Law: Income Tax Act, 1961

Section: 80

(a) Income-tax----Capital gains---Computation---Long-term capital gains---Deductions--­Assessee suffering business loss in the same year---Business loss not to be deducted from capital gains for calculating deductions---Indian Income Tax Act, 1961, S.80-T. During the previous year relevant to the assessment year 1973-74, the respondent, a Hindu undivided family, derived long-term capital gains of Rs.1,02,740. The respondent had suffered a business loss of Rs.41,892 in the same previous year. While allowing the relief under section 80-T of the Income Tax Act, 1961, the Income-tax Officer set off the business loss against the capital gains and granted relief on the balance. The Appellate Assistant Commissioner and the Appellate Tribunal held that the respondent was entitled to the relief under section 80-T on Rs.1,02,740 without deduction of the business loss; and the High Court, on a reference, affirmed the decision of the Tribunal. On appeal to the Supreme Court: That the deduction provided for in section 80-T had to be made from out of the capital gains and no question could arise of the business loss being set off against this amount of capital gains. (b) Income-tax--- ----"Such income" in S.80-T, Indian Income Tax Act, 1961---Refers to capital gains and not total income---Income Tax Act, 1961, S.80-T. The words "such income" in the main part of section 80-T meant and referred to the capital gains and not the total income of the assessee. Held also, that the fact that the High Court had relied upon the decision of the Supreme Court in the case of Cloth Traders (P.) Ltd. v. C.I.T. (Addl.) (1979) 118 ITR 243 as an additional factor supporting its understanding, and that decision had been overruled by the Supreme Court in Distributors (Baroda) v. Union of India (1985) 155 ITR 120, made no difference to the decision. C.I.T. v. Venkatachalam (1979) 120 ITR 688 affirmed. Cambay Electric Supply Industrial Co. Ltd. v. C.I.T. (1978) 113 ITR 84 (SC); Cloth Traders (P.) Ltd, v. C.I.T. (Addl.) (1979) 118 ITR 243 (SC) and Distributors (Baroda) (P.) Ltd. v. Union of India (1985) 155 ITR 120 (SC) ref. JUDGMENT B.P. JEEVAN REDDY, J.--- This appeal is directed against the…

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