1982 (3) TMI 107 - AT - Income Tax

Summary

Issues:
1. Calculation of deduction under section 80T for long-term capital gains.

Analysis:
The judgment by the Appellate Tribunal ITAT BOMBAY-D involved a dispute regarding the calculation of the deduction under section 80T for long-term capital gains. The assessee had sold gold and shares of two companies, resulting in long-term capital gains. The disagreement centered around whether the deduction should be computed before or after setting off the loss from the sale of certain shares against the total capital gain.

The assessee contended that the deduction should be calculated at 40% of each long-term capital gain amount separately, without considering the loss from the sale of specific shares. The assessee arrived at a deduction amount of Rs. 1,60,890 based on this calculation method. On the other hand, the department argued that the deduction should be allowed after setting off the loss from the sale of certain shares against the total capital gain. The department calculated the deduction at Rs. 96,890 following this approach.

The Commissioner (Appeals) upheld the department's view without specifically addressing the arguments presented by the assessee. The Commissioner based the decision on a High Court ruling, which was not provided to him by the assessee. However, it was noted that there were conflicting decisions from various High Courts on the interpretation of the relevant section.

The Tribunal considered the conflicting decisions and highlighted that there were divergent views on the interpretation of section 80T. The Tribunal emphasized the principle that when two views are possible, the one favoring the taxpayer should be preferred. Therefore, the Tribunal ruled in favor of the assessee and directed that the deduction under section 80T should be allowed based on the long-term capital gain before setting off any losses.

In conclusion, the Tribunal allowed the appeal, stating that the assessee was entitled to succeed in the dispute over the calculation of the deduction under section 80T for long-term capital gains. The judgment clarified that the deduction should be granted in proportion to the long-term capital gain determined before adjusting for any losses against the income chargeable as long-term capital gains.