TaxTMI 
TaxTMI 
2021 (5) TMI 145
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....empt under section 10), the gain or loss from transactions such source des not enter into the computation of income as the same gets excluded at the threshold itself. Therefore, loss from such source is not available for set off or for carry forward for set- off against income chargeable to tax. Therefore, while the computation of Long Term Capital Gain/Loss on the sale off the said shares is accepted as correct, the aforesaid net Long Term Capital Loss (Rs. 4,45,74,513 /-) shall not be carried forward for set-off against Long Term Capital Gain, if any, in the succeeding years." 3. The ld. CIT (A) supported the action of the Assessing Officer relying on the FAQ dated 04.02.2018 issued by CBDT. The question 23 of the said instructions is as under: "Q23. What will be the treatment of long-term capital loss arising from transfer made between 1st February, 2018 and 31s t March, 2018? Ans.23. As the exemption from long- term capital gains under clause (38) of section 10 will be available for transfer made between 1st February, 2018 and 31st March, 2018, the long- term capital loss arising during this period will not be allowed to be set-off or carried forward." 4....
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....ng term asset clearly is income in the hand of the assessee in term of section 2(24) read with the definition of transfer as defined u/s 2(47) of the I. T. Act. 1961. 3. The receipt then has to be considered from the view of specific provision of exemption under Chapter III of the Income Tax Act, 1961. The Privy Council in its landmark judgment in Gopal Saran Narain Singh vs CIT (1935) 3 ITR 237 PC] laid down that "anything that can be properly described as income is taxable under the Act unless expressly exempted". Chapter III explicitly provides for the income which does not form part of total income. If the receipt is covered by the provisions of Chapter III, particularly Section 10, then even if the receipt is in nature of the income it cannot be assessed as income. Only the receipts which have passed the above tests are to be assessed as income of an assessee as per the provisions of Chapter IV for computing the total income of an assessee. The question of setting of losses or carry forward of losses provided for under Chapter VI of the I.T. Act, 1961 will arise only when the computation of income is so done. 4. Now kind attention is drawn to 10(38) of the I.....
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....that receipt/ income does not arise unless specifically provided for in the provisions which exempt or exclude such income from part of total income for the assessee. Thus in the case of the assessee if the income from the transfer of long term asset being equity share is exempt under Section 10(38) then there is no mandate to compute to long term capital gain or loss for the purposes of Section 10(38). In case the interpretation that it is the capital gain which is exempt u/ s 10(38) is taken, then such interpretation would be not in harmony with scheme of Act for computation of income of assessee. Needless to say such an interpretation would also unsettled the trite legal position whereby losses from agricultural activities and earning dividend will also be claimed for setoff. To summarize the Hon' ble Bench may kindly appreciate that the allowability of deduction for income exempt under Section 10 (38) cannot be done selectively only when the expenses exceed the income. Thus it does not matter whether an assessee had gain or loss from transfer of long term capital asset being equity share in a company where such transaction is chargeable to STT, since the entire receipt from suc....
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....f which would fail to achieve the manifest purpose of the legislation we should avoid a construction which would reduce the legislation to futility, and should rather accept the bolder construction, based on the view that Parliament would legislate only for the purpose of bringing about an effective result The principles indicated in the said cases were reiterated by this Court in Mohan Kumar Singhania v. Union of India (AIR 1992 SC 1). The statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute. 6.6 The Court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare clause with other parts of the law and the setting in which the clause to be interpreted occurs. [ See R. S. Raghunalh v. State of Karnataka and Anr. (AIR 1992 SC 81)]. Such a construction has the merit of avoiding any inconsistency or repugnancy either wnthin a section or between two different sections or provisions of the same statute. It is the duty of the Court to avoid a he....
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.... any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17 ; (iiia) any special allowance or benefit, other than perquisite included under sub- clause (iii), specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit; (iiib) any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living; (iv) the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid; (iva) the value of any benefit or perquisite, whether convertible into money or not, obtained by any representative assessee menti....
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....e of such employees; (xi) any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. Explanation: For the purposes of this clause, the expression "Keyman insurance policy" shall have the meaning assigned to it in the Explanation to clause (10D) of section 10 ; (xii) any sum referred to in clause (va) of section 28; (xiia) the fair market value of inventory referred to in clause (via) of section 28; (xiii) any sum referred to in clause (v) of sub-section (2) of section 56 ; (xiv) any sum referred to in clause (vi) of sub- section (2) of section 56 ; (xv) any sum of money or value of property referred to in clause (vii) or clause (viia) of sub- section (2) of section 56 ; (xvi) any consideration received for issue of shares as exceeds the fair market value of the shares referred to in clause (viib) of sub- section (2) of section 56; (xvii) any sum of money referred to in clause (ix) of sub- section (2) of section 56 ; (xviia) any sum of money or value of property referred to in clause (x) of sub-section (2) of section 56 ; (xviib) any compensatio....
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....chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004): [Provided also that nothing contained in this clause shall apply to any income arising from the transfer of long- term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust, made on or after the 1st day of April, 2018.] Explanation.- For the purposes of this clause,- (a) "equity oriented fund" means a fund- (i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty- five per cent of the total proceeds of such fund; and (ii) which has been set up under a scheme of a Mutual Fund specified under clause (23D): Provided that the percentage of equity share holding of the fund shall be computed with reference to the annual average of the monthly averages of the opening and closing figures; (b) "International Financial Services Centre" shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); (c) "recognised stock exchange....
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....the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall be first set off under sub- sections (1) and (2) and thereafter the loss referred to in section 71 A shall be set off in the relevant assessment year in accordance with the provisions of that section.]" Section 74: "[Losses under the head " Capital gains". 74. [(1) Where in respect of any assessment year, the net result of the computation under the head "Capital gains" is a loss to the assessee, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and- (a) in so far as such loss relates to a short-term capital asset, it shall be set off against income, if any, under the head "Capital gains" assessable for that assessment year in respect of any other capital asset; (b) in so far as such loss relates to a long-term capital asset, it shall be set off against income, if any, under the head "Capital gains" assessable for that assessment year in respect of any other capital asset not being a short-term capital asset; (c) if the loss cannot be wholly so set off, the amount of loss not so set ....
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....property by the owners to a third party. Thus, to understand what kind of property can be considered a capital asset, it would be appropriate to refer to the definition of transfer in Section 2 (47) of the Act. 15. Section 2 (47)(v) and (vi), and Explanation 2 make it adequately clear that possession, enjoyment of immovable property, as well as an interest in any asset are all transferable "capital assets". Explanation clarifies that " the transfer includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement or otherwise. Thus, rights or interests in a property are kinds of property that are transferable capital assets. Hence, booking rights or rights to purchase the apartment or rights to obtain title to the apartment are also capital assets that can be transferable. 16. A contract for sale of flat was capable of specific performance and was also and therefore, a right in an uncompleted building or a flat was clearly a property as contemplated by Section ....