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2021 (9) TMI 708 - HC - Income TaxDeduction of advances written off - Deduction being advances paid to Continental Group of Companies for supply of machinery and written off during the year - whether allowable capital expenditure? - HELD THAT:- The assessee has filed appeal for the Assessment Year 2003-04 [2021 (9) TMI 736 - KERALA HIGH COURT] and question no.4 in the said appeal relates to disallowing the deduction of advances written off by the assessee. The Counsel appearing for the parties state that the same reason could be adopted for answering the instant question as well. For the reasons recorded in question no.4 therein, the instant question is answered in favour of the Revenue and against the Assessee. Setting off long term capital loss on sale of shares and units of mutual funds against the long term capital gain earned on the sale of land - application of Section 10(38) on one hand and on another the extent to which set-off under Section 70(3) read with Sections 48 to 55 of the Act could be claimed by the assessee - Whether assessee is mixing up heterogeneous heads as homogeneous heads and claiming the set-off? - HELD THAT:- The literal meaning of Section 70(3) clearly shows that both for including the loss against set-off and setting of loss against income the computation must have been made under Sections 48 to 55 of the Act. The language of Section 70(3) is clear and unambiguous. In the understanding of this Court, the Parliament intended homogeneous entries to adjust the loss or profit against one another and not introduce heterogeneous elements or entries. Hence, the interpretation adopted by the assessee would give benefits not otherwise intended by the Section. The effort of the assessee, in our view, includes an excluded claim, i.e., a heterogeneous claim under Section 70(3) of the Act, by claiming that the homogeneity of long term capital gain is satisfied by the assessee. We are of the view that the application of Section 70(3) by the assessee is incorrect and illegal. AO has very clearly appreciated the objection, applied the law to the circumstances of the case, and recorded the findings. As we have noted supra the CIT (Appeals) and the Tribunal have merely adopted the conclusions recorded by the Assessing Officer. After independently examining the implication of each one of the Sections and the principle laid down by the Supreme Court in Harprasad & Co. case [1975 (2) TMI 2 - SUPREME COURT], we are of the view that no exception to the view taken by the Assessing Officer, as confirmed by the CIT (Appeals) and Tribunal could be taken by us as well. - Decided in favour of revenue.
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