TaxTMI 
TaxTMI 
2024 (4) TMI 1272
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....method of setoff of Short Term Capital Losses (STCL) incurred from transactions liable to tax at lower rate, against Short Term Capital Gains (STCG) chargeable to tax at higher rate i.e., 30% plus surcharge and cess. 3. The facts germane to the primary issue raised in appeal are as under: During the period relevant to Assessment year under appeal, the Assessee earned STCGs and also STCLs. The Assessee after set-off of STCLs from STCGs, offered to tax net capital gains of Rs.70,95,52,656/-. The details of STCGs/STCLs earned by the Assessee and the net STCG after set-ff of STCL are tabulated as under: Particulars 15% 30% Total Short-term capital gains 63,14,67,867/- 1,75,26,12,868/- 2,38,40,80,735/- Short-term capital los....
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....ctions of the DRP passed the impugned assessment order. Hence, the present appeal. 5. Shri Madhur Agarwal appearing on behalf of Assessee submitted that the DRP and Assessing Officer have erred in holding that the Assessee cannot set-off STCLs suffered in category liable to tax at lower rate against STCG liable for tax at higher rate. The provisions of section 70(2) of the Act allows the Assessee to set-off losses against the income arrived under the same head of income. The section does not put embargo for setting off STCLs liable to tax at lower rate against STCG in category liable for higher rate of tax. To support his submissions, he placed reliance on the following decisions: 1. ACIT Vs. Mac Charles India Ltd. in ITA No.586/Bang/201....
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....nt, vehemently defended the impugned assessment order and direction of the DRP. The ld Departmental Representative (in short 'ld. DR') referring to the provisions of section 70(2) of the Act submitted that the expression used in sub section (2) is "similar computation" i.e., within the same category. Thus, STCLs taxable under 15% category can be set-off against STCGs taxable at the rate of 15%. STCL falling under 15% category cannot be set-off against gains taxable at the rate of 30%. 7. We have heard rival sides and have examined orders of the authorities below. We have also considered the decisions cited before us by the Counsel for the Assessee. The Assessee has suffered STCL on assets liable to tax at 15% at the same time the Assessee ....
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....ight which the assessee has in law. This is the principle adopted by the CIT(A) in allowing relief to the assessee. We are of the view that the reasoning adopted by the CIT(A) is just and proper and calls for no interference. In view of the above conclusions on a plain reading of the relevant provisions of section 70(2) and section 111A of the Act, we do not wish to refer to the case laws to which a reference has been made by the CIT(A) in his order. For the reasons given above, we confirm the order of the CIT(A) and dismiss ground No.2 raised by the Revenue." (Emphasized by us) 8. In the case of First State Investments (Hongkong) Ltd. (supra) under similar situation, the Assessing Officers rejected Assessee's manner of set-off of STCL ....
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....orrect rate of income-tax comes into being. Income under the head Capital gains' is determined as per sections 45 to 55A. Section 48 with the heading "Mode of computation" provides that the income chargeable under the head "Capital gains" shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset, the expenditure incurred wholly and exclusively in connection with such transfer and the cost of acquisition of the asset along with the cost of any improvement, if any. Thus, the computation of capital gain, which is prescribed under section 48, cannot be confused with the rate of tax liable to be charged on the income under the head 'Capital gain' so c....