|DATE:||(Date of pronouncement)|
|DATE:||June 2, 2011 (Date of publication)|
|Click here to download the judgement (tata_power_54EC_ltcg_losses.pdf)|
S. 54EC deduction allowable before set-off of brought-forward loss
The assessee earned LTCG of Rs.233 crores and claimed deduction of Rs.124 crores u/s.54EC on account of investment in specified bonds of NABARD. The assessee also had brought forward long term capital loss of Rs.111 crores. The assessee first claimed deduction u/s 54EC and then, against the balance, set-off the brought forward losses. The CIT revised the assessment u/s 263 on the ground that the long-term capital loss had to be first set-off against the LTCG and the deduction u/s 54EC was allowable only on the balance. On appeal by the assessee to the Tribunal, HELD allowing the appeal:
While s. 54EC is an exemption provision which exempts capital gains and takes them outside the purview of chargeable “capital gains”, s. 74 deals with the carry forward and set off of loss under the head “capital gains”. The stage at which set off of carried forward long term capital loss is to be given is subsequent to the stage at which income under the head capital gains is computed and deduction u/s 54EC is to be given in the course of the latter. Accordingly, s. 54EC deduction has to be given before set-off of losses.