TMI Blog1987 (4) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... see, a private limited company, disclosed capital gains of ₹ 3,10,200 but claimed set off of capital loss of ₹ 3,17,500 sustained by it during the assessment year 1957-58 on sale of shares to three associate concerns. It was maintained by the assessee that the loss was sustained in the previous year relevant to the assessment year 1957-58 and the same should beset off against the capital gains in the assessment year in question. The Income-tax Officer disallowed the claim for set off on the footing that when in the assessment year 1957-58 the loss was claimed, it was excluded in the computation of income as capital loss and the Appellate Assistant Commissioner while disposing of the assessee's appeal had stated that it was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of loss was not genuine while disposing of the appeal for the assessment year 1957-58 and ultimately allowed the assessee's claim. At the instance of the Revenue, four questions were referred for the opinion of the High Court : 1. Whether, on the facts and in the circumstances of the case, the Income-tax Officer's order for the assessment year 1957-58 had not merged in the Appellate Assistant Commissioner's order in which the Appellate Assistant Commissioner had given a clear finding that the loss was notional ? 2. If the answer to the above question is in the negative, whether any loss could be said to have been determined for the assessment year 1957-58, which could be carried forward to subsequent years ? 3. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement just transferred the shares held by one company to another company under their control and management. Of course, the transfer was not a trading activity. In these circumstances, I hold that the Income-tax Officer has rightly disallowed the loss claimed, the same being notional capital loss. The High Court found that both the Income-tax Officer as also the. Appellate Assistant Commissioner had found that the loss was a capital loss. The High Court further found: In our opinion, this section (section 80 of the 1961 Act) cannot apply to a case where in law a return could not have been filed under section 139. That is to say in relation to assessment years prior to the coming into force of the Income-tax Act, 1961, a return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t off in accordance with the provisions of that sub-section, the portion not so set off shall be carried forward to the following year and set off against capital gains for that year, and if it cannot be so set off, the amount thereof not so set off shall be carried forward to the following year and so on, so however, that no such loss shall be carried forward for more than eight years ...... (3) When, in the course of the assessment of the total income of any assessee, it is established that a loss of profits or gains has taken place which he is entitled to have set off under the provisions of this section, the Income-tax Officer shall notify to the assessee by order in writing the amount of the loss as computed by him for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets shall be carried forward to the following assessment year and set off against the capital gains, if any, relating to capital assets other than short-term capital assets assessable for that assessment year and, if it cannot be so set off, the amount thereof not so set off shall be carried forward to the following assessment year and so on : Provided that where, in the case of any assessee not being a company, the net loss computed in respect of such capital assets for any assessment year does not exceed five thousand rupees, it shall not be carried forward under this section. (b) Notwithstanding anything contained in the Indian Income-tax Act 1922 (11 of 1922), any loss computed under the head 'Capital gains' in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in pursuance of a return filed under section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) of section 74 or sub-section (3) of section 74A. Reading the provisions of section 74(1)(b) and section 80 together, we agree with the submission advanced on behalf of the assessee that the benefit conferred under section 24 of the 1922 Act continued to be given effect to under the 1961 Act and notwithstanding the wording of section 80 of the later Act, the High Court was right in holding that the claim of set off was admissible. In our view, on a bare analysis of these provisions, and without reference to anything more, this appeal can be disposed of. We find t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
