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July 2025

S. 70 – Short-term capital loss (on which STT was paid) can be set off against short-term capital gains (on which STT was not paid) as per section 70(2).

By Jagdish T Punjabi, Chartered Accountant
Devendra Jain & Aditya Bhatt, Advocates
Reading Time 3 mins
24  (2025) 174 taxmann.com 932 (Mum Trib) Teacher Retirement System of Texas vs. ACIT ITA No.: 1371 (Mum) of 2025 A.Y.: 2022-23 Dated: 23.05.2025 S. 70 – Short-term capital loss (on which STT was paid) can be set off against short-term capital gains (on which STT was not paid) as per section 70(2). FACTS The assessee was a resident of the United States of America, and was registered as a Foreign Portfolio Investor with the Securities and Exchange Board of India. For AY 2022-23, the assessee filed its return of income on 26.07.2022, declaring a total income of ₹1,392,97,42,630. The return filed by the assessee was selected for scrutiny. During the assessment proceedings, it was observed that the assessee computed the net short-term capital gains amounting to ₹312,17,86,831, after set off the short-term capital loss [on which securities transaction tax (STT) was paid], which is taxable at 15% under section 111A, against the short-term capital gains (on which STT was not paid), which is taxable at 30% under section 115AD. Thereafter, the assessee set-off the balance loss against the short-term capital gains earned on the transaction of sale of share subjected to STT. The AO held that section 111A and 115AD provide different rate of taxes and the assessee's manner of setting-off its short-term capital loss, taxable at 15%, first against the short-term
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