Meaning of “For the purposes of this section”

The meaning of for the purposes of this section used in section 70 to 79 of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here is an excerpt of the court’s order in which the Hon’ble Tribunal tried to explain the meaning of for the purposes of this section.

Meaning of for the purposes of this section defined by court

The phrase ‘for the purposes of this section’ used in section 70 to 79 of the Income Tax Act came up before Hon’ble ITAT-Kolkata in R.P.G. Industries Ltd. Vs. Asstt. CIT [2003] 85 ITD 105 (KOL. – TRIB.) and it explained.

Meaning : The expression ‘for the purposes of the section’ in the explanation to section 73 has been deliberately used in order to achieve the object of the legislation insofar as the intention of the legislature has been to make the explanation applicable only in cases of companies claiming loss in the business of purchase and sale of shares and the said explanation is not intended to be operative in the event of there being a profit in the business of purchase and sale of shares.

Meaning of for the purposes of this section

Set off of loss from one source against income from another source under the same head of income.

70.(1) Save as otherwise provided in this Act, where the net result for any assessment year in respect of any source falling under any head of income, other than “Capital gains“, is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head.

(2) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any short-term capital asset is a loss, the assessee shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of any other capital asset.

(3) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any capital asset (other than a short-term capital asset) is a loss, the assessee shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of any other capital asset not being a short-term capital asset.

In this article, you can get guidance from tribunal on the meaning of for the purposes of this section under section 70 to 79 of the Income Tax Act.

Updated up to Finance Act 2021