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TMI Blog1993 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... nd against the assessee. The question stated, at the instance of the Revenue, for the opinion of the High Court read (at page 57) : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessable capital gain would be only Rs. 1,81,671 computed in the manner set out in paragraph 14 of the order of the Tribunal ?" The assessee is a registered firm. The assessment year concerned is 1973-74, the relevant previous year being the financial year 1972-73. During the said previous year, the assessee sold shares held by it in several companies. From the sale of shares in three companies, it secured a gross long-term capital gain of Rs. 5,61,508. However, in the sale of shares in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereupon, the Revenue asked for and, obtained the said reference. The High Court answered the said question in the negative, i.e., in favour of the Revenue, on the following reasoning : the income from capital gains constitutes a separate head of income under the Act. Capital gains are bifurcated into long-term capital gains and short-term capital gains. In this case, the court is concerned only with long-term capital gains. Section 70(2)(ii) prescribes the manner in which the loss from sale of long-term capital asset is to be set off. According to the said provision, the assessee " shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under the similar computation made for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with section 80T, before setting off the losses. We are afraid that the arguments advanced by Mr. Ramachandran travel far beyond the controversy involved herein. This is not a case where the assets transferred by the assessee during the relevant previous year consisted of both types of capital assets. They were of only one type, namely, shares. From the sale of certain shares, the assessee derived profit and from the sale of certain other shares, it suffered loss. The simple question is how to work out and apply the deductions provided by section 80T in such a case. For answering this question, it is necessary to notice the provisions of section 80T and section 70, as they stood during the relevant previous year. " 80T. Where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n five thousand rupees and the amount of the long-term capital gains relating to the capital assets mentioned in sub-clause (i) ; and (B) where the amount of the long-term capital gains relating to the capital assets mentioned in sub-clause (i) is equal to or more than five thousand rupees, (fifty per cent.) of the long-term capital gains relating to any other capital assets. "70. (1) Save as otherwise provided in this Act, where the net result for any assessment year in respect of any source falling under any head of income other than 'Capital gains' is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head. (2) (i) Where the result of the computatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gains during the relevant previous year. The amount of capital gains during the relevant previous year means the profits derived minus the losses suffered. This is precisely the opinion of the High Court with which view we agree. It is not possible to treat the transfer of each asset separately and apply the deductions separately. If the argument of learned counsel for the appellant is logically extended, it would mean that even the deduction of Rs. 5,000 should be applied in each case separately. Learned counsel, however, did not take that stand. He agreed that the standard deduction of Rs. 5,000 must be applied to the totality of the capital gains. At the same time, he says, the deductions provided in clause (b) should be applied separ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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