Long term capital loss

This query is : Resolved

Guest

Guest (Querist)

11 August 2010 WHETHER LONG TERM CAPITAL LOSS OF SHARES CAN BE SET OFF AGAINST THE LONG TERM CAPITAL GAIN ON SALE OF BUILDING ARISING IN THE SAME YEAR AS PER SECTION 74 (1) (b) OF THE INCOME TAX ACT, 1961?

CA. Pradeep Nayak

CA. Pradeep Nayak (Expert)
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11 August 2010 Any capital gains arising on sale of shares on which STT is paid is exempt u/s 10(38). Loss arising from such transactions cannot be carried forward or set off against other taxable transactions which are not exempt. Hence, set off is not possible.

If the share sale transaction is not done through stock exchange & no STT is paid, such gains can be used for set off against other Long term capital loss such as one arising on sale of building.

Guest

Guest (Querist)

20 August 2010 thanks for ur reply...
But still it is subject to discussion that whether the same is fall under section 74 (1) (b) of the Income Tax Act?

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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20 August 2010 Loss must not be from exempt source of income - The provisions of sections 70 and 71 relating to set off of loss from one head against income from another head contemplate loss from a source the income from which is liable to tax. If income from a source is altogether exempt from tax, loss from that source cannot be set off against income from a different source or income under a different head - CIT v. S.S. Thiagarajan [1981] 129 ITR 115 (Mad.).

Aditya Maheshwari

Aditya Maheshwari (Expert)
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20 August 2010 Since sale of share held for more than one year sold on exchange is exempt loss cannot be used for set off of profit.

Guest

Guest (Querist)

21 August 2010 thanks Aditya...

Aditya Maheshwari

Aditya Maheshwari (Expert)
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21 August 2010 U can also thank by using the thank user icon.