TS-326-ITAT-2015 (Mum), [2015] 58 taxmann.com 115 (Mumbai – Trib.)
Facts of the case and Question of law:
Assessee is a pharmaceutical company, engaged in manufacturing and sale of pharmaceuticals, formulations, dietetic specialties and animal husbandry. Assessee in its computation on income has shown;
| Long Term Capital Loss on Sale of Equity Shares (STT paid) | Rs.57,32,835/- |
| Long Term Capital Loss on Sale of Mutual Funds (STT paid) | Rs.2,61,655/- |
| Long Term Capital Gain on Sale of Land at Chennai | Rs.94,12,00,000/- |
Assessee has set off such long term capital loss on sale of equity shares and mutual funds against long term capital gains on sale of land. Now the question is whether Long term capital loss on sale of equity shares can be set off against Long term capital gain arising on sale of land or not, as the income from Long term capital gain on sale of such shares are exempt u/s.10(38).
Contention of the Assessee:
Assessee is not satisfied with the decision of CIT(A) and its contention is;
1. Section 10(38) exempts only the positive income and thus losses will not come within the purview of the said section.
2. Section 70 does not put any embargo to exclude long term capital loss from sale of shares to be set off against long term capital gain arising on account of sale of other capital asset.
3. Nothing has been mentioned in sections 45 to 48 that capital gain or loss on sale of shares are to be excluded as section 10(38) exempts the income arising from the transfer of long term capital asset being an equity share or unit.
4. Specific exemption is given only to the income arising from transfer of long term capital asset being an equity share in company or unit of equity oriented fund, which is chargeable to STT. Thus, only income from such long term capital asset would not form part of computation and not losses.
Contention of the Revenue:
Learned DR strongly relied upon the order of the AO and CIT(A) and submitted that,
1. Income includes loss also.
