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2022 (4) TMI 684 - AT - Income TaxSetting off the long term capital loss arising on sale of shares not subject to STT against long term capital gain arising from sale of Shares subjected to STT exempt from tax under section 10(38) - whether the assessee was legally correct in claiming carry forward of full amount of losses without setting of such losses against the Long-Term Capital Gain exempted u/s 10(38)? - HELD THAT:- Having considered the scheme of law as also the interpretation taken in various legal precedents discussed above including the binding decision of Hon’ble Jurisdictional High Court of Gujarat in Kishorbhai Bhikhabhai Virani [2015 (2) TMI 807 - GUJARAT HIGH COURT] we are inclined to hold that the assessee has rightly claimed the carry forward of Long-Term Capital Loss (STT not paid) and Short-Term Capital Loss without setting off against the exempted Long-Term Capital Gain (STT paid) u/s 10(38). At this stage we would also like to make an additional mention that even if assume, without accepting, that the revenue’s contention is correct in setting off losses against exempt income [long term capital gain u/s 10(38)], there would be an absurd outcome. We find that the lower authorities are not justified in setting off losses against the exempted long-term capital gain thereby reducing the quantum of carry forward of losses claimed by the assessee. We therefore direct the Ld. AO to allow full carry-forward of losses as claimed by the assessee without set-off against exempted long-term capital gain. Appeal of assessee allowed.
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