GSB CAPITAL MARKETS LTD, MUMBAI V. DCIT RG 4(1), MUMBAI

ITA 307/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1891 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY R SINGH
• Keywords: Capital asset
• Section: 143(3)

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 307 /MUM/2014 ( / ASSESSMENT YEAR : 2010-11) GSB CAPITAL MARKETS LTD., 78/80 ALI CHAMBERS, TAMARIND LANE, FORT, MUMBAI 400 0 01 / V. DCIT- RANGE 4(1), MUMBAI ./ PAN :AABCG7866N ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI AJAY R. SINGH REVENUE BY : SHRI RAJESH OJHA / DATE OF HEARING : 04-11-2015 / DATE OF PRONOUNCEMENT : 16-12-2015 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING I TA NO. 307/MUM/2014, IS DIRECTED AGAINST THE ORDERS DATED 22-10-2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)- 8, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010- 11. 2. ALTHOUGH THE ASSESSEE COMPANY HAS RAISED FIVE GR OUNDS OF APPEAL IN THIS APPEAL FILED WITH THE TRIBUNAL BUT THE EFFECTI VE ISSUE INVOLVED IN THIS APPEAL IS REGARDING NOT ALLOWING THE SET OFF OF BRO UGHT FORWARD LOSS ARISING FROM TRANSFER OF SHORT-TERM CAPITAL ASSET INCURRED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2009-10 OF RS. 19,2 1,095/- AGAINST GAINS ITA 307/M/14 2 ARISING FROM TRANSFER OF LONG-TERM CAPITAL ASSET E ARNED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2010-11 OF RS. 39,89,235/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS A MEMBER OF THE BOMBAY STOCK EXCHANGE AND ENGAGED IN THE BUS INESS OF SHARE BROKING, TRADING AND DEALING IN SHARES AND SECURITIES. 4.DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 1 43(3) READ WITH SECTION 143(2) OF THE INCOME TAX ACT,1961(HEREINAFTER CALLE D THE ACT) , IT WAS SEEN BY THE LEARNED ASSESSING OFFICER( HEREINAFTER CALLE D THE AO) THAT THE ASSESSEE COMPANY HAS CLAIMED SET OFF OF BROUGHT FOR WARD LOSS ARISEN FROM TRANSFER OF SHORT-TERM CAPITAL ASSET RS. 19,21,095/ - DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2009-10 AGAINST THE GAINS ARISING FROM TRANSFER OF LONG-TERM CAPITAL ASSET OF RS. 39,89, 236/- EARNED BY THE ASSESSEE COMPANY DURING THE PREVIOUS YEAR RELEVANT TO THE AS SESSMENT YEAR 2010-11 WHICH, IN THE OPINION OF A.O. IS NOT ALLOWABLE DUE TO DIFFERENCE IN THE TAX RATE. THE ASSESSEE COMPANY SUBMITTED THAT THE SAID SET OF F OF LOSS BE ALLOWED U/S 74(1) OF THE ACT WHICH READS AS UNDER:- LOSSES UNDER THE HEAD CAPITAL GAINS , SECTION 74(1)(A) 74(1) WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NE T RESULT OF THE COMPUTATION UNDER THE HEAD CAPITAL GAINS IS A LOSS TO THE ASSESSEE, THE WHOLE LOSS SHALL SUBJECT TO THE OTHER PROVISIONS OF THIS CHAPTER, BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR, AND - (A) INSOFAR AS SUCH LOSS RELATES TO A SHORT TERM CAPI TAL ASSET, IT SHALL BE SET OFF AGAINST INCOME, IF ANY, UNDER THE HEAD CAP ITAL GAINS ASSESSABLE FOR THAT ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET. ITA 307/M/14 3 WHILE THE A.O. DISALLOWED THE LOSS IN VIEW OF SECTI ON 70(3) OF THE ACT WHICH READS AS UNDER:- SET OFF OF LOSS FROM ONE SOURCE AGAINST INCOME FRO M ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. 