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TMI Blog1985 (8) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gains at Rs. 31,560. 2. Before the AAC it was contended that deduction under section 80T should be given first from the gross capital gains and out of the balance amount the purchase cost of the new asset should be deducted. The AAC did not accept the submission. He held that the amount that has to be deducted under section 54 of the Act is in the nature of exemption. The capital gains chargeable to tax is arrived at after granting the above exemption. The net capital gains after granting the above exemption has to be included in the total income. Then the relief under section 80T is to be allowed. Thus, he upheld the assessment order. Against the same the assessee has preferred this appeal. 3. The learned counsel for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of the capital asset. Thus, under the above provisions, the cost of acquisition of the asset and the cost of improvement thereto and the expenditure incurred will be first deducted from the full value of consideration received. Then the exemption under section 54 will be allowed. It is only after computing the capital gains the question of allowing deduction under section 80T would arise. Section 80T comes under Chapter VIA of the Act. Section 80B(5) of the Act which is under Chapter VIA defines 'gross total income' which means the total income computed in accordance with the provisions of this Act before making any deduction under this Chapter or under section 280-O of the Act. It is clear from the above provision that it is only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question can naturally not be found from the decision of the Supreme Court in Cloth Traders' case [1979] 118 ITR 243, as the Supreme Court was not concerned with such a situation in that case...." On the other hand, the Gujarat High Court followed the ratio laid down by the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84. In our view, the ratio laid down in the above cases squarely apply to the instant case. We may also refer to a decision of the Tribunal in the case of M. Raghavan [IT Appeal No. 319 (Coch.) of 1983, dated 28-1-1985] wherein it was held that after allowing exemption under section 54 the question of allowing deduction under section 80T would arise. 5. The learned counsel for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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