1986 (9) TMI 95 - AT - Income Tax

High Court clarifies deduction rules for capital gains under section 80T, Tribunal dismisses grounds on interest and trust income.

The Tribunal dismissed the grounds related to deletion of interest and income from the trust, aligning with a previous order. Regarding the deduction ... Deductions, Long-term Capital Gains Issues:1. Deletion of interest received not recorded in the books2. Deletion of income received from the trust3. Deduction under section 80T of the Income-tax Act4. Consideration of provisions of section 80AB of the ActAnalysis:1. The first issue pertains to the deletion of interest received but not recorded in the books and deletion of income from the trust. The Appellate Tribunal noted that these grounds were similar to those raised in a connected appeal. The Tribunal dismissed these grounds based on the detailed reasons provided in the earlier order.2. The next issue involves the deduction under section 80T of the Income-tax Act. The Commissioner (Appeals) allowed the deduction based on the gross figure of long-term capital gains without deducting the short-term capital loss. The Commissioner relied on the decision of the Gujarat High Court in CIT v. Gautam Sarabhai to support this conclusion. The High Court held that the deduction under section 80T should be based on the gross figure of long-term capital gains and not the net figure after any set off. The Tribunal directed the Income Tax Officer (ITO) to modify the assessment accordingly.3. The revenue appealed against the Commissioner's decision, arguing that the deduction under section 80T should be based on the net figure after adjusting the short-term capital loss. The revenue also contended that the Commissioner did not consider the provisions of section 80AB and section 80A(2). The Tribunal examined the contentions and held that the correct legal position was not fully appreciated. It clarified that the option under section 71(2) regarding set off of losses and the relief under section 80T operate in different stages. The Tribunal concluded that the claim for setting off short-term capital loss against other income and then against net long-term capital gain after relief under section 80T was not supported by law. The matter was remanded to the ITO for reconsideration.4. The Tribunal noted that the decision in Gautam Sarabhai's case aligned with their interpretation. The Tribunal did not find it necessary to address other points raised in the appeal. Consequently, the appeal of the revenue was partly allowed, and the matter was remanded for further consideration in accordance with the provisions of the Act.This detailed analysis outlines the Tribunal's decision on each issue raised in the appeal, providing a comprehensive understanding of the judgment.