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income-tax Officer Vs. M. Chidambaram - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Madras
Decided On
Judge
Reported in(1984)9ITD400(Mad.)
Appellantincome-tax Officer
RespondentM. Chidambaram
Excerpt:
.....sale of another asset, the deduction under section 80t was available only after setting off the loss against the income and the assessee will not be entitled to the deduction from the gross income. it is submitted that on the same analogy it is only after determining the total income that the deduction under chapter via of the act came into the picture and, therefore, when in the result there was no taxable capita! gains, the assessee was not entitled to any deduction under section 80t at all.the assessee was unable to contest this proposition because section 80a(2) of the act provided for the deduction under section 80t only out of the gross total income. the intention of the parliament appears to be that where the assessee has taxable capital gains, the assessee would be entitled to.....
Judgment:
1. This appeal by the revenue is directed against the order of the AAC granting deduction under Section 80T of the Income-tax Act, 1961 ('the Act').

2. The assessee is an individual. In the previous year ended 31-12-1979, corresponding to the assessment year 1980-81, the assessee had shown loss of Rs. 44,208 under the head 'Profits and gains of business or profession'. The assessee also had capital gains of Rs. 29,600 from the sale of the property as well as certain shares.

According to the assessee, the deduction under Section 80T should be given out of this capital gains of Rs. 29,600 before setting off the capital gains against the loss from business in computing the total income. But the ITO set off the capital gains against the business income which resulted in the gross total income being a net loss. He, therefore, decided that the assessee was not assessable for this assessment year 1980-81. But the assessee appealed and contended that if the deduction under Section 80T is given before setting off the income from capital gains against the loss from business, there would be a further loss in the business which could be carried forward and set off in the next year. This was accepted by the AAC who directed the ITO to allow the deduction under Section 80T.3. The revenue is in appeal to contend that the deduction under Section 80T is not a step in the computation of the capital gains but a step in the computation of the net taxable income and should succeed the determination of gross total income which could be arrived at only by setting off the income from one head against the loss from another head. Reliance was placed on the decision of the Madras High Court in the case of CIT v. Smt. Sigappi Achi [1983] 140 ITR 448 where it was pointed out that where the assessee had capital gains from the sale of one asset and capital loss from the sale of another asset, the deduction under Section 80T was available only after setting off the loss against the income and the assessee will not be entitled to the deduction from the gross income. It is submitted that on the same analogy it is only after determining the total income that the deduction under Chapter VIA of the Act came into the picture and, therefore, when in the result there was no taxable capita! gains, the assessee was not entitled to any deduction under Section 80T at all.

The assessee was unable to contest this proposition because Section 80A(2) of the Act provided for the deduction under Section 80T only out of the gross total income. The intention of the Parliament appears to be that where the assessee has taxable capital gains, the assessee would be entitled to some deduction under Section 80T. But, if there is no taxable capital gains in the sense that capital gain is set off against the loss under some other head of income, then the assessee is not entitled to any deduction and would not be able to take advantage of the deduction to augment loss from some other head and carrying it forward for setting off against the income of another assessment year.

The provision under Section 80T is only for abatement of the taxable capital gains. In the present case, there is no taxable capital gains because applying the provision of Section 71(2) of the Act, the capital gain is set off against the loss from business and, therefore, the question of allowing a deduction under section SOT itself does not arise. In the circumstances, the AAC was in error in directing the ITO to grant deduction under Section 80T and we, therefore, reverse his order and restore the matter to the ITO.4. The AAC has also observed that the assessee not being assessable to tax, there was no justification to demand further compulsory deposit.

Though the ground has been taken to say that the AAC had no jurisdiction to deal with the question of compulsory deposit, it was obvious that there is no miscarriage of justice in this direction.

Therefore, we are not called upon to interfere the order in this respect. The appeal is treated as allowed.


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