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TMI Blog2011 (11) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal Madras 'A' Bench dated 13.12.2000 made in ITA No.209/Mds/1995 for the assessment year 1992-1993 and the same was admitted on the following question of law: "Whether on the facts and circumstances of the case and having regard to the provisions of Section 67(2), the Appellate Tribunal was right in law in holding that the appellant is not entitled to the deduction under Section 48(2) of the Income Tax Act, 1961 on the share of capital gains allocated to him on the basis of the computation in the assessment of a firm of which the appellant is a partner?" 2.1. The assessee is a partner of a firm The Foundry and Engineering Services. In respect of the assessment year 1992-1993, he admitted share income from the firm comprised of loss of Rs.1,75,537/- under the head "business", long term capital gains of Rs.3,97,680/-, and short term capital gains of Rs.30,179/-. From the long term capital gains, the assessee claimed deduction under Section 48(2) of the Income Tax Act, 1961 (for brevity, "the Act"). The Assessing Officer has completed the assessment without considering the plea for deduction on long term capital gains. 2.2. On appeal, the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deductions. He would rely upon the judgment in Commissioner of Income Tax (Central), Madras v. Express Newspapers Ltd., (1980) 124 ITR 117 to substantiate his contention. 4.1. On the other hand, it is the contention of Mr.Patty B.Jegannathan, learned Senior Standing Counsel for the respondent that when once in the hands of the partnership firm the long term capital gain has been granted deduction, the remaining amount which comes to the hands of each partner will not retain the character of capital gain and allowing of deduction once again in the hands of the partner will amount to granting double benefit, which cannot be the intent of the lawmakers. 4.2. It is also his submission that the assessee cannot rely upon Section 80T of the Act. In any event, it is submitted that the said section which has been relied upon by the learned counsel for the appellant has been repealed with effect from 1.4.1989. 5. We have heard the learned counsel for the assessee as well as the Department and considered the entire factual matrix. 6. Chapter VI-A of the Act allows deductions to be made in computing total income. Section 48 of the Act which stood during the relevant point of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch amount; (b) in any other case, fifteen thousand rupees as increased by a sum equal to, (i) in respect of long-term capital gain so arrived at relating to capital assets, being buildings or lands or any rights in buildings or lands or gold, bullion or jewellery, (A) in the case of a company, ten per cent of the amount of such gain in excess of fifteen thousand rupees; (B) in the case of any other assessee, fifty per cent of the amount of such gain in excess of fifteen thousand rupees; (ia) in respect of long-term capital gain so arrived at relating to equity shares of venture capital undertakings, (A) in the case of a company, other than venture capital company, thirty per cent of the amount of such gain in excess of fifteen thousand rupees; (B) in the case of venture capital company, sixty per cent of the amount of such gain in excess of fifteen thousand rupees; (C) in any other case, sixty per cent of the amount of such gain in excess of fifteen thousand rupees; (ii) in respect of long-term capital gain so arrived at relating to capital assets other than capital assets referred to in sub-clauses (i) and (ia), (A) in the case of a company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be prescribed; (2) the company does not have adequate financial resources to undertake projects for which it is otherwise professionally or technically equipped; and (3) the company seeks to employ any technology which will result in significant improvement over the existing technology in India in any field and the investment in such technology involves high risk. (3) The deductions specified in sub-section (2) shall be made also for the purposes of computing any loss under the head Capital gains in so far as it pertains to any long-term capital asset and, for the this purpose, any reference in that sub-section to the amount of long-term capital gain arrived at after making the deductions under clause (a) of sub-section (1) shall be construed as reference to the amount of loss arrived at after making the said deductions." 7. Under Section 48(1) of the Act, the deduction in respect of the full value of the consideration received or accrued regarding the expenditure incurred wholly, etc. and cost of acquisition of asset and the cost of improvement are granted. This deduction has admittedly been granted from the capital gain in the hands of the partnership firm. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner in which the income or loss of the firm has been determined under each head of income.", is certainly not in relation to any independent right under Section 48(2) of the Act. 11. It is not in dispute that in the hands of the partner the amount of long term capital gain is entitled to apportionment under various heads. But, the question here is whether the deduction already claimed under Section 48(2) of the Act by the firm can be claimed by the partner once again in his hands in respect of his share of long term capital gains. 12. The analogy made by the learned counsel to Sections 80A(3) and 80T of the Act cannot be made applicable to the facts of the present case. The present assessment being of the year 1992-1993, after the Direct Tax Laws (Amendment) Act, 1989 came into effect from 1.4.1989 by which Section 80T of the Act came to be omitted, the taxing structure in respect of the firm and individual partner were different when compared to the legal position after the said date, namely 1.4.1989. Simply because by change of law nominal tax has been imposed on the firm and in the hands of the partner different tax amount has been imposed, there can be no comparison b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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