COMMISSIONER OF INCOME TAX Vs. B. K. BIRLA.

JUDGEMENT

(1.) At the instance of the Commissioner of Income Tax, the following question of law has been referred to this court under Sec. 256(1) of the Income Tax Act, 1961, for the assessment year 1971 -72 : Whether, on the facts and in the circumstances of the case, the assessee is entitled to deduction of Rs. 5,000 as contemplated under Sec. 80T of the Income Tax Act, 1961, from the long -term capital gains of Rs. 5,864 before the same are set off against the short -term capital loss of Rs. 7,792

(2.) THE facts leading to this reference are that for the year under reference, the assessee suffered loss of Rs. 7,792 under the head "Capital gains - short -term" and made profit of Rs. 5,864 under the head "Capital gains -long -term". In his return of income as well as during the course of assessment proceedings, the assessee claimed that he should be granted deduction of Rs. 5,000 as contemplated under Sec. 80T of the Act in respect of "long -term capital gains" without setting it off first against "short -term capital loss" of Rs. 7,792. The Income Tax Officer, however, first set off the "long -term capital gains" against "short -term capital loss" and determined the loss under the head "Capital gains" at Rs. 1,928 (Rs. 7,792 minus Rs. 5,864). Moreover, he declined to give relief under Sec. 80T of the Act with the following remark "Relief under Sec. 80T is not allowable because there is no long -term capital gains after adjusting short -term capital loss against it.

(3.) IN appeal, it was submitted that the Income Tax Officer should have first allowed the statutory relief of Rs. 5,000 as contemplated under Sec. 80T of the Act and then proceeded to make other adjustment to the total income.