TMI Blog1991 (12) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... that, in the previous year relevant to the asst. year under appeal, the assessee had long-term capital gain of Rs. 1,27,654. The company also suffered loss of Rs. 1,19,522 on sale of short-term capital asset. The assessing officer while arriving at the total taxable income of the assessee, adjusted the short-term capital loss against the long-term capital gain. He submitted that, the tax rate on long-term capital gains of companies, is only 40%, while the normal rate of tax ranges from 50% and above. The lower rate of tax on long-term capital gain is provided specifically and this could not be denied to the assessee. He pleaded that, the calculation of the tax has to be made separately for other incomes and for the long-term capital gain. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amply clear from the plain reading of the section, for the benefit of lower rate of taxation cannot be denied to the assessee. He placed reliance on the decision of the Third Member in Second Addl. ITO v. C.J. Shah [1984] 10 ITD 151 (Bom.). Reliance was placed on the ruling of the Delhi High Court in Mahalaxmi Sugar Mills Co. Ltd. v. CIT [1974] 94 ITR 592. Shri Dinodia referred to the Third Member's decision in C.J. Shah's case and submitted that, he finds that, the claim as advanced by the assessee gets support from that decision. He finally submitted that, in view of the plain reading of the Act and the decision of the Third Member in the case of C.J. Shah, his plea should be upheld. 11. Shri Jha for the revenue contended that, the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an asset, which is not a short-term capital asset, then, the assessee is entitled to have such a loss set off against the income from a similar computation of an asset that is not a short-term capital asset. Section 71 refers to the procedure for setting off loss under one head against the income from any other head of income. Sub-section (1) of section 71, refers to a situation of the assessee having loss under any head other than capital gains and having no income under the head capital gains. In that situation, the assessee is entitled to set off his loss against his income that is assessable and arising under any other head of income. Sub-section (2) talks of a situation where, the assessee has suffered loss under any head of income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the short-term loss against the long-term capital gain. The first of the alternatives do not apply to the present case. The second alternative is attracted. Since it is for the assessee to stake his right or claim for the adjustment of the loss against the income, and if he chooses not to take shelter under the second alternative, then, it cannot be thrust upon him by the tax administrators. The assessee, therefore, by not exercising his right or claim of adjustment of the loss under section 70, he can bypass its provisions. Section 71, has provided for three methods for making the claim or enforcing one's right for adjustment of the loss suffered under one head of income against the income from any other head. First, the assessee suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. According to this alternative, the assessee can stake his right or claim for the adjustment of the short-term capital loss against his income from any head other than from capital gains. The assessee in the instant case, has suffered a loss on short-term capital asset, and has income from other sources and from long-term capital gain. The assessee has staked its right or claim for adjustment of the short-term capital loss against its income from other sources. The third alternative allows or permits such a claim or right being entertained by the tax administrators and therefore, the plea of the assessee is justified. Accordingly we hold that, the assessee has the right or claim to get its short-term capital loss of Rs. 1,19,522 adjusted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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