Loss from Sale of Shares and Mutual Funds on which STT paid can’t be set off against LTCG arising out as per S.70(3): ITAT

Read More: https://www.taxscan.in/loss-from-sale-of-shares-and-mutual-funds-on-which-stt-paid-cant-be-set-off-against-ltcg-arising-out-as-per-s-703-itat-read-order/247446/

Clipped from: https://www.taxscan.in/loss-from-sale-of-shares-and-mutual-funds-on-which-stt-paid-cant-be-set-off-against-ltcg-arising-out-as-per-s-703-itat-read-order/247446/?utm_source=izooto&utm_medium=push_notifications&utm_campaign=Loss%20from%20Sale%20of%20Shares%20and%20Mutual%20Funds%20on%20which%20STT%20paid%20can%27t%20be%20set%20off%20against%20LTCG%20arising%20out%20as%20per%20S.70(3):%20ITAT

In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that Loss from the sale of shares and mutual fundson which Securities Transaction Tax (STT) paid can’t be set off against Long Term Capital Gian ( LTCG ) arising out as per Section 70(3) of the Income Tax Act, 1961.

The revenue challenged the set off of long-term capital loss arising from STT-paid transactions against long-term capital gain arising from the sale of the flat.

Shri Sujan Azad Parikh, the assessee set off thelong-term capital gain earned from the sale of Skylark flatagainst current year losses of Rs. 53,97,182, on account of long-term capital loss on the sale of mutual funds and carried forward long-term capital loss of Rs. 1,59,75,965, on account of sale of mutual funds during the previous years.

The AO denied the claim of setting off a long-term capital loss against the long-term capital gain from the sale of the flat. In appeal, the CIT(A) vide impugned order following the decision of the coordinate bench of the Tribunal in M/s Raptakos Breet & Co. Ltd., allowed the claim of the assessee.

It was observed that the Kerala High Court in Appolo Tyres Ltd vs DCIT, held that Long-term capital loss arising out of the sale of shares and units of mutual funds on which STT was paid and covered under section 10(38) could not be set off against long-term capital gain arising out of the sale of land as per section 70(3) of the Act. 

A Coram comprising of Shri Prashant Maharishi, Accountant Member and Shri Sandeep Singh Karhail, Judicial Member observed that the application of section 703) by the assessee is incorrect and illegal. The Assessing Officer appreciated the objection, applied the law to the circumstances of the case, and recorded the findings.

In light of the above-said decision of the Kerala High Court, the Tribunal held that “the claim of the assessee of set-off of long-term capital loss arising from STT paid transactions against long-term capital gain arising from the sale of the flat is rejected.” The appeal by the Revenue was partly allowed.To Read the full text of the Order CLICK HERE

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Jt. Commissioner of Income Tax vs Shri Sujan Azad Parikh

Counsel for Appellant:   Shri Satish Modi

Counsel for Respondent:   Shri Ajay Singh

CITATION:   2023 TAXSCAN (ITAT) 211

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