1987 (11) TMI 145 - AT - Income Tax

Summary

Issues:
- Appeal against order under sec. 263 of the Income-tax Act, 1961
- Interpretation of provisions of sec. 80T regarding setting off losses against capital gains

Analysis:
1. The appeal was filed against an order made under sec. 263 of the Income-tax Act, 1961, concerning the computation of total income for the assessment year 1981-82. The Commissioner opined that the order was erroneous as it did not set off losses against capital gains and allowed relief under sec. 80T on the net amount only.

2. The assessee contended that sec. 80T did not require setting off any other loss against the computed capital gains for granting deductions. The Revenue also acknowledged the Commissioner's order was contrary to the specific provisions of the Act, indicating a lack of justification for the Commissioner's view.

3. Section 80T allows a deduction from income chargeable under the head "Capital gains." The section specifically mentions income chargeable under this head without requiring the setting off of losses from other heads. The confusion arose between the concept of total income, where losses from one head are set off against income from another, and the computation of income under a specific head.

4. The order of the Commissioner was deemed unwarranted as there was no provision in the Act mandating the setting off of losses from other heads against income chargeable under 'Capital gains.' The correct sequence of deductions under sec. 80T was highlighted, showing that the ITO's assessment was accurate and did not necessitate any intervention.

5. Consequently, the Tribunal allowed the appeal, emphasizing that the assessee was entitled to relief under sec. 80T for the capital gains component of the total income. The Commissioner's order was canceled based on the factual accuracy of the ITO's assessment and a clear reading of the statutory provisions.

6. In conclusion, the Tribunal's decision clarified the correct interpretation of sec. 80T and affirmed that setting off losses against capital gains was not required under the specific provisions of the Income-tax Act, ultimately ruling in favor of the assessee and overturning the Commissioner's order.