TMI Blog2014 (9) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 71 does not give any option to the assessee to carry forward business loss separately despite there being income under the head capital gain. Section 71(2) contemplates a situation where in respect of any assessment year, the net result of computation under any head of income , other than "capital gain" is a loss and assessee has income assessable under the head "capital gains", in such situation, such loss may, subject to provision of Chapter VI (section 66 to 80), be set off, for and from assessment year 1992-93, against assessee’s income, if any, assessable for that assessment year under any head of income including the head "capital gains" (whether relating to short term capital gain asset or any other capital asset). Thus, provisions of section 71(2) cannot be construed to give option to the assessee to carry forward business loss separately without set off of income arising out of short term capital gain. Only on the basis of word "may" as appearing in section 71(2), such benefit cannot be granted to the assessee as has been sought by it. The language of the provision is clear. No option has been given to the assessee to carry forward loss under any other head to subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee owned two premises, one of which was sold during the year. The position of the block of assets is described in para 2.5 of the order of Ld. CIT(A) and being relevant for disposal of the appeal is described as under: Sr. No. Assets Rate % (P.A) WDV 01.04.2006 Additions during the year Deletions during the year Net Block of Asset Depreciation allowable WDV 31/3/2007 1. Shop Premises M9 10 21,933,828.00 2,977,989.21 0 24,911,817.21 2. Office premises 10 1,428,116.39 34,500,000.00 (33,071,883.61) (BLOCK OF ASSET) 23,361,944.39 2,977,989.21 34,500,000.00 (8,160,066.40) 3.1 It can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng more under the MAT was shown to be payable. 3.4 In the assessment order also the income of the assessee under normal provisions has been computed at ₹ 79,02,680/- as against income computed in MAT of ₹ 2,78,08,632/-. Therefore, it is clear that the assessee in the present case is assessable at the income determined under section 115JB irrespective of the fact that whether view taken by the assessee or AO is correct. 3.5 The A.O while computing the capital gain of the assessee firstly did not reduce the amount of ₹ 29,77,989/- from the capital gain assessable as short term capital gain. Secondly, he has denied the claim of the assessee that its business loss should be carried forward to next year and capital gain should be assessed on stand alone basis for this year. According to A.O capital gain shown by the assessee have to be set off against business loss of the assessee and, therefore, assessee will be entitled to carry forward the resultant business loss after setting off of capital gain. The computation of the AO in the assessment order is as under: Income from business /profession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een rendered on section 71(1) but he submitted that following observations of their Lordships from the said decision will be relevant to construe that assessee has such option as per sub-section (2) of section 71. It would appear from the above that section 70 talks of set off of loss from one source against the income from another source under the same head of income. There is no difficulty in understanding the provisions of this section. Section 71 talks of set off of loss from one head against income from another head. As noted above, it is the assessee's contention that it has an option not to set off business loss against income under other head. On the contrary, the Revenue's contention is that there is no option of any sort as contended on behalf of the assessee, in the matter of set off of loss under one head against income under other head of the same year. It is only in the case of setting off of loss against the income under the head Capital gains that an option is given to the assessee in view of the expression if the assessee so desired used in sub-section (2) of section 71 of the Act. On a careful reading of section 71 of the Act, it is very much apparen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets. 6.1 From perusal of aforementioned provision, it will be clear that section 50(2) will not be applicable to the facts of the present case as block of assets has not ceased to exist for the reasons that all the assets in the blocks are not transferred during the previous year. According to section 50(1), where full value of the consideration received or accruing as a result of transfer of asset together with the aforementioned value of such consideration received or accrued as a result of the transfer of any other capital asset falling within the block of assets during the previous year, exceed aggregate of the following namely: - expenditure incurred wholly and exclusively in connection with such transfer or transfers. - the wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t section 71(1) will not be applicable to the case of the assessee as in the present case assessee has income under the head capital gain. Section 71(2) will be applicable as in the present case the assessee has computed loss under the head income from business or profession . It is the contention of Ld. AR that word used in section 71(2) may gives an option to the assessee so as to whether adjust the said loss against capital gain or not. Thus, according to assessee it is entitled to carry forward business loss separately and to get assessed capital gain in the year under consideration. 7.2 In our considered opinion there is no force in the claim made by the assessee. Firstly, sub-section (2) of section 71 does not give any option to the assessee to carry forward business loss separately despite there being income under the head capital gain. Section 71(2) contemplates a situation where in respect of any assessment year, the net result of computation under any head of income , other than capital gain is a loss and assessee has income assessable under the head capital gains , in such situation, such loss may, subject to provision of Chapter VI (section 66 to 80), be set of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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