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2020 (8) TMI 508 - AT - Income TaxLong-term capital loss - AO in not allowing carry forward of long term capital loss claimed by the appellant - entitled to set off and/or carry forward long term capital loss - CIT(A) holding that since the ‘income’ includes ‘loss’, hence section 10(38) will not only apply to STT paid transactions generating positive income but also similar transactions generating negative income (loss) - Whether source of income arising from transfer of shares held as long term capital asset is not exempt from tax? - HELD THAT:- Provisions of Section 10 (38) of the income tax act, any ‘income‘ arising from the transfer of a long-term capital asset , being an equity shares in the company or unit of an equity oriented fund, shall not be included in the total income of the previous year of any person, provided the transaction of the sale of such shares or equity are subject to securities transaction tax, if the same transaction is entered into after chapter VII is enacted. There is no dispute between the assessee and the revenue that if the ‘income‘ arising on the sale of such shares is positive i.e. profit/gain, it would be exempt under this Section. But dispute is that when assessee incurs ‘Loss‘ on transfer of such long term capital assets , whether same shall be ignored for the purpose of computation of the income of the assessee or shall be considered part of the income computation mechanism and should be allowed to be set-off in accordance with other provisions of the act and shall also be carried forward. This issue has arise in because in this year assessee has incurred long- term capital loss on sale of shares which was subject to securities transaction tax. The assessee wants that this loss should be allowed to enter into the computation of total income of the assessee and if is not set-off against any other capital gain in that year, then it should be allowed to be carried forward in future years. In nutshell, the controversy is exemption provisions u/s 10 (38) that ‘income‘ arising from transfer of a long-term capital asset shall only include positive i.e. Gain or the negative i.e. Losses also. Lower authorities have not committed any error in ignoring the loss incurred by the assessee on sale of shares and securities, on which assessee has paid securities transaction tax, holding that when the income is exempt, then both positive income as well as the negative loss , both, do not enter into the regular computation of the assessee. Accordingly, the orders of the lower authorities are upheld wherein the assessee has been denied the set of and or carry forward of long-term capital loss on transfer of shares on which the assessee has paid securities transaction tax and are covered by the provisions of Section 10 (38) of the Act Assessee has also slipped in its written submission that when there are two views on an issue, the opinion which is favourable to the assessee should be adopted. As given our thoughtful consideration to this issue and find that when honourable Supreme Court has decided on issue that income includes losss also, it decides from the day one when the law is enacted. Therefore, now there are no two views on the issue so, we are constrained to take a view in favour of the revenue and against the assessee.
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