With reference to claim for set-off of long term capital loss pertaining to the STT paid transfer of equity shares and equity-oriented mutual funds the Delhi bench in 19 ITR (Trib)-OL 458 held that when income is exempt u/s 10(38), both the positive income as well as the negative loss will not enter into the regular computation of the assessee.
In their judgment, the bench further followed the High Court decision ( Gujarat) instead of the decision of the co-ordinate Benches (Mumbai )citing the principle of judicial discipline.
The bench citing Supreme court verdicts also held that there are no two views on the issue that income includes losses also and thus concluded as under :
“41. In view of the above facts and circumstances and respectfully following the decision of the honorable Gujarat High Court as well as the authoritative commentary on Law and Practice of Income-tax supported by the decisions of the honorable Supreme Court, we dismiss ground No. (1) of the appeal of the assessee which is the solitary ground in this appeal.”
In the right earnest perhaps the best course would have been for the bench to let go the issue pass through the special bench test.