TaxTMI 
TaxTMI 
2022 (7) TMI 1414
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....4,39,736 from Rs. 40,03,040, when assessee was not maintaining any bifurcation in respect of the taxable income and tax free income. 3. Whether on the facts and circumstances of the case, and in law, the Ld CIT(A) erred in restricting the addition on account of Helicopter/aircraft charges to 1/7 instead of 1/4th made by the AO without considering the maximum uses of helicopter/aircraft for personal use by assessee and by his family member. 4. Whether on the facts and circumstances of the case, and in law, the Ld CIT(A) erred in deleting the addition of Rs. 5,00,000/- made by the AO on account of Software License Charge without considering the capital nature of the transactions. 5. The Appellant craves leave to add, to amend and/or to alter any of the grounds of appeal, if need be. 6. The Appellant, therefore, prays that on the grounds stated above, the order of the CIT(A)- 48, Mumbai may be set aside and that of the Assessing Officer restored." 3. When this appeal was called for hearing, the learned Representative appearing for the parties fairly agreed that the issues arising in the present appeal are covered by the decision of the Co-ordinate Bench of the Tribunal render....
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....and transactions which are not treated as transfer for the purpose of capital gain u/s. 45. The mode of computation to arrive at capital gain or loss has been enumerated from sections 48 to 55. Further sub section (3) of section 70 and section 71 provides for set off of loss in respect of capital gain. 8. From the conjoint reading and plain understanding of all these sections it can be seen that, firstly, shares in the company are treated as capital asset and no exception has been carved out in section 2(14), for excluding the equity shares and unit of equity oriented funds that they are not treated as capital asset. Secondly, any gains arising from transfer of Long term capital asset is treated as capital gain which is chargeable u/s. 45; thirdly, section 47 does not enlist any such exception that transfer of long term equity shares/funds are not treated as transfer for the purpose of section 45 and section 48 provides for computation of capital gain, which is arrived at after deducting cost of acquisition i.e. cost of any improvement and expenditure incurred in connection with transfer of capital asset, even for arriving of gain in transfer of equity shares; lastly, section 70 ....
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.... source of income is exempt or only a part of source is exempt. Here it needs to be seen whether section 10(38) is source of income which does not enter into computation at all or is a part of the source, the income in respect of which is excluded in the computation of total income. For instance, if the assessee has income from Short term capital gain on sale of shares; Long term capital gain on debt funds; and Long term capital gain from sale of equity shares, then while computing the taxable income, the whole of income would be computed in the total income and only the portion of Long term capital gain on sale of equity shares would be removed from the taxable income as the same is exempt u/s 10(38). This precise issue had come up for consideration before the Hon'ble Calcutta High Court in Royal Turf Club, wherein the Hon'ble High Court observed that "under the Income tax Act 1961 there are certain incomes which do not enter into the computation of the total income at all. In computing the total income of a resident assessee, certain incomes are not included under s.10 of the Act. It depends on the particular case; where the Act is made inapplicable to income from a certain sourc....
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....son who is a resident includes all income from whatever source it is derived. In computing the total income, certain incomes are not included under s. 10 of the Act. It depends on the particular case where certain income, in respect of which the Act is made inapplicable to the scheme of the Act, and in such a case, the profit and loss resulting from such a source do not enter into the computation at all. But there are other sources which for certain economic reasons are not included or excluded by the will of the Legislature. In such a case we must look to the specific exclusion that has been made. The question is in this case whether s. 10(27) is a source which does not enter into the computation at all or is a source the income in respect of which is excluded in the computation of total income. How this question will have to be viewed, has been looked into by the Supreme Court in several decisions to some of which our attention was drawn." After discussing the various decisions of the Hon'ble Supreme Court specifically the decision of in the case of Karamchand Premchand (supra), the Hon'ble High Court came to the following conclusion: "cl.(27) of s.10 excludes in express term....
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....hips observed that "it may be remembered that the concept of carry forward of loss does not stand in vacuo. It involves the notion of set- off. Its sole purpose is to set off the loss against the profits of a subsequent year. It pre-supposes the permissibility and possibility of the carried forward loss being absorbed or set off against the profits and gains, if any, of the subsequent year. Set off implies that the tax is exigible and the assessee wants to adjust the loss against profit to reduce the tax demand. It follows that if such setoff is not permissible or possible owing to the income or profits of the subsequent year being from a non-taxable source, there would be no point in allowing the loss to be "carried forward". Conversely, if the loss arising in the previous year was under a head not chargeable to tax, it could not be allowed to be carried forward and absorbed against income in a subsequent year from a taxable source." The ratio and the principle laid down by the Hon'ble Apex Court would not apply here in this case, because the concept of income includes loss will apply only when entire source is exempt or is not liable to tax and not in the case where only one of t....
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.... Bench of the Tribunal in assessee's own case cited supra. Therefore, respectfully following the aforesaid decision, ground no.1, raised in Revenue's appeal is dismissed. 7. The issue arising in ground no.2, raised in Revenue's appeal is pertaining to disallowance under section 14A of the Act. 8. We find that the Co-ordinate Bench of the Tribunal in assessee's own case cited supra decided similar issue by observing as under:- "19. Considered the rival submissions and material placed on record, we observe that assessee has earned exempt income to the extent of Rs..49,23,544/- whereas the Assessing Officer calculated the disallowance u/s. 14A r.w. Rule 8D to the extent of Rs..67,13,465/- which is more than the exempt income earned by the assessee. The various courts have held that disallowance u/s. 14A of the Act cannot be more than the exempt income earned by the assessee. Therefore, we are in agreement with the finding of the Ld.CIT(A) and we do not find any reasons to interfere with the finding of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed." 9. As similar issue is arising in the present appeal, we see no reason to deviate from the view so taken by t....