TMI Blog2008 (4) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... . GUPTA JJ. P. S. Patwalia with Arvind Nayar for the assessee. Ms. Rashmi Chopra for the Commissioner. JUDGMENT The judgment of the court was delivered by V. B. Gupta J.- This reference has been made to this court under section 256(1) of the Income-tax Act, 1961 (for short "the Act"), by the Income-tax Appellate Tribunal, Delhi Bench "E", in ITA No. 3112/Del/91 relevant to the assessment year 1989-90. 2. The Tribunal has referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the order of the Assessing Officer computing taxable gain at Rs. 6,60,000 for the assessment year 1989-90 ?" 3. The brief facts of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brokerage Less : Deduction under section 48 Less : Cost of flat purchased Less : Investment in IDBI bonds Rs. 1,25,000 45,000 Rs. 30,00,000 1,70,000 28,30,000 14,20,000 14,10,000 9,00,000 5,10,000 6,00,000 Nil" 4. The Assessing Officer, however, did not accept this and worked out the capital gains as under : Sale consideration Less : Cost as on 1-1-74 Brokerage Long-term capital gains Less : Invested in purchase of flat Less : Invested in purchase of IDBI bonds Less : Deductions under section 48(2) Rs. 1,25,000 45,000 Rs. 30,00,000 1,70,000 28,30,000 9,00,000 19,30,000 6,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this will be restricted to the amount arrived at after giving the deduction under sections 53 and 54 of the Act. Therefore, the assessee is entitled to deduction under section 48(2) of the Act before giving the deduction under sections 53 and 54 of the Act. Learned counsel also cited CIT v. V. V. George [1997] 227 ITR 893 (Ker) in support of its contentions. 8. Learned counsel for the Revenue, on the other hand, supported the order of the Assessing Officer on the ground that the scheme of sections 45 and 48 of the Act clearly makes it a case that deductions under sections 54 and 54E of the Act shall be made in the beginning of the computation. 9. Capital gains have been made chargeable to income-tax under section 45 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) in any other case, ten thousand rupees as increased by a sum equal to ; (i) in respect of long-term capital gain so arrived at relating to capital assets, being buildings or lands or any rights in buildings or lands or gold, bullion or jewellery,- (A) in the case of a company, ten per cent. of the amount of such gain in excess of ten thousand rupees ; (B) in the case of any other assessee, fifty per cent. of the amount of such gain in excess of ten thousand rupees. (ii) in respect of long-term capital gain so arrived at relating to capital assets,- (A) in the case of a company, thirty per cent. of the amount of such gain in excess of ten thousand rupees ; (B) in any other case, sixty per cent. of the amount of such gain in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation under consideration comes on the statute as a result of the Finance Act, 1987, with effect from April 1, 1987. The said Explanation is reproduced hereinbelow : 'In this section and in sections 54, 54B, 54D, 54E, 54F and 54G, references to capital gain shall be construed as references to the amount of capital gain as computed under clause (a) of sub-section (1) of section 48.' " Therefore, in computing capital gains the provisions of section 48(2) of the Act should be given effect to before giving effect to the pro-visions of section 54E of the Act. 15. The deductions specified under sub-section (2) of section 48 of the Act is with reference to the gross capital gains calculated under clause (a) of sub-section (1) only. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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