Set off of indexed long term capital loss permissible against non-indexed long term capital gains

Vipul A. Shah Vs. 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?

Observations and Ruling of the Mumbai Tribunal

· 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.

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