1985 (1) TMI 111

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....apital gains arising out of the transaction was computed by the ITO in the following manner : The sale consideration was Rs. 1,02,140. The cost of acquisition of the properties with improvements came to Rs. 21,000 and the expenses for the sale to Rs. 2,500. Deducting these amounts the balance amount came to Rs. 78,640. The assessee had purchased another property for his residence and because of this he was entitled to exemption to the extent of Rs. 46,000 under section 54 of the Act. Deducting this amount the balance came to Rs. 32,640. The deduction under section 80T was worked out by the ITO on this amount. 4. The contention of the assessee is that the deduction under section 80T should be worked out on the gross capital gains and that....

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....ise and if the assessee's contention is accepted, deduction under section 80T can be claimed even when the entire sale consideration becomes exempt under section 54 because of investment in another property. With regard to the decisions relied on by the assessee, it was contended by the department that the matter has been considered in all its aspects by the Gujarat High Court in CIT v. Gautam Sarabhai [1981] 129 ITR 133, that the Gujarat High Court had in that case distinguished the decision of the Supreme Court in the case of Cloth Traders (P.) Ltd. and had dissented from the decision of the Madras High Court in the case of V. Venkatachalam. It was also pointed out by the department that under section 54 only the difference between the sa....

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....rm loss under the head ' Capital gains ' brought forward from earlier year(s) or thereafter. One view is this that against long-term capital gains of the current year unabsorbed carried forward long-term capital loss is first to be set off as per the provisions of section 74(1)(a)(ii). Any balance left after such set off will supply the base for deduction under section 80T [CIT v. Gautam Sarabhai [1981] 129 ITR 133 (Guj.), following CIT v. M. Seshasayee [1981] 129 ITR 1 66 (Mad.) and H.H. Sir Rama Varma v. CIT [1981] 129 ITR 156 (Ker.) and relying on Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC) and CIT v. Amul Transmission Line Hardware (P.) Ltd. [1976] 104 ITR 771 (Guj.) and distinguishing Cloth Traders (P.) Ltd....