COMMISSIONER OF INCOME TAX Vs. VENKATACHALAM V

JUDGEMENT

(1.) IN this reference under Section 256(1) of the I.T. Act 1961, the following question has been referred:

(2.) THE assessee, a HUF, derived capital gains of Rs. 1,02,740 in the relevant previous year for the assessment year 1973-74. THEre is no dispute about this figure. THE assessee claimed that the capital gains should be processed under Section 80T on the entire sum of Rs. 1,02,740, reduced only by the exemption of Rs. 5,000 available under the same provision. THE ITO considered that this claim was not tenable and he adjusted the business loss of Rs. 41,892 against the capital gains of Rs. 1,02,740 and brought to tax a sum of Rs. 55,848 as capital gains. How this sum of Rs. 55,848 was arrived at will be clear from the following : <FRM>JUDGEMENT_688_ITR120_1979Html1.htm</FRM>

(3.) SUBSEQUENTLY, a similar question came to be considered in CIT v. M. Seshasayee (T.C. No. 408 of 1975) in a judgment dated February 14, 1979. At the time of the argument in the said case, our attention was drawn to a decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT, 1978 113 ITR 84 . That was a case which arose under Section 80E. That decision of the Supreme Court was applied in interpreting Section 80T. In doing so, we referred also to another decision of the Karnataka High Court in Dr. T. Ramadas M. Pai v. CIT, 1978 115 ITR 883 . We pointed out that though the decision of the Karnataka High Court had not noticed Section 80B(5), nor the decision of the Supreme Court, the conclusion reached was consistent with the reasoning of the Supreme Court in the said case, and we, therefore, agreed with it.