Vipul A. Shah v. ACIT (ITA No 3190/Mum/2010) Mumbai ITAT dated 8 April 2011
Facts- The taxpayer was engaged in share trading. During the assessment year 2004-05, the taxpayer had set off the indexed long term capital loss against non-indexed long term capital gains. The Assessing Officer did not allow the set off of indexed long term capital loss against non-indexed long term capital gains.
Issue before the Mumbai Tribunal - Whether the indexed long term capital loss can be set off against non-indexed long term capital gains? The provisions of section 48 to 55 of the Income-tax Act ("ITA") refer to the mode of computation of capital gains. The provisions of section 70(3) of the ITA refers to setting of long term capital loss against the long term capital gains arrived at under a similar computation. The Tribunal observed that the above provisions relating to set off of long term capital loss against the long term capital gains existed much prior to the mode of computation of capital gain without applying the benefit of indexation.
· A plain reading of the provisions of section 70(3) of the ITA shows that the first part of the provision refers to a loss as computed under sections 48 to 55 of the ITA in respect of any capital asset.
· The second part of the provisions of section 70(3) of the ITA refers to income if any as arrived at under "similar computation". Thus, the second part refers only to the mode of computation under sections 48 to 55 of the ITA and that would be the correct interpretation. It cannot be said that the second part of the provisions by using the ex-pression "similar computation", refers to a similar computation under either the second proviso to section 48 relating to indexed capital gains or proviso to section 112(1) relating to non-indexed capital gains.
· The Tribunal accordingly held that indexed long term capital loss can be set off against non-indexed long term capital gains.
Facts- The taxpayer was engaged in share trading. During the assessment year 2004-05, the taxpayer had set off the indexed long term capital loss against non-indexed long term capital gains. The Assessing Officer did not allow the set off of indexed long term capital loss against non-indexed long term capital gains.
Issue before the Mumbai Tribunal - Whether the indexed long term capital loss can be set off against non-indexed long term capital gains? The provisions of section 48 to 55 of the Income-tax Act ("ITA") refer to the mode of computation of capital gains. The provisions of section 70(3) of the ITA refers to setting of long term capital loss against the long term capital gains arrived at under a similar computation. The Tribunal observed that the above provisions relating to set off of long term capital loss against the long term capital gains existed much prior to the mode of computation of capital gain without applying the benefit of indexation.
· A plain reading of the provisions of section 70(3) of the ITA shows that the first part of the provision refers to a loss as computed under sections 48 to 55 of the ITA in respect of any capital asset.
· The second part of the provisions of section 70(3) of the ITA refers to income if any as arrived at under "similar computation". Thus, the second part refers only to the mode of computation under sections 48 to 55 of the ITA and that would be the correct interpretation. It cannot be said that the second part of the provisions by using the ex-pression "similar computation", refers to a similar computation under either the second proviso to section 48 relating to indexed capital gains or proviso to section 112(1) relating to non-indexed capital gains.
· The Tribunal accordingly held that indexed long term capital loss can be set off against non-indexed long term capital gains.
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