TaxTMI 
TaxTMI 
2021 (5) TMI 263
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....at NIL after set off of current year's business loss and also brought forward business loss. The CPC did not allow set off of brought forward losses against the short term capital gain amounting to Rs. 3.80 crores and hence, made the adjustment and raised a demand of Rs. 1,16,75,364/-. Against which the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) allowed the appeal of the assessee holding that it is permissible to claim the set off of brought forward losses against the short term capital gain. Accordingly, allowed the appeal of the assessee. The ld. CIT(A) relied on the decision of jurisdictional ITAT in the case of Sri Padmavathi Srinivasa Cotton Ginning & Pressing Factory (29 DTR Trib. 1) and also the decision of the ITAT, Mumbai in the case of Digital Electronics Ltd. Vs. Addl.CIT [(2011) 16 taxmann.com 316 (Mumbai)]and M/s.Nirmal Plastic Industries (ITA No.6428/MUM /2009) and allowed the appeal of the assessee. 4. We have heard both the parties and perused the material available on record. 5. The ld. CIT(A) allowed the appeal of the assessee and placed reliance on the decision of this tribunal in the case of Sri Padmavathi Srinivasa Cotton Ginnin....
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....set off does not arise in respect of unabsorbed depreciation relating to assessment year 1996-97 and earlier years, in view of the decision of Hon'ble Madras High Court decision in the case of S & S Power Switchgear Ltd. supra). Accordingly, we direct the AO to allow set off of the eligible amount of unabsorbed depreciation and unabsorbed business loss against the short-term capital gain. 7. The learned CIT(A) vide para 7 of his order has raised a doubt regarding assessment of lease rentals under the head business. Inviting our attention to the above said observation of learned CIT(A), learned Authorised Representative submitted that the question of application of section 50 of the Act will not arise if the income of the assessee is not assessable under the head business. We do not wish to make any comment m this regard as the observation of learned CIT(A) was not an issue before the AO or before us. 8. In the result, the appeal of the assessee is partly allowed." On identical set of facts the Hon'ble ITAT, Mumbai in the case of Digital Electronics Ltd., which was relied upon by the appellant directed the AO to grant set off of brought fo....
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....h 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 off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year ..........". It is thus clear that s. 72 of the Act 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 is to be carried forward to the following assessment year and is allowable for being set off "against the profits, if any, of that business or profession carried on by him and assessable for that assessment year". It is thus for setting off the i....
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....us, because it refers to simultaneous application of s. 41(2) and s. 50 on the same amount. In contrast to that position, the short reference to s. 41(2) in the present case is to show the nature of income in contradistinction with the head under which it is to be assessed. Revenue thus does not derive any advantage from this decision. In view of these discussions and as also bearing in mind the entirety of the case, we are of the considered view that the income earned in the year before us, although not taxable as "profits and gains from business or profession" was an income in the nature of income of business nevertheless. The assessee was, therefore, indeed justified in claiming the set off of business losses against the income of capital gains. We uphold the grievance of the assessee and direct the AO to grant the set off. The assessee gets relief accordingly. The appellant also relied on the decision of Hon'ble ITAT, Mumbai in the case of M/s. Nirmal Plastic Industries (ITA No. 6428/MUM/2009). I have also perused the decision and found that the Hon'ble Tribunal allowed the claim of set off of brought forward business loss against capital gains computed u/s.50 ....