1982 (1) TMI 19 - HC - Income Tax

Summary

Issues:
Claim for relief under section 80T of the Income Tax Act, 1961 based on long-term capital assets - Interpretation of section 80T - Computation of long-term capital gains and losses - Entitlement to relief under section 80T.

Analysis:
The judgment delivered by the High Court of Madras involved a case where the assessee sought relief under section 80T of the Income Tax Act, 1961. Section 80T provides relief to an assessee other than a company when the gross total income includes income chargeable under the head 'Capital gains' related to capital assets other than short-term capital assets. In this case, the assessee had long-term capital assets in the form of equity shares and vacant sites. The assessee incurred a loss of Rs. 96,907 on the sale of shares and gained Rs. 48,767 on the sale of house sites, resulting in a net loss of Rs. 46,140. Despite the net loss, the assessee claimed relief under section 80T based on the capital gains from the sale of the house sites. The Income Tax Officer rejected this claim, but the Tribunal allowed the appeal, stating that the relief should be based on the gains from the sale of the house sites.

Upon analyzing section 80T, the court emphasized that the relief is applicable to income chargeable under the head 'Capital gains' related to capital assets other than short-term capital assets. The Income Tax Act categorizes income into different heads, including capital gains, which further divides into long-term and short-term gains. The computation involves setting off long-term capital losses against long-term gains. In this case, the long-term capital loss from shares was Rs. 96,907, while the gains from real property were Rs. 48,767, resulting in a net loss. As per the provisions, relief under section 80T is only applicable when there is a positive income under the head 'Long-term capital gains.' The Tribunal's decision failed to consider the computation of long-term gains and losses and the relief provided under section 80T.

The question of law referred to the court was whether the deduction under section 80T should be allowed on the capital gains from the sale of property, with the balance set off against the capital loss from the sale of shares. The court ruled against the assessee, stating that the relief under section 80T was not applicable in this case. The Department was awarded costs from the assessee, including counsel's fee of Rs. 500.