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TMI Blog2018 (5) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds raised by the assessee per its appeal are as under:- 1. For that the order of assessment passed u/s. 143(3) and sustained by the Ld. CIT(A), Durgapur is arbitrary, illegal and bad both in law and fact. 2. For that the Ld. CIT(A), Durgapur, in consideration of the facts and circumstances of the case, erred in sustaining order of the AO in making adjustment of unabsorbed business loss of Rs. 16,64,524/- of the earlier year against capital gain. 3. For that the Ld. AO in consideration of facts and circumstances of the case is not justified to adjust unabsorbed business loss of the earlier year against capital gain during the year. 4. For that the Ld. AO in consideration of the facts and circumstances of the case, erred in cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought forward business loss. The AO set off of the brought forward unabsorbed business loss against the LTCG income declared by assessee. 5. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that as per the provision of Section 72 of the Act, the brought forward business loss of Rs.16,64,524/- only can be set off against the business income. Therefore, the action of AO i.e. setting off the brought forward business loss against the LTCG income is contrary to the provision of the Act. However, Ld. CIT(A) disregarded the contention of assessee and confirmed the order of AO after having reliance on the order of ITAT Mumbai Tribunal in the case of Digital Electronics Ltd. vs. ACIT (2011) 135 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward loss against the LTCG income declared by assessee. Thus, AO levied tax on the business of Rs.13,36,761/- as well as charged LTCG tax @ 20% on the remaining amount of LTCG income i.e. Rs. 69,65,974.00 (Rs. 86,30,498.00 - 16,64,542.00). The view taken by the AO was upheld by the Ld. CIT(A). Now the issue before us arises for our consideration so as to whether the impugned loss of Rs.16,64,824/- i.e. unabsorbed brought forward loss should be set off against the business income of Rs.13,36,761/- and balance of Rs.3,27,763/- against the LTCG income. At this juncture, we find important to reproduce the provision of Sec 72 of the Act, which reads as under:- "Carry forward and set off of business losses. 3872. 39[(1) Where for any assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the profits and gains, if any, of that business or any other business carried on by him and assessable for that assessment year ; and (b) if the loss cannot be wholly so set off, the amount of loss not so set off shall, in case the business so re-established, reconstructed or revived continues to be carried on by the assessee, be carried forward to the following assessment year and so on for seven assessment years immediately succeeding.] (2) Where any allowance or part thereof is, under sub-section (2) of section 32 or sub-section (4) of section 35, to be carried forward, effect shall first be given to the provisions of this section. (3) No loss 42[(other than the loss referred to in the proviso to sub-section (1) of this sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, of that business or profession carried on by him and assessable for that assessment year'. Thus, for setting off the income, while the loss to be carried forward has to be under the head 'Profits and gains of business or profession', the gains against which such loss can be set off, has to be profits of 'any business or profession carried on by him and assessable in that assessment year'. In other words, there is no requirement of the gains being taxable under the head 'Profits and gains of business or profession' and, thus, as long as gains are 'of any, business or profession carried on by the assessee and assessable to tax for that assessment year', the same can be set off against loss under the he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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