Section 70(3) — the law in short
What the courts have decided on section 70(3), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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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.