70 1. SAVE AS OTHERWISE PROVIDED IN THIS ACT, WHERE THE NET RESULT FOR ANY ASSESSMENT YEAR IN RESPECT OF ANY SOURCE FALLING UNDE R ANY HEAD OF INCOME, OTHER THAN CAPITAL GAINS, IS A LOSS, THE AS SESSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINS T HIS INCOME FROM ANY OTHER SOURCE UNDER THE SAME HEAD. (2) WHERE THE RESULT OF THE COMPUTATION MADE FOR AN Y ASSESSMENT YEAR UNDER SECTION 48 TO IN RESPECT OF ANY SHORT-TE RM CAPITAL ASSET IS A LOSS, THE ASSESSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST THE INCOME, IF ANY, AS ARRIVED AT UNDER A SIMILAR COMPUTATION MADE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET. (3) WHERE THE RESULT OF THE COMPUTATION MADE FOR ANY AS SESSMENT YEAR UNDER SECTION 48 TO 55 IN RESPECT OF ANY CAPITAL ASSET (OTHER THAN A SHORT TERM CAPITAL ASSET) IS A LOSS, THE ASSESSEE SHAL L BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST THE INCOME, IF ANY, AS ARRIVED AT UNDER A SIMILAR COMPUTATION MADE FOR THE ASSESSMENT YEA R IN RESPECT OF ANY OTHER CAPITAL ASSET NOT BEING A SHORT TERM CAPITA L ASSET. IN THE OPINION OF A.O., LOSS ARISING FROM TRANSFER OF SHORT-TERM CAPITAL ASSETS (ON WHICH STT IS PAID) IS ASSESSED AT 15% TAX RATE WHILE THE GAIN ARISING FROM TRANSFER OF LONG-TERM CAPITAL ASSETS (ON WHICH STT IS NOT PAID) IS ASSESSED AT 20% TAX RATE AND HENCE THE AO HELD THAT IT CANNOT B E SET OFF IN VIEW OF SECTION 70(3) OF THE ACT VIDE ASSESSMENT ORDERS DATED 23-02 -2013 PASSED U/S 143(3) OF THE ACT. 5.AGGRIEVED BY THE ASSESSMENT ORDERS DATED 23-02-20 13 PASSED U/S 143(3) OF THE ACT, THE ASSESSEE COMPANY CARRIED THE MATTER B EFORE THE CIT(A) AND MADE SUBMISSIONS THAT THE SECTION 70(3) OF THE ACT IS NO T APPLICABLE TO THIS ISSUE AND THE A.O. HAS ERRED IN INVOKING THE PROVISIONS O F SECTION 70(3) OF THE ACT. ITA 307/M/14 4 THE ASSESSEE COMPANY , INTER-ALIA SUBMITTED BEFOR E THE CIT(A) THAT THE ASSESSEE COMPANY HAS RIGHTLY CLAIMED SET OFF OF BRO UGHT FORWARD LOSS ARISEN FROM TRANSFER OF SHORT-TERM CAPITAL ASSET DURING TH E PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2009-10 AGAINST THE GAINS ARISE N FROM TRANSFER OF LONG- TERM CAPITAL ASSETS EARNED DURING THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR 2010-11IN VIEW OF SECTION 74(1)(A) OF THE ACT AND THE AO HAS WRONGLY INVOKED PROVISIONS OF SECTION 70(3) OF THE ACT WHEREAS SET OFF OF THE SAID LOSS IS GOVERNED BY SECTION 74(1)(A) OF THE AC T . THE ASSESSEE COMPANY , INTER-ALIA , SUBMITTED AS UNDER: SECTION 74 WAS AMENDED BY THE FINANCE ACT, 2002 MA DE EFFECTIVE FROM 1-4-2003 AND ACCORDINGLY, IT IS BEIN G MADE APPLICABLE FROM A.Y. 2003-04 ONWARDS. MEMORANDUM EX PLAINING RELEVANT CLAUSE NO. 28 OF THE FINANCE BILL OF 2002 IN RESPECT OF AMENDMENT PROPOSED AND CARRIED OUT IN SEC: 74 IS EN CLOSED HEREWITH. THE OBJECT OF THE SAID AMENDMENT WAS TO R ECTIFY THE ANOMALY BY AMENDING THE SAID SECTION TO PROVIDE THA T 'WHERE IN RESPECT OF ANY A. Y., THE NET RESULT OF COMPUTATION UNDER THE HEAD 'CAPITAL GAIN' IS A LOSS TO THE ASSESSEE, IN SO FAR AS SUCH LOSS RELATES. TO A SHORT TERM ASSETS, IT SHALL BE CARRIE D FORWARD AND SET