loss against the income under the head "Other sources" and if balance is left, the same is directed to be set off against the income under the head "Capital gains". Resultantly, the ground raised by the assessee is hereby allowed. The said ITAT decision is applicable in the present case as facts are similar in both the matter as relates to whether option is available to an assessee for set off of any head of loss against any head of income including capital gain assessable for that assessment year. The said question was answered in favour of the assessee therein. The CIT(A) while dismissing the appeal of the assessee, m....