Bharucha, J. - (1.) The assessee made long-term capital gains during the accounting year relevant to the Assessment Year 1970-71. He had brought for Ward a long term capital loss from previous assessment years to be set off there against. The assesses claimed a deduction under Section 80-T of the Income-tax Act, 1961 (hereinafter referred to as 'the said Act). For the purposes of determining the amount on which such deduction was available to the assesses, the Income-tax Officer took into account the figure arrived at after setting off the capital loss of previous assessment years against the capital gains for the Assessment Year 1970-71. He rejected the contention of the assesses that for the purposes of the deduction under Section 80-T that figure of capital gains should be taken as it stood before set off of the capital loss of previous assessment years. The Appellate Assistant Commissioner allowed the assessee's appeal. The Revenue preferred an appeal to the Income-tax Appellate Tribunal against the order of the Appellate Assistant Commissioner. The Tribunal allowed the appeal.
(2.) Arising out of the judgment and order of Tribunal, the following question was referred to the High Court of Kerala: "Whether Section 80T relief is to be given only for the amount of capital gains after the capital loss is set off - The High Court answered the question in the affirmative, that is to say, in favour of the Revenue and against the assesses. (The judgment of the High Court is reported in 129 ITR 156 (Kerala)). This appeal is preferred by the assessee by special leave.
(3.) On behalf of the assessee it was submitted that the High Court had erred in holding that the words "such income" in Section 80-T referred to the amount which was arrived at after set off of the capital loss brought forward from earlier years. The submission was that the words "such income" referred only to the capital gains received in the relevant accounting year. It was submitted also that the placement of Section 80-T in the said Act was not to be emphasised and that the capital loss carried forward was required to be set off only after the chargeable capital gains had been assessed as reduced by the deduction provided by Section 80T.;