For assessment year 2021-22, an assessee had the following items of capital gains:
B4e – On redemption of Tax free bonds @10% – Net gains
B10e – On redemption of other debt mutual funds @20% after indexation – Net gains
B5c – On Sale of Equity Shares @10% – Net loss(or LTCL)
Short Term Capital Gains(STCG)
A3e – On Sale of Equity Shares @15% – Net loss (or STCL)
A6g – On redemption of other debt mutual funds @ applicable rates – Net gains
Brought forward Long Term Capital Loss.(or LTCL)
Section 70(2) entitles the assessee to have the STCL from any capital asset to be set off against any CG, whether ST or LT from any other capital asset.
Section 70(3) entitles the assessee to have the LTCL from any capital asset to be set off against LTCG from any other capital asset.
This means that the assessee should be allowed to set off
- A3e against B10e, and
- B5c against B10e
The structure of the ITR-3 allows the assessee to set off A3e against B10e but compels him to set off B5c against B4e in complete contravention of the provisions of the Section 70(3).
At this stage, it is not known if there are any other anomalies on the same lines for other items of set off.
This calls for a thorough re-examination of the ITR form.
Meanwhile, the assessee finds himself in a peculiar position. He cannot appeal against the intimation under Section 143(1) as there is no disallowance (assuming that the computations are approved in toto). At the same time, there is no route for him to claim the above set-off.
Relief absolutely essential.
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