ITO Section 38

Deduction of losses in computing the amount chargeable under the head “Capital Gains”. 

(1) Subject to this Ordinance, in computing the amount of a person chargeable to tax under the head “Capital Gains” for a tax year, a deduction shall be allowed for any loss on the disposal of a capital asset by the person in the year.

(2) No loss shall be deducted under this section on the disposal of a capital asset where a gain on the disposal of such asset would not be chargeable to tax.

(3) The loss arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely: 

A – B
where :

• A is the cost of the asset; and
• B is the consideration received by the person on disposal of the asset.

(4) The provisions of sub-section (4) of section 37 shall apply in determining component A of the formula in sub-section (3).

(5) No loss shall be recognized under this Ordinance on the disposal of the following capital assets, namely: —

• (a) A painting, sculpture, drawing or other work of art;
• (b) Jewellery;
• (c) A rare manuscript, folio or book;
• (d) A postage stamp or first day cover;
• (e) A coin or medallion; or
• (f) An antique.