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TMI Blog1986 (9) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... d appeal of Rasiklal Mohanlal, the father of the assessee in IT (Appeal) No. 1530 (Ahd.) of 1984-85. For the detailed reasons set out in the aforesaid order, we dismiss these two grounds of appeal raised by the revenue. 3. The third and fourth grounds in the appeal of the revenue which involves a common point reads as under : (3) The learned Commissioner (Appeals) erred in law and on facts in holding that deduction under section 80T of the Income-tax Act, 1961 ('the Act') is to be given on the basis of the gross figure of the long-term capital gains and not on the net figure after any set off. (4) The learned Commissioner (Appeals) failed to consider the provisions of section 80AB of the Act on the facts and in the circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the assessee's income under the head 'Capital gains'. The Commissioner (Appeals), however, indicated in his order that the assessee had indicated his option to be assessed in such manner. The Commissioner (Appeals) also pressed into service the decision of the Hon'ble Gujarat High Court in the case of CIT v. Gautam Sarabhai [1981] 129 ITR 133 to come to the conclusion that he did. He accordingly accepted the contention of the assessee and observed as under : "9. I have carefully considered the submissions of the assessee. Sub-section (3) of section 71 introduced with effect from 1-4-1968 now entitles an assessee the set off of a short-term capital loss against income assessable under any head of income other than capital gains. Now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile deciding the applicability of the provision, the quantum of income under a given head is not very relevant as decided by the Supreme Court while interpreting section 80M, and what is relevant is only the existence of a given category of income as a part and parcel of the gross total income and it is this existence without reference to the quantum of the concerned head of income that would invoke applicability of the concerned deduction provision...." The Gujarat High Court has, therefore, held that if there is any net long-term capital gain included in the gross total income, the quantum of deduction under section 80T is to be given on the basis of the gross figure of the long-term capital gains and not on the net figure, after any se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t legal position which obtains in the instant case. To our mind, the legal position is quite clear. In the first place, the question is in regard to the exercise of option contemplated under section 71(2) of the Act. According to section 71(2), the assessee has an option either to set off the loss under the head 'Short-term capital gains' against his other income and carry forward the balance to the subsequent year or years for a period of eight years or in the alternative set off the loss arising out of short-term capital assets against the income from long-term capital assets. The option once exercised will have to be given full effect to and the provisions of the Act do not predicate mixing up of the two alternatives. It may also be poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is said to have been made. This letter has not been referred to either by the ITO or by the Commissioner (Appeals). In fitness of things, the assessee may be given a fresh opportunity in this regard and his claim be adjudicated de novo in accordance with the provisions of the Act and the discussion which we have set out above. 9.1 Before we part, we may say that the decision in the case of Gautam Sarabhai does not advance the case of the assessee any further. On the contrary, it states the proposition on the same lines which we have set out here inasmuch as the adjustment of capital loss against capital gain has to be made first before determining the total income and the relief under section 80T has to be given effect to thereafter. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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