OFF AGAINST THE INCOME, IF ANY UNDER THE HEAD 'CAPI TAL GAIN' ASSESSABLE FOR THE FOLLOWING A. Y. IN RESPECT OF A NY OTHER CAPITAL ASSETS AND IN SO FAR AS SUCH LOSS RELATES TO A LONG TERM CAPITAL ASSETS, IT SHALL BE CARRIED FORWARD AND SET OFF AGA INST THE INCOME, IF ANY, UNDER THE HEAD 'CAPITAL GAINS' ASSESSABLE F OR THE FOLLOWING A.Y. IN RESPECT OF ANY OTHER CAPITAL ASSETS NOT BE ING A SHORT TERM CAPITAL ASSETS.' THE ABOVE AMENDMENT HAVE MADE THE SITUATION ABUNDANTLY CLEAR THAT B/F STCL AVAILABLE FOR SET OF F AGAINST LTCG EARNED IN THE SUBSEQUENT A.Y. MADE EFFECTIVE FROM 1 .4.2003 END ACCORDINGLY, IT IS BEING MADE APPLICABLE FROM A. Y. 2003-04 ONWARDS. MEMORANDUM EXPLAINING RELEVANT CLAUSE NO. 28 OF THE FINANCE BILL OF 2002 IN RESPECT OF AMENDMENT PROPOS ED AND CARRIED OUT IN SEC. 74 IS ENCLOSED HEREWITH. THE ASSESSEE COMPANY ALSO SUBMITTED THAT SECTION 70 OF THE ACT IS NOT APPLICABLE BECAUSE IT DEALS WITH INTRA-HEAD SET OFF OF CAPITAL LOSSES INCURRED DURING THE SAME YEAR AGAINST GAINS OF THE SAME YEA R AND DOES NOT DEAL WITH THE SET OFF OF BROUGHT FORWARD CAPITAL LOSSES. THE CIT(A) REJECTED THE ITA 307/M/14 5 CONTENTIONS OF THE ASSESSEE COMPANY AND HELD THAT L OSS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSET (ON WHICH STT IS PAID) OF RS. 19,21,095/- AND GAINS ARISING FROM TRANSFER OF LONG-TERM CAPIT AL ASSETS (ON WHICH STT IS NOT PAID) OF RS. 26,46,573/- ARE DIFFERENT HEADS AN D DO NOT COME UNDER SIMILAR COMPUTATION AS GAIN ARISING FROM TRANSFER O F SHORT-TERM CAPITAL ASSET IN THE PRESENT CASE IS ASSESSED @ 15% TAX RATE AND GAIN ARISING FROM TRANSFER OF LONG-TERM CAPITAL ASSET IS ASSESSED AT 20% TAX R ATE AND HENCE APPEAL OF THE ASSESSEE COMPANY WAS REJECTED AND THE ASSESSMENT O RDER OF THE A.O. WAS UPHELD WHEREBY THE CIT(A) HELD THAT BROUGHT FORWARD LOSS INCURRED ON TRANSFER OF SHORT-TERM CAPITAL ASSET(ON WHICH STT W AS PAID ) OF RS. 19,21,095/- IS NOT ALLOWED TO BE SET OFF AGAINST GA IN ARISING FROM SALE OF LONG- TERM CAPITAL ASSET (ON WHICH STT WAS NOT PAID) . T HUS, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE COMPANY VIDE ORDERS DATE D 22.10.2013 6.AGGRIEVED BY THE ORDER DATED 22.10.2013 OF THE CI T(A), THE ASSESSEE COMPANY IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE COMPANY REITERA TED THE SUBMISSION AS HAS BEEN MADE BEFORE THE LOWER AUTHORITIES AND SUBM ITTED THAT SECTION 74(1)(A) OF THE ACT IS APPLICABLE AND SECTION 70 OF THE ACT IS NOT APPLICABLE TO THE ISSUE IN APPEAL AS IT DEALS WITH INTRA-HEAD ADJ USTMENT OF LOSSES INCURRED DURING THE YEAR WHILE SECTION 74(1)(A) DEALS WITH S ET OFF OF BROUGHT FORWARD LOSS INCURRED ON TRANSFER OF SHORT-TERM CAPITAL ASS ET AGAINST THE CAPITAL GAINS EARNED DURING THE YEAR. THE LD. COUNSEL OF THE ASSE SSEE COMPANY RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF CAPITAL INTERNATIONAL EMERGING MARKET FUND V. DDIT(IT) (2013) 145 ITD 491(MUM. TRI B.) TO CONTEND THAT MERELY BECAUSE TWO SET OF TRANSACTION ARE LIABLE FO R DIFFERENT RATE OF TAX, IT DOES NOT MEAN THAT THESE TRANSACTION DOES NOT ARISE FROM SIMILAR COMPUTATION AS CONTENDED BY THE AUTHORITIES BELOW. THE LD. COUN SEL ALSO DREW OUR ATTENTION TO CIRCULAR NO 8 OF 2002, DATED 27-08-20 02 ISSUED BY CBDT WHICH ITA 307/M/14 6 IS EXPLANATORY NOTES ON PROVISIONS RELATING TO DIRE CT TAXES TO CONTEND THAT THE AMENDMENT WERE MADE BY FINANCE ACT, 2002 TO RECTIFY THE ANOMALY AND NOW LOSS ARISING FROM TRANSFER OF SHORT-TERM CAPITAL A SSET CAN BE SET OFF AGAINST ANY CAPITAL GAINS WHILE LOSS ARISING FROM TRANSFER OF LONG-TERM CAPITAL ASSET CAN BE SET OFF ONLY AGAINST LONG-TERM CAPITAL GAINS . 8. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDERS OF AUTHORITIES BELOW AND SUBMITTED THAT CAPITAL LOSSES CAN BE SET OFF AGAINST THE INCOME IF ANY ARRIVED AT UNDER THE SIMILAR COMPUTATION MADE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET. HE SUBMITTE D THAT SECTION 70(3) OF THE ACT IS APPLICABLE AND SECTION 74 OF THE ACT IS NOT APPLICABLE IN THE INSTANT CASE. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL ON RECORD. BEFORE WE PROCEED, IT IS IMPORTANT TO REPRO DUCE THE RELEVANT SECTION:- LOSSES UNDER THE HEAD CAPITAL GAINS SECTION 74(1)(A) 74(1) WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NE T RESULT OF THE COMPUTATION UNDER THE HEAD CAPITAL GAINS IS A LOSS TO THE ASSESSEE, THE WHOLE LOSS SHALL SUBJECT TO THE OTHER PROVISIONS OF THIS CHAPTER, BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR, AND - (A) INSOFAR AS SUCH LOSS RELATES TO A SHORT TERM CAPI TAL ASSET, IT SHALL BE SET OFF AGAINST INCOME, IF ANY, UNDER THE HEAD CA PITAL GAINS ASSESSABLE FOR THAT ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSETS. WHILE THE A.O. DISALLOWED THE LOSS BY REFERRING TO SECTION 70(3) OF THE ACT WHICH READS AS UNDER:- SET OFF OF LOSS FROM ONE SOURCE AGAINST INCOME FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME ITA 307/M/14 7 SECTION 70(3) 70(3) WHERE THE RESULT OF THE COMPUTATION MADE FOR ANY ASSESSMENT YEAR UNDER SECTION 48 TO 55 IN RESPECT OF ANY CAPITAL ASSET (OTHER THAN A SHORT TERM CAPITAL ASSET) IS A LOSS, THE ASSESSEE SH ALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST THE INCOM E, IF ANY, AS ARRIVED AT UNDER A SIMILAR COMPUTATION MADE FOR THE ASS ESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET NOT BEING A SHOR T TERM CAPITAL ASSET. IT COULD BE SEEN THAT SECTION 70 OF THE ACT DEALS WITH THE SET OFF LOSSES FROM ONE SOURCE AGAINST THE INCOME FROM ANOTHER SOURCE U NDER THE SAME HEAD OF INCOME AND DEALS WITH INTRA-HEAD ADJUSTMENT OF LOSS ES DURING THE SAME ASSESSMENT YEAR UNDER THE SAME HEAD OF INCOME. WHI LE SECTION 74 OF THE ACT DEALS WITH THE LOSSES UNDER THE HEAD CAPITAL GAINS AND DEALS WITH THE CARRY FORWARD OF CAPITAL LOSSES AND SET OFF AGAINST THE I NCOME OF THE SUBSEQUENT FINANCIAL YEAR AND SECTION 74(1)(A) OF THE ACT CLEA RLY STIPULATES THAT LOSS ARISING FROM TRANSFER OF SHORT-TERM CAPITAL ASSET W HICH ARE BROUGHT FORWARD FROM EARLIER YEARS CAN BE SET OFF AGAINST THE CAPIT AL GAIN ASSESSABLE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASS ET WHICH COULD BE EITHER LONG-TERM CAPITAL GAIN AND SHORT-TERM CAPITAL GAIN. THE AMENDMENT MADE BY FINANCE ACT, 2002 HAS RECTIFIED THE ANOMALY AS EXIS TED WHICH WAS EXPLAINED BY CIRCULAR NO 8 OF 2002, DATED 