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June 2026

Where the assessee earned long-term capital gains from the sale of certain shares and claimed exemption under section 54F, while also incurring long-term capital loss on the sale of other shares and carried forward such loss, such carry forward was allowable since section 54F overrides section 70(3) for the purpose of computation.

By Jagdish T Punjabi, Chartered Accountant Devendra Jain & Aditya Bhatt, Advocates
Reading Time 4 mins

23. (2026) 185 taxmann.com 711 (Mum Trib)

Nikesh Bhagwandas Mehta v. ITO

A.Y.: 2022-23 Date of Order: 15.04.2026

Sections: 45, 54F, 70

Where the assessee earned long-term capital gains from the sale of certain shares and claimed exemption under section 54F, while also incurring long-term capital loss on the sale of other shares and carried forward such loss, such carry forward was allowable since section 54F overrides section 70(3) for the purpose of computation.

FACTS

The assessee filed his return of income for AY 2022-23 on 29.8.2022 reporting total income of Rs.49,53,740. During the year, the assessee had earned long term capital gain on sale of shares of Rs.69,84,283 which was claimed as exempt under section 54F. He had also carried forward long term capital loss of Rs.37,72,601 on sale of certain other shares incurred during the year. Return was processed by CPC under section 143(1) wherein the carry forward of said long term capital loss was disallowed.

Aggrieved, the assessee filed an appeal before CIT(A) who upheld the disallowance by holding that first inter head loss is to be adju

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