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TMI Blog2000 (12) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... oundry and Engineering Services (FES). In the return of income for the assessment year 1992-93 the assessee admitted share income from the firm FES comprising of loss of Rs. 1,75,537 under the head 'Business' and long term capital gains of Rs. 3,97,680 as also short term capital gains of Rs. 30,179. From the long term capital gains the assessee claimed deduction under section 48(2). The Assessing Officer completed the assessment determining the total income at Rs. 2,79,200 without considering the claim for deduction under section 48(2) from the long term capital gains. Though the assessee took up the matter in appeal, the CIT(A) held that the assessee was not entitled to deduction under section 48(2) in respect of the share of capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins would be allowable from the share of capital gains included in the total income of the partner. Sri Seetharaman, the ld. counsel for the assessee contends before us that there is no bar in the Act in giving the deduction under section 48(2) from the share income assessable in the hands of the partner after allowing the deduction in the assessment of the firm. It is his contention that such deduction in the hands of the partner does not amount to a double deduction, as the deduction already allowed under section 48(2) was in the hands of a different assessee namely, the firm and not in the assessment of the individual partner. Drawing our attention to section 80T (omitted w.e.f. 1-4-1988) Sri Seetharaman points out that when deduction wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory provisions relating to the transfer of a long term capital asset, providing for further deductions specified in section 48(2). From a close reading of section 48(1) it can be seen that the income chargeable under the head 'Capital gains' shall be computed (a) by deducting from the full value of the consideration received the amounts mentioned in clauses (i) and (ii) and where the capital gains is a long term capital gains, by making the further deduction as specified in sub-section (2). In other words, the income chargeable under the head 'Capital gains' is computed by deducting from the full value of consideration- (1) the expenditure incurred wholly and exclusively in connection with the transfer; (2) the cost of acquisitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 67(2) that the assessee claims deduction under section 48(2) on the capital gains allocated as his share from the firm's income. 6. From the statutory provisions relating to the mode of computation of the capital gains as given in section 48 we have seen that the deductions under section 48 are given in computing the capital gains. It is the net capital gains computed in accordance with the provisions of section 48 that is chargeable to tax in the hands of the firm and in the assessment of the firm the share due to each partner is allocated. There is no provision in the Act to allow again the deduction under section 48(2) in the hands of the partner, from the share of capital gains already determined as allocable to him. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment of the partner of a firm. It is true that section 80A(3) has been amended by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989 omitting therefrom section 80T. Before the amendment it was clearly provided in section 80A(3) that where in computing the total income of a firm, A.O.P. or body of individuals, any deduction is admissible under section 80G or... section 80T no deduction under the same section shall be made in computing the total income of a partner of the firm, or as the case may be, of a member of the Association of Persons or body of individuals in relation to the share of such partner in the income of the firm etc, The reference to section 80T has been removed from section 80A(3) w.e.f 1-4-1989. That wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Legislature intentionally provided in section 80A(3) that once the deduction was allowable in the case of a firm etc., no such deduction would be allowed in the case of a partner, and that after section 80T was substituted by section 48(2), there was no such bar against the deduction allowable in the case of a partner. Section 80T provided for the deduction from the gross total income of the assessee, which included capital gains. Under the then existing provision there could be the claim for deduction under section 80T from the gross total income of an assessee being a partner of a firm, whose income included share income by way of capital gains. That was why the Legislature provided a specific provision in section 80A(3) against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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