27-08-2002 ISSUED B Y CBDT WHICH IS EXPLANATORY NOTES ON PROVISIONS RELATING TO DIRECT TAXES REFERRING TO THE AMENDMENT MADE BY FINANCE ACT, 2002 TO RECTIFY THE ANOMALY AS UNDER: 40. MODIFICATIONS OF PROVISIONS RELATING TO SET O FF OF LONG TERM CAPITAL LOSS 40.1 THE EXISTING PROVISION CONTAINED IN SECTION 70 OF THE INCOME-TAX ACT PROVIDES THAT WHERE THE NET RESULT FOR ANY ASSESSME NT YEAR IN RESPECT OF ANY SOURCE FALLING UNDER ANY HEAD OF INCOME IS A LO SS, THE ASSESSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST HIS INCOME FROM ANY OTHER SOURCE UNDER THE SAME HEAD. FURTHER, SECTION 74 OF THE ITA 307/M/14 8 INCOME-TAX ACT PROVIDES THAT A LOSS UNDER THE HEAD CAPITAL GAINS CAN BE CARRIED FORWARD AND SET OFF AGAINST CAPITAL GAIN IN THE FOLLOWING EIGHT ASSESSMENT YEARS. 40.2 SINCE LONG-TERM CAPITAL GAINS ARE SUBJECT TO L OWER 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, WH ETHER SHORT-TERM OR LONG-TERM , LOSSES ARISING FROM TRANSFER OF LONG-TE RM CAPITAL ASSETS, WILL BE ALLOWED TO BE SET OFF ONLY AGAINST LONG-TERM CAPITA L GAINS. IT IS FURTHER PROVIDED THAT A LONG TERM CAPITAL LOSS SHALL BE CAR RIED FORWARD SEPARATELY FOR EIGHT YEARS TO BE SET OFF ONLY AGAINST LONG-TER M CAPITAL GAINS. HOWEVER, A SHORT-TERM CAPITAL LOSS , MAY BE CARRIED FORWARD AND SET OFF AGAINST ANY INCOME UNDER THE HEAD CAPITAL GAINS. THUS, AS COULD BE SEEN ABOVE FROM THE EXPLANATORY NOTES TO FINANCE ACT, 2002 , THE LOSS ARISING FROM TRANSFER OF SHORT-TERM CAPITAL ASSET CAN BE SET OFF AGAINST ANY CAPITAL GAINS, WHETHER SHORT-TERM CAPI TAL GAINS OR LONG-TERM CAPITAL GAINS . IT FURTHER STIPULATED THAT THE ANOM ALY EXISTING DUE TO LONG-TERM CAPITAL GAINS BEING SUBJECT TO LOWER RATE OF TAX, A RE HENCE-FORTH ALLOWED TO BE SET OFF ONLY AGAINST LONG-TERM CAPITAL GAINS. HENCE , THE CONTENTIONS OF REVENUE IN THIS RESPECT AS ADVANCED IN THIS APPEAL CANNOT BE ACCEPTED. SIMILARLY , THE CONTENTION OF THE REVENUE THAT SHOR T-TERM CAPITAL LOSS CAN NOT BE SET OFF AGAINST LONG-TERM CAPITAL GAINS DUE TO D IFFERENCE IN TAX RATE CAN ALSO NOT BE ACCEPTED BECAUSE OF THE PROVISIONS OF SECTIO N 74(1)(A) OF THE ACT WHICH CLEARLY STIPULATES THAT CARRIED FORWARD LOSSES ARIS ING FROM TRANSFER OF SHORT- TERM CAPITAL ASSET CAN BE SET OFF AGAINST INCOME FR OM CAPITAL GAINS ASSESSABLE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAP ITAL ASSET AND THE DECISION OF THE TRIBUNAL IN THE CASE OF CAPITAL INTERNATIONA L EMERGING MARKETS FUND V. ITA 307/M/14 9 DDIT (2013) 145 ITD 491(MUM.-TRIB.) SUPPORTS THE CO NTENTION OF THE ASSESSEE COMPANY , WHEREBY THE TRIBUNAL HELD AS UNDER: 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL. WE FIND THAT IDENTICAL ISSUE WAS DECIDED IN THE FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN THE CASE OF DWS INDIA EQUITY FUND (SUPR A) IN FOLLOWING MANNER : '5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING SET OFF OF SHORT TERM CAPITAL LOSS ARISING FROM STT PAID SHARE TRANSACTIO NS AGAINST SHORT TERM CAPITAL GAIN ARISING FROM NON STT TRANSACTIONS . THE ASSESSEE HAD EARNED SHORT TERM CAPITAL GAIN OF RS.40,25,93,7 17/- FROM NON STT TRANSACTIONS AND IT HAD