Section 70(2)

Section 70(2) — the law in short

What the courts have decided on section 70(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• K2 Family Private Trust v DCIT — the return utility cannot block the set-off order the assessee is entitled to claim High CourtHelps taxpayerNo later treatment found
  The e-filing utility forces my client's STT-paid short-term loss against STT-paid gains first and will not let him claim the sequence he wants. Is his only option to file the return the utility's way and argue later?
  No. The Bombay High Court held that the procedure of filing a return cannot bar an assessee from making a claim under the Act which he feels he is entitled to, and directed the CBDT to modify the utility so that the petitioner could set off the STT-paid short-term capital loss against the non-STT short-term capital gains first, failing which the Assessing Officer was to accept a revised return for AY 2025-26 in paper mode.
• Statutory position — the capital-loss asymmetry: sections 70(2), 70(3) and 74(1) from AY 2003-04 CBDT Circulars & InstructionsCuts both ways
  I have a long-term capital loss and short-term capital gains this year, and also a brought-forward long-term loss. Which loss can go against which gain, and for how long can I carry it?
  A short-term capital loss can be set off against any capital gain, short-term or long-term; a long-term capital loss can only be set off against a long-term capital gain. That asymmetry holds both within the year, under s.70(2) and s.70(3), and on carry forward, under s.74(1)(a) and s.74(1)(b); the carry forward is limited to eight assessment years by s.74(2). The present form of both sections was put in place by the Finance Act 2002 with effect from 1 April 2003, that is Assessment Year 2003-04.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.