Ita/49/2014 Of The Commissioner Of Income Tax-Iii v. Shri Sanjiv Kapur

IN THB HIGH COURT OF KARNATAKA AT BANGALOREDATEBD THIS THE DAY OF AUGUST 2014 PRESENT THER HON’BLE MR.JUSTICK N KUMAR| AN ] THR HON’BLE MR.JUSTICE B.MANOHAR| ITA NO.49/2014 BETWEEN 1.THERE COMMISSIONER OINCOME TAX-III.C.R.BUILDINGINCOME TAX-III.C.R.BUILDING QUEENS ROAD|BANGALORE-560 O78.BANGALORE-560 O78. OoTHR DBEPUTY COMMISSIONER OF INCOME TAXCIRCLE 7(1)BANGALORE.CIRCLE 7(1)BANGALORE. _. . APPBRBLLANTS (BY SRI E.LSANMATHI, ADV.) | ANT SHRI SANJIV KAPURNO.569, 16 ‘A’ MAIN ROAD|II] BLOCK, KORAMANGALA|BANGALORE -34PAN AHOPK O5SO8L ~~. RESPONDENT | (BY SRI A.SHANKAR & SRI M.LAVA, ADVS.) THIS [TA IS. FILKED UNDER SECTION 260-A OINCOME TAX ACT, 1961, ARISING OUT OF ORDER DATED30.08.2013 PASSED IN ITA NO.1520/BANG/2012, FOR THEASSBSSMEBNT YBAR 2007-08 PRAYING THIS HON’BLECOURT TO: 1)DECIDE THE FOREGOING QUESTION OF LAW.AND/OR SUCH OTHER QUESTIONS OF LAW AS MAYAND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BR FORMULATED BY THR HON BLE COURT ASDEEMED FIT.. 2.SETASIDETHERAPPBRLLATEORDERDATHD.30.08.2013PASSEDBY|THERINCOME.TAX|APPELLATE TRIBUNAL, ‘B’ BENCH, BANGALORE, AS|SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S.CASE,IN_APPKBALPROCBKBEDINGNO.1520/BANG/2012 FOR THE ASSESSMENT YEAR|2007-08. 30.08.2013PASSEDBY|THERINCOME.TAX|APPELLATE TRIBUNAL, ‘B’ BENCH, BANGALORE, AS|SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S.CASE,IN_APPKBALPROCBKBEDINGNO.1520/BANG/2012 FOR THE ASSESSMENT YEAR|2007-08. THIS APPEAL COMING ON FOR ADMISSION THIS.DAY,N KUMAR J., DELIVERED THE FOLLOWING: JUDGMENT The substantial question of law raised in thisappeal by the revenue is aS under: “Whether on the facts and in the circumstances|of the case, the Tribunal was justified in law inupholding the deletion of disallowance of set offof short term capital loss of Rs.1,61,49,595/-|incurred on account ot transaction in shares|against the long term capital gains made from|saleoT|immovablepropertywithotulappreciating the fact that the assessee seeks toset off the short term capital loss against|income which was arrived at under a dissimilar|computation? 2. The contention of the Revenue is, a short termcapital loss can be set off only against short term capital gain. A short term capital loss cannot be set olf againsta long term capital gain. 3. Section 7O of the Income Tax Act, 1961, which deals with set olf of loss from one source against incomefrom another source under the same head of income|reads as under:| 70. (1) Save as otherwise provided in this)Act, where the net result for any assessment yearin respect of any source falling under any head ofincome, other than “Capital gains”, is a loss, theassessee Shall be entitled to have the amount ofsuch loss set off against his income from any othersource under the sqme head. (2) Where the result of the computation made|for any assessment year under sections 48 to 55in respect of any short-term capital asset is a loss,the assessee shall be entitled to have the qmountof such loss set off against the income, if any, asarrived at under a similar computation made forthe assessment year in respect of any other capitalasset. (3) Where the result of the computation made|for any assessment year under sections 48 to 55 in respect of any capital asset (other than a short-term capital asset) is a loss, the assessee shall beentitled to have the amount of such loss set offagainst the income, if any, as arrived at under asimilar computation made for the assessment yearin respect of any other capital asset not being aShort-term capital asset. 4 Circular No.8 ot JOO2 dated 27.08.2002 issuedby CBDT makes the position of the Department clear at40.2. It reads as under: (3) Where the result of the computation made|for any assessment year under sections 48 to 55 in respect of any capital asset (other than a short-term capital asset) is a loss, the assessee shall beentitled to have the amount of such loss set offagainst the income, if any, as arrived at under asimilar computation made for the assessment yearin respect of any other capital asset not being aShort-term capital asset. 4 Circular No.8 ot JOO2 dated 27.08.2002 issuedby CBDT makes the position of the Department clear at40.2. It reads as under: “40.2 Since long-term capital gains are subject|to lower incidence of tax, the Finance Act, 2002|has rectified the anomaly by amending the said|sections to provide that while losses from|transfer of short-term capital assets can be set|off against any capital gains, whether short-term or long-term, losses arising from transfer oflong-term capital assets, will be allowed to be|set off only against long-term capital gains|XXXK”. oO. This is clear from the language employed insub-section (2) and sub-section (3). That is preciselywhat both the appellate authorities have held. 6. In that view of the matter, the substantial question of law is answered in favour of the assesseeand against the revenue. We do not see any merit inthis appeal. Accordingly, the appeal is dismissed. JT/-| Sd/-| JUDGE| Sd/- JUDGE|