INCURRED SHORT TERM CAP ITAL LOSS OF RS.1,26,45,10,006/- FROM STT PAID TRANSACTIONS. THE ISSUE IS WHETHER SHORT TERM CAPITAL LOSS CAN BE SET OFF AGAI NST SHORT TERM CAPITAL GAIN MENTIONED ABOVE. UNDER THE PROVISIONS OF SECTION 70(2), SHORT TERM CAPITAL LOSS ARISING FROM ANY ASS ET CAN BE SET OFF AGAINST SHORT TERM CAPITAL GAIN ARISING FROM ANY OT HER ASSET UNDER A SIMILAR COMPUTATION MADE. THE AO HELD THAT SINCE GAIN WAS FROM SHARES ON WHICH NO STT WAS PAID AND LOSS FROM STT P AID TRANSACTIONS, THESE FELL IN DIFFERENT CATEGORIES AN D COULD NOT BE SET OFF AGAINST EACH OTHER. WE FIND THAT THIS ASPECT HA S ALREADY BEEN EXAMINED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FIRST STATE INVESTMENTS (HONG KONG) LTD. V. ADIT(SUPRA), IN WHICH IT HAS BEEN HELD THAT THE PHRASE 'UNDER SIMILAR COMPUTATIO N MADE' REFERS TO COMPUTATION OF INCOME, THE PROVISIONS FOR WHICH ARE CONTAINED UNDER SECTIONS 45 TO 55A OF THE ACT. THE TRIBUNAL A LSO HELD THAT THE MATTER OF COMPUTATION OF INCOME WAS A SUBJECT WHICH CAME ANTERIOR TO THE APPLICATION OF RATE OF TAX WHICH ARE CONTAIN ED IN SECTION 110 ITA 307/M/14 10 TO 115BBC. THEREFORE, MERELY BECAUSE THE TWO SET OF TRANSACTIONS ARE LIABLE FOR DIFFERENT RATE OF TAX, IT CANNOT BE SAID THAT INCOME FROM THESE TRANSACTIONS DOES NOT ARISE FROM SIMILAR COMPUTATION MADE AS COMPUTATION IN BOTH THE CASES HAS TO BE MAD E IN SIMILAR MANNER UNDER THE SAME PROVISIONS. THE TRIBUNAL THER EFORE, HELD THAT SHORT TERM CAPITAL LOSS ARISING FROM STT PAID TRANSACTIONS CAN BE SET OFF AGAINST SHORT TERM CAPITAL GAIN ARISING FROM NON SIT TRANSACTIONS. THE CASE OF THE ASSESSEE IS IDENTICAL . THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL , WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS, T HEREFORE, UPHELD. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D.' RESPECTFULLY, FOLLOWING THE ABOVE MENTIONED ORDER O F THE TRIBUNAL, WE DECIDE GROUND NO. 7 IN FAVOUR OF THE ASSESSEE. THUS IN VIEW OF OUR ABOVE DISCUSSIONS AND REASONING , WE HOLD THAT ASSESSEE COMPANY HAS RIGHTLY CLAIMED THE SET OFF OF BROUGHT FORWARD LOSS ARISEN FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSET OF RS.19, 21,095/- INCURRED DURING THE ASSESSMENT YEAR 2009-10 TO BE SET OFF AGAINST THE G AINS ARISING FROM TRANSFER OF LONG-TERM CAPITAL ASSET EARNED DURING THE PREVI OUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2010-11 WHICH HAS BEEN WRONGLY DEN IED BY THE A.O. AND CONFIRMED/SUSTAINED BY THE CIT(A). HENCE, WE SET A SIDE THE ORDERS OF AUTHORITIES BELOW AND DIRECT FOR ALLOWING THE SET O FF OF BROUGHT FORWARD LOSS ARISING FROM TRANSFER OF SHORT-TERM CAPITAL ASSET OF RS.19,21,095/- INCURRED DURING THE ASSESSMENT YEAR 2009-10 AGAINST THE GAIN S ARISING FROM TRANSFER OF LONG-TERM CAPITAL ASSETS EARNED DURING THE PREVIOU S YEAR RELEVANT TO THE ASSESSMENT YEAR 2010-11. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE COMPANY IS ALLOWED ITA 307/M/14 11 ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2015. # $% &' 16-12-2015 ( ) SD/- SD/- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 16-12-2015 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI