COMMISSIONER OF INCOME TAX Vs. VIMLA P KAPADIA

JUDGEMENT

(1.) THE only question of law raised in this reference at the instance of the Department is :

(2.) THE assessee is an individual. The proceedings relate to her assessment for the asst. year 1972 73. The assessee had earned during the previous year long term capital gains of Rs. 77,520. She had also unabsorbed loss under the head "Long term capital gains" of Rs. 28,385 determined in the earlier year. The question that arose for consideration was whether the loss under the head "Long term capital gains" from the earlier year should be set off first against the long term capital gains of the current year or whether the assessable amount out of the long term capital gains of the current year be determined first under S. 80T and then the loss under the head "Long term capital gains" brought forward from the earlier year be set off. The ITO adopted the first method. The AAC agreed with him. The Tribunal, however, agreed with the assessee and held that the taxable amount out of the longterm capital gains under S. 80T should be determined first and the loss under the head "Long term capital gains" from the earlier year should be set off thereafter.

(3.) THEREFORE , S. 74 is to be applied first before computation is to be made under S. 80T. This is also the view taken by the Madras High Court in the decision relied upon by Dr. Balasubramanian, learned counsel for the Department, in CIT vs. M. S. P. Nadar, Sons (1989) 75 CTR (Mad) 214 : (1989) 179 ITR 55.