TaxTMI 
TaxTMI 
2026 (5) TMI 454
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....luru, (CPC) u/s. 143(1) of the Income-tax Act (hereinafter referred to as the "Act"), dated 26.02.2024, for Assessment Year 2022-23. 2. Grounds taken by the assessee are reproduced as under: "1. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld CPC, Bengaluru in denying the carried forward long term capital loss amounting to Rs. 37,72,601/- 2. On the facts and circumstances of the case and law, the Ld CIT(A) failed to consider that the gross long term capital gain on sales of shares amounted to Rs. 69,84,283/- and the same was claimed as exemption under section 54F of the Income Tax Act, 1961. 3. On the facts and circumstances of the case and law, the Ld CIT....
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.... long term capital gain of equal amount and therefore, long term capital loss of Rs. 37,72,601/- cannot be adjusted against the long term capital gain of Rs. 69,84,283/-. The view adopted by the ld. CIT(A) is that first inter head loss is adjusted and then only, exemption u/s. 54F can be claimed on the amount of net capital gain. By taking this view, long term capital loss of Rs. 37,72,601/- was adjusted against the long term capital gain of Rs. 69,84,283/- and the net capital gain was worked out to Rs. 32,11,682/- which the assessee was allowed to claim as exempt u/s. 54F. He thus, upheld the disallowance of carry forward of long term capital loss of Rs. 37,72,601/- processed by CPC u/s. 143(1). 4. Before us, ld. Counsel for the assesse....
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.... being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house thereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new axset). the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such ca....
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....essment year in respect of any other capital asset not being a short-term capital asset." 5.1. From section 45(1), it is noted that the chargeability of profit or gain arising from the transfer of capital asset is subject to what is provided in section 54 to 54H, which includes section 54F. Thus, the chargeability itself factors in the benefit available to the assessee u/s. 54F (section relevant to the present case). Heading of the section 54F mentions that capital gain on transfer of certain capital assets is not to be charged in case of investment in residential house. Thus, when the conditions as prescribed u/s. 54F are complied with by the assessee, the capital gain arising out of the transfer of certain capital assets gets an exit f....
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....e, assessee is also eligible to carry forward long term capital loss of Rs. 37,72,601/- incurred by him on sale of another set of long term equity shares. It is not necessary that one should first apply section 70(3) and thereafter only the assessee could invest the capital gain/net consideration arising from the transaction of long term capital asset as required u/s. 54F. Scheme of section 45 to 55A provides for computation of capital gains and the effect has to be given first to the provision of capital gains as provided under the said sections and then apply the provisions of section 70. To put it in other words, section 70 would come into the computation of total income only when the capital gains has been computed in accordance with th....