2004 (5) TMI 42

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.... in respect of another asset in the same assessment year? (2) Whether, on the facts and in the circumstances of the case, and on a correct interpretation of section 71(3), the Appellate Tribunal erred in law in holding that short-term capital loss can be sought to be set off against income assessable under any head of income other than capital gains (i.e., against income from other sources also) even if there is income from capital gains?" The assessee, M/s. Mahindra Co. Ltd., Khetan Bhawan, M. I. Road, Jaipur, is a limited company, which derives income from interest on securities, house property and business. The relevant assessment year is 1985-86. In this year, the assessee suffered short-term capital loss amounting to Rs. 29,700. ....

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....mputation made for any assessment year under sections 48 to 55 in respect of any short-term capital asset is a loss, the assessee shall be entitled to have the amount of such loss set off against the income from any other capital asset in that year. Mr. Anuroop Singhi, learned counsel for the Department, further submits that under section 71(3), where the result of the computation under sections 48 to 55 in respect of capital gains relating to short-term capital assets is a loss and the assessee has income assessable under any head of income other than "Capital gains", the short-term capital loss should be first set off against the short-term capital gain or long-term capital gain, then the balance loss be set off against the "income fro....

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.... assessable under any head of income other than "Capital gains", the assessee shall, subject to the provisions of this Chapter, be entitled to have such loss set off against the income under any other head. It further provides that if the assessee has suffered any loss in computing the income under sections 48 to 55 and if the total loss on account of that computation is not possible to be set off against capital gains or income from capital asset that balance short-term capital loss can be set off against income under any head other than "Capital gains". Section 14 of the Act provides different heads of income, under which different income can be taxed, which reads as under: "A-Salaries; B- . . . . ; C-Income from house propert....