Capital gain exemption & loss

Vikas Gandhi (Chartered Accountant) (37 Points)

27 September 2011  

What is the correct interpretation of law in following situation - An assessee is having Long Term Capital Gain as well as Long Term Capital Loss. The assessee has also made investment u/s 54EC. In such a situation, what will be the order?

a) Whether Loss will be first adjusted against the Gain and then Exemption will be given; or

b) whether exemption will be granted first and then from the balance capital gain, loss will be adjusted. 

If we go by the order of the section, option (b) is the correct interpretation, however if we go logically, then option (a) seems to be appropriate.

Kindly let me know what is the correct interpretation and commonly followed approach by Income Tax Department