| Question And Answer | |
|---|---|
| Subject: | Set off of Loss under the head Long Term Capital Gain |
| Category: | Income-Tax |
| Querist: | Ruchi Bhansali |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Capital Gains, indexation . long term capital gains |
| Date: | December 29, 2021 |
Assessee is a company, who has invested in a share of unlisted public company in the year 2006 having total cost Rs. 42,00,000/-. In the month of October 2020, the assessee company has received a letter informing them about capital reduction pursuant to resolution plan approved by Hon’ble NCLT and informed that entire existing, issue, subscribed and paid up share capital of said unlisted public company held by existing share holders stands cancelled and extinguished. Therefore, the value of shares of the said unlisted public company becomes Zero.
Issues:
- Whether the assessee company can take the benefit of indexation of the investment in shares made in the year 2006 for Rs. 42,00,000/- and compute a long term loss after taking into account indexed cost?
- Whether such loss as worked out above can be set off against the long term capital gain from sale of land in the same year ?
- Please Guide.
Yes, the assessee can claim the benefit of indexation while computing long-term capital loss. Long-term capital loss can only be set off against long-term capital gain. If there is any surplus Long-term capital loss the same can be carried forward for 8 years.