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TMI Blog1983 (11) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... dends amounting to Rs. 2,14,350. The ITO worked out the deduction under section 80K of the Act on dividends from shares attributable to the profits and gains of industrial undertaking exempt under section 80J of the Act at Rs. 39,556. He also worked out the deduction under section 80T of the Act based on the long-term capital gains at Rs. 3,51,050. The Commissioner (Appeals) was, however, of the view that if the business loss of Rs. 3,25,375 was set off against the income from dividends, there would be no dividend income left and, hence, there was no question of any deduction under section 80K. He further held that the deduction under section 80T on long-term capital gains can only be allowed on the long-term capital gains after set off of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctions under sections 80K and 80T. It was also pointed out by Shri Mehta that section 80AB of the Act introduced by the Finance (No. 2) Act, 1980, with effect from 1-4-1981, laid down that any deduction required to be made under Chapter VIA of the Act, except under section 80M, shall be worked out with reference to the amount of the income of that nature which is computed in accordance with the provisions of the Act and this itself shows that prior to 1-4-1981, e.g., the assessment year 1977-78 under consideration before us, the deduction has to be worked out on the gross amount of the income under the head 'Dividend on shares' attributable to profits and gains of the industrial undertaking exempt under section 80J and under the head 'Long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 45 of the Act have not to be reduced by the business loss. Similarly, in view of the ratio laid down by the Hon'ble Supreme Court in the case of Cloth Traders (P.) Ltd., the deduction under section 80K has to be worked out on the gross amount of the dividends. As explained by their Lordships of the Hon'ble Supreme Court in the case of Cloth Traders (P.) Ltd., Chapter VIA deals with various categories or types of income which are entitled to the deduction under the various provisions of Chapter VIA. This means that once a category or a type of income which is entitled to the deduction under any of the provisions of Chapter VIA is determined, the deduction under the relevant provision has to be worked out on the income of that category or t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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