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Issues involved: Interpretation of relief under section 80T of the Income Tax Act, 1961 based on gross amount of capital gains versus net amount after set off of carried forward capital loss of earlier years.
Summary: The case involved an individual assessee assessed for the year 1973-74 with long-term capital gains of Rs. 38,780. The dispute arose regarding the computation of relief under section 80T, where the assessee claimed a fifty per cent rebate on the net amount after set off of capital loss from earlier years. The Income Tax Officer (ITO) adjusted the capital loss against the gains and allowed a deduction of Rs. 5,000, resulting in a different computation. The Appellate Authority Commissioner (AAC) and the Tribunal sided with the assessee's interpretation. The key contention was whether the relief should be based on gross total income as per the Act or on the net capital gains after adjustments. Section 80T of the Income Tax Act provides for deductions on long-term capital gains. The definition of "gross total income" under section 80B(5) was crucial in determining the computation method for relief under section 80T. The department argued that the gross total income should be computed as per the Act, including adjustments like capital loss set off, as supported by a Supreme Court decision in a similar context. The court noted a previous decision on section 80T and highlighted the relevance of the Supreme Court's interpretation in aligning with the current case. The court referred to a Karnataka High Court decision on a similar provision, but emphasized the importance of considering the Supreme Court's ruling and the definition provision in section 80B(5). Ultimately, the court answered the question in the negative, favoring the revenue's interpretation. The judgment highlighted the significance of computing deductions on capital gains based on the gross total income as per the provisions of the Income Tax Act.
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