TMI Blog1989 (1) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... res of six other companies, viz., (i) Shree Ayyanar Spinning and Weaving Mills Ltd., (ii) Virudhunagar Steel Rolling Mills Ltd., (iii) Be Be Rubber Ltd., (iv) Bhavani Tea Ltd., (v) Pierce Leslie India Ltd. and (vi) Keelkotagiri Ltd., the assessee sustained long-term capital loss in a sum of Rs. 96,583. The assessee, in the course of the assessment proceedings before the Income-tax Officer, computed the assessable capital gains on the aforesaid transactions of sale of shares in the following manner : Rs. Gross long-term capital gains 5,61,508 Less : Deduction under section 80T(b) 5,000 ---------------- 5,56,508 Less : Deduction under section 80T(b)(ii) at 50% 2,78,254 ---------------- 2,78,254 Less : Loss on sale of shares 96,583 ---------------- Profit 1,81,671 ---------------- Against the quantum of assessable capital gains computed as aforesaid by the assessee, the Income-tax Officer recomputed it at Rs. 2,29,963 on the following basis: Rs. Gross long-term capital gains 5,61,508 Less : Long-term capital loss of the same year 96,583 ----------------- Balance of long-term capital gains of the year 4,64,925 Less : Deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chettiar (T. C. No. 1222 of 1977, dated 4-1-1982). On the other hand, learned counsel for the assessee attempted to support the conclusion arrived at by the Tribunal on its reasoning and by referring us to the decision in CIT v. Canara Workshops P. Ltd. [1986] 161 ITR 320 (SC). We have carefully considered the rival submissions made. The scheme of the Act envisages different heads of income, such as, income from property, profits and gains of business, income from securities, capital gains, etc. Capital gains is also one such head of income, though, for certain purposes, that has been bifurcated into long-term capital gain and short-term capital gain. We are, in this reference, concerned only with the long-term capital gains. The assessable income falling under the head "Long-term capital gains" comprises the totality of the long-term capital gains secured by the sale of individual capital assets after deducting or setting off the long-term capital losses as well against the long-term capital gains. Under section 70 (2) (ii) of the Act, it is provided that an assessee shall be entitled to have the amount of such loss set off against the gains, if any. In other words, if the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "A reading of section 80T will clearly show that the relief is exigible not on individualised items of long-term capital gains, but, on the contrary, it is on Income chargeable under the head "Capital gains" relating to capital assets other than short-term capital assets. Under the scheme of the Income-tax Act, there are different heads of income, such as, income from property, profits and gains of business, income from securities, capital gains, and so on. For certain purposes, chiefly for set-off of loss under the head 'Capital gains', capital gains itself is bifurcated into two subheads-long-term capital gains and short-term capital gains. The income which is chargeable under the sub-head 'Long-term capital gains' would really include the sum total of the long-term capital gains derived from the sale of individual capital assets. But, before arriving at the figure chargeable under the sub-head 'Long-term capital gains', one will have to set off the long-term capital losses, as against the long-term capital gains. This rule of computation is laid down by section 70(2)(ii) of the Act. In the present case, the long-term capital loss on the sale of shares was Rs. 96,907, whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be entitled to set off such loss against the long-term capital asset and its set off as against the longterm capital gains derived from the sale of any other long-term capital asset in the same previous year and that the determination of the loss on the transfer of a long-term capital gain derived from the transfer of any other long-term capital asset will alone give us the income chargeable under the head "Long-term capital gains" within the meaning of section 80T of the Act. In that view, the Tribunal's conclusion was not accepted. The conclusion of the Tribunal in this case that it cannot be held that it is only the net adjusted figure under section 70(2)(ii) of the Act that stands included in the gross total income and not the surplus or deficit from each transfer computed in the manner prescribed in sections 48 to 55 of the Act, cannot at all be supported in view of the decisions referred to already. CIT v. Canara Workshops P. Ltd. [1986] 161 ITR 320 (SC) does not in any manner assist the assessee. In that case, the court was considering section 80B of the Act and the question was whether the loss incurred by the assessee in the manufacture of alloy steels, a priority i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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