TMI Blog2010 (11) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 10(38) of the Act. In the facts of the present case, the assessee during the year under consideration had disclosed income from long term capital gains at ₹ 6,17,14,300/-. The Assessing Officer was of the view that brought forward losses accruing from sale of shares in the relevant assessment years totaling ₹ 1,79,71,926/- were required to be adjusted against income earned from profit on sale of shares. The Assessing Officer requisitioned the assessee why the said adjustment should not be made for. In reply, it was clarified by the Ld. AR for the assessee that income from long term capital gains on sale of shares relating to the present year were exempt u/s 10(38) of the Income Tax Act and first the said exemption u/s 10(38) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be allowed to be set off against the business income which may nullify the mandate of section 14A, cannot be accepted. Disallowance u/s 14A requires finding of incurring of expenditure where it is found that the earning exempted income no expenditure has been incurred, disallowance under section 14A cannot stand. In the present case finding on this aspect, against the Revenue, is not shown to be perverse. Consequently, disallowance is not permissible. 4. We have heard the rival contentions and perused the records. The assessee in the present case had shown income from long term capital gains at ₹ 6.17 crores. The said income was claimed as exempt under the provisions of section 10(38) of the Income Tax Act, which has been all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular income does not form part of the total income under any of the heads enumerated u/s 14 of the Act, the same is not includible u/s 14 of the Act and the same would not be aggregated as gross total income of the year against which the deduction under Chapter VI of the Act are to be allowed or against which setting of the losses is to be carried out. The assessee during the year under consideration had claimed the income from long term capital gains on sale of shares as exempt u/s 10(38) of the Act and once the same has been accepted as exempt under the said provisions of the Act by the Assessing Officer, we find no merit in the stand of the Assessing Officer and CIT(A) that the brought forward losses carried forward by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slature in introducing clause (38) to section 10 of the Act. 6. Accordingly, in the facts of the present case, we hold that the assessee is entitled to the benefit of carry forward of losses on the sale of shares amounting to ₹ 1.91 Crores to the succeeding years, against income, if any, under the said head. We direct the Assessing Officer not to carry out any adjustment of brought forward losses on the sale of shares against the income from long term capital gain earned during the year. The ground No.1 raised by the assessee is allowed. 7. The issue in ground No.2 raised by the assessee is against the disallowance made u/s 14A of the Act. The assessee during the year under consideration had earned dividend income of ₹ 30, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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