B. P. Jeevan Reddy, J. - (1.) This appeal is directed against the Judgment of the Madras High Court. The question referred for the opinion of the High Court, u/S. 256(1) of the Income-tax Act, 1961, reads as follows:"Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee was entitled, for the assessment year 1973-74, to relief under S. 80-T of the Income-tax Act. 1961, on an amount calculated, in terms of the aforesaid provisions, with reference to the gross capital gains of Rs. 1,02,740/- -
(2.) The assessee, a Hindu Undivided Family, derived capital gains in a sum of Rs. 1,02,740/- during the previous year relevant to the assessment year 1973-74. He claimed deductions thereon under and as provided by S. 80-T of the Income-tax Act. The Income-tax Officer, however, adopted a different method, he found that during the said previous year the assessee had suffered a business loss of Rs. 41,892/ - he set off the said loss against the capital gains of Rs. 1,02,740/ -and applied the deductions provided in Section 80-T to the balance figure. The assessee's appeal was allowed by the Appellate Assistant Commissioner, who held that the deductions provided by S. 80-T should be applied to the sum of Rs. 1,02,740/-. An appeal preferred by the Revenue failed in the Tribunal. Thereupon, the aforesaid question was referred at the instance of the Revenue.
(3.) Under S. 14 of the Income-tax Act, 'Capital gains' is a separate head of income. Capital gains have to be computed in accordance with the provisions contained in Ss. 45 to 48, among other provisions, occurring under the sub-head "E- Capital gains" in Chapter IV - 'Computation of Total Income'. S. 48, as it stood at the relevant time, prescribed the manner in which the capital gains have to be determined. It reads: "The income chargeable under the head "Capital gains" shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely: (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the capital asset and the cost of any improvement thereto." ;