TMI Blog2011 (5) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore Commissioner erred in assuming the order under section 263 because these errors can only be assumed when the order of the AO is erroneous and prejudicial to the interest of the revenue whereas in the present case, the order was not erroneous at all - Decided in the favour of the assessee - I.T.A No.3382/ Mum/2010 - - - Dated:- 31-5-2011 - Shri Pramod Kumar, Shri V.Durga Rao, JJ. Dinesh Vyas, for the appellant Jay Kumar, for the respondent O R D E R Per Pramod Kumar: 1. By way of this appeal, the assessee appellant has challenged correctness of learned Commissioner s order dated 25th March, 2010 passed under section 263 of the Income tax Act, 1961, for the assessment year 2005-06, on the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long term capital gain after allowing deduction under section 54EC. In effect thus, not only the entire long term capital gains were set off against long term capital loss brought forward but also an amount of Rs.210,82,028 remained to be set off, out of long term capital loss so brought forward, and was carried forward as such. Subsequently, however, learned Commissioner called upon the assessee to show cause as to why deduction allowed not be subjected to revision proceedings on the ground that brought forward long term capital loss ought to have been adjusted before granting of deduction under section 54EC. In the opinion of the learned Commissioner, the AO, by allowing deduction under section 54EC prior to setting off long term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of setting off brought forward long term capital loss is to be done before granting deduction under section 54EC. He submits that while deduction under section 54EC is to be granted at the time of computing the income under the head capital gains , the exercise of setting off the brought forward long term capital loss is to be done after the income under the head capital gains is so computed. He also submits that by virtue of section 54EC, effectively the long term capital gain, when invested in specified bonds and subject to fulfillment of conditions associated therewith, is an income exempt from tax and an income which is exempt from tax cannot be involved in any exercise of the setting off the brought forward loss. It is his cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis, where the investment is less than the capital gains in question. It is thus clearly an exemption provision in nature inasmuch as it specifies the situation in which capital gains, otherwise taxable, will not be taxed. In effect when and to the extent section 54EC comes into play, the related capital gains cannot be part of chargeable income under the head income from capital gains . Section 74 which deals with carry forward and set off of loss under the head capital gains , provides that when a long term capital loss is carried forward, it shall be set off against income if any, under the head capital gains assessable for that assessment year in respect of any other capital asset not being short term capital asset . In other wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
