Carry-Forward Of Loss under the head Capital Gains
Due to the application of Cost Inflation Index, there could be a loss under the head capital gains. The loss allowed to be carried forward for set off against capital gains in future for a period of 8 years. However, as per the Finance Act, 2002 the long-term capital gain can be adjusted w.e.f. AY 2005-2006 only against long-term capital gain of the year or else it can carry forward for subsequent 8 years but only against long-term capital gains.
As per Section 70 losses from transfer of short-term capital
assets can be set off against any capital gains, whether short-term or
long-term, but losses arising from transfer of long-term capital assets would
be allowed to be set off only against long-term capital gains. Through an
amendment of Section 74 of the I.T. Act, 1961, it is further provided
that a long-term capital loss would be carried forward separately for eight
assessment years to be set off only against long-term capital gains. However, a
short4erm capital loss may be carried forward and set off against any income
under the head “Capital gains”.