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TMI Blog1982 (10) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 54E of the Income-tax Act, 1961 ('the Act'). The assessee sold certain shares of Vikram Mills, Dhrangadhra Chemicals, etc., during the year under appeal. On sale of 414 shares of Vikram Mills, the assessee derived capital gains of Rs. 1,32,894 on the basis of the sale consideration of Rs. 2,36,394. However, in regard to the sale of shares of Dhrangadhra Chemicals, Sarangpur Cotton and Silver Cotton the assessee suffered net capital loss. The total loss in sale of these shares worked out to Rs. 9,474. Thus the net capital gains worked out to Rs. 1,23,420. The assessee invested the sale consideration in specified assets within the meaning of section 54E and claimed exemption in regard to the capital gains. The ITO found that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next observed that the exemption to capital gains under section 54E has to be determined with reference to each of the assets, and the relief should not be determined after setting off the capital loss against the capital gains, which were exempt under section 54E. In other words, he held that capital gains should be worked out separately in respect of each of the assets and after considering the exemption admissible under section 54E, the capital loss should be set off only against the net amount of the capital gains so determined. 3. Being aggrieved, the revenue has come up in appeal before us. The learned departmental representative pointed out that the construction of section 54E as placed by the AAC had no basis and, therefore, relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on sale of original asset in specified assets within a period of six months from the date of sale. This section is designed to grant exemption from capital gains liability and by its very nature, therefore, excludes the consideration received on sale of asset which has resulted in capital loss. Secondly, the aggregation of sale consideration received on the sale of all the assets during the year is not contemplated under the scheme of section 54E because the sale consideration has to be invested within a period of six months after the date of transfer of the original asset. Therefore, it follows that as and when the asset is transferred, the assessee must make investment or deposit within a period of six months after the date of each such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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