Case Law Details
Rare Investments Vs CIT (ITAT Mumbai)
The issue under consideration is whether the long-term capital gain on sale of non-STT paid shares can be set off against long-term capital loss arising from STT paid shares?
In the present case, the assessee is a partnership firm engaged in the business of investment of shares, securities and bonds during the year under consideration. The ld. AO show-caused the assessee that in view of the provisions of Section 10(38) of the Act while the claim of set off of STT paid long term capital loss with non-STT paid long term capital gain be not allowed to be set off in the assessment. He observed that if income from a source is altogether exempt from tax, loss from that source cannot be set off against income from a different source or income under different head.
ITAT states that the provisions of Section 70-80 of the Act does not speak about payment of STT at all. There is no mention of STT even in Section 74 of the Act which talks about set off of carry forward of losses under the head “capital gains”. Respectfully following the High Court’s decision, ITAT are inclined to accept the argument of the ld. AR that the source of income remains income derived from transfer of shares and that STT paid long term capital loss and non-STT paid long term capital gains are only segments of such source and cannot be construed as a separate source altogether. Therefore, ITAT hold that assessee is entitled for set off of STT paid long term capital loss with non-STT paid long term capital gains in the facts of the instant case. Accordingly, the grounds raised by the assessee are allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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