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DCIT, Central Circle-6 M/s. Rolta Shares World Trade Annexe, M.K. Road Vs. Centre, Cuffe Parade, Colaba Mumbai 400020 Mumbai 400005
October, 04th 2012
                           "D" Bench, Mumbai

                 Before Shri D. Manmohan, Vice President
                and Shri N.K. Billaiya, Accountant Member

                          ITA No. 3421/Mum/2010
                          (Assessment Year: 2006-07)

 DCIT, Central Circle-6                M/s. Rolta Shares & Stock P. Ltd.
 9th Floor, Old CGO Building     Vs.   Unit No. 10, 17th Floor, World Trade
 Annexe, M.K. Road                     Centre, Cuffe Parade, Colaba
 Mumbai 400020                         Mumbai 400005
                                       PAN - AAACR 3156 M
          Appellant                                 Respondent

                    Appellant by:      Shri A.B. Koli
                    Respondent by:     Shri Shekhar Gupta

                    Date of Hearing:       03.10.2012
                    Date of Pronouncement: 03.10.2012


Per D. Manmohan, V.P.

     This appeal is filed at the instance of the Revenue and it pertains to
A.Y. 2006-07.

2.    The only ground urged by the Revenue reads as under: -

     "1. On the facts and in the circumstances of the case and in law, the
         Ld CIT(A) erred in directing set off of long term capital loss of
         Rs.1,17,04,550/- against short term capital gain of
         `4,11,06,974/- in violation of the provisions of section 74(i)(b) of
         the Act."

3.    The assessee company is a share broker. For the year under
consideration it declared taxable income of `2.36 crores after setting off the
long term capital loss of ` 1.17 crores against the short term capital gain of
`4.11 crores. The case was taken up for scrutiny. In the light of the
provisions of section 74(i)(b) of the Act the AO was of the opinion that long
term capital loss cannot be set off against short term capital gain in view of
the amendment to the said provision. He accordingly completed the
assessment by computing the total income at `3,70,89,880/-. On an appeal
                                       2                  ITA No. 3421/Mum/2010
                                                   M/s. Rolta Shares & Stock P. Ltd.

filed by the assessee the learned CIT(A) noticed that the appellant suffered
capital loss in A.Y. 2002-03. The loss included long germ capital loss and
short term capital loss. The said loss was set off against long term and short
term capital gains for A.Y. 2003-04 and the unadjusted loss was carried
forward for further set off against assessment years 2004-05 and 2005-06.
Since the matter pertaining to assessment years 2004-05 and 2005-06 were
pending before the Settlement Commission, which in turn refused carried
forward of capital loss of 2002-03, assessee had carried forward the loss for
A.Y. 2006-07 and claimed set off. In his opinion the provision, which was
amended by Finance Act 2002 with effect from 01.04.2003, applies to losses
suffered in A.Y. 2003-04 or afterwards but losses suffered in earlier years
can be carried forward and adjusted. Accordingly he directed the AO to allow
the set off in A.Y. 2006-07. Aggrieved Revenue is in appeal before us.

4.      At the time of hearing the learned counsel for the assessee submitted
that the issue stands squarely covered by the decision of the ITAT Mumbai
Special Bench in the case of Kotak Mahindra Capital Co. Ltd. vs. ACIT (24
Taxman 100) wherein the Bench observed as under: -

     "46. In view of the above discussion, we are of the view that the
     provisions of section 74 which deal with carry forward and set off of
     losses under the head "capital gains" as amended by Finance Act,
     2002, will apply only to the unabsorbed capital loss for the
     assessment year 2003-04 and onwards and will not apply to the
     unabsorbed capital losses relating to the assessment years prior to
     the assessment year 2003-04. Accordingly, we answer the question
     referred to this Special Bench in favour of the assessee holding that
     the assessee is entitled to set off the long-term capital loss in AY
     2001-02 against the short-term capital gain made by it in AY 2003-
     04. Ground No. 2 of the assessee's appeal is accordingly allowed."

5.      The learned D.R. fairly admitted that the issue is covered by the order
of the Special Bench though he submitted that the plain language of section
74 does not permit set off of long term capital loss against short term capital

6.      Having regard to the circumstances of the case we hold that this issue
stands squarely covered by the decision of the ITAT Special Bench (supra).
Since the view taken by the learned CIT(A) is in conformity with the decision
                                       3                   ITA No. 3421/Mum/2010
                                                    M/s. Rolta Shares & Stock P. Ltd.

taken by the Special Bench, we do not find any infirmity in the order passed
by the CIT(A) and, therefore, dismiss the appeal filed by the Revenue

Order pronounced in the open court on 3rd October, 2012.

                   Sd/-                                  Sd/-
              (N.K. Billaiya)                       (D. Manmohan)
           Accountant Member                        Vice President

Mumbai, Dated: 3rd October, 2012

Copy to:

   1.   The   Appellant
   2.   The   Respondent
   3.   The   CIT(A) ­ 36, Mumbai
   4.   The   CIT­ Central 1, Mumbai City
   5.   The   DR, "D" Bench, ITAT, Mumbai
                                                       By Order

//True Copy//
                                                   Assistant Registrar
                                           ITAT, Mumbai Benches, Mumbai
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