Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1981-82, the following question of law has been referred to this court : " Whether, on the facts and in the circumstances of the case and in the light of the proper interpretation of Section 11 of the Income-tax Act, 1961, the Tribunal is justified in holding that the capital gain amounting to Rs. 2,91,644 is eligible for deduction under Section 80T of the Income-tax Act, 1961 ?"
(2.) The facts leading to this reference are that the assessee is a trust assessed to tax in respect of the capital gain of Rs. 2,91,644 on sale of shares. The Assessing Officer rejected the assessee's claim for deduction under Section 80T of the Income-tax Act, 1961. The Commissioner of Income-tax (Appeals) declined to interfere in the matter. On an examination of the facts and in the circumstances of the case and on interpretation of the relevant provisions of the Act, the Tribunal held that : " The lower authorities were not justified in taking into account the entire long-term capital gain of Rs. 2,91,644. We further hold that the said sum of Rs. 2,91,644 is eligible to deduction of Rs. 1, 19,658 (Rs. 5,000 plus Rs. 1,14,658) under Section 80T of the Act ; in the circumstances, therefore, we direct the Income-tax Officer to recompute the assessee's taxable income accordingly."
(3.) Section 80T provides that where the gross total income of an assessee not being a company includes any income chargeable under the head "Capital gains" relating to capital assets other than short-term capital assets, a straight deduction to the extent of the prescribed percentage of such gains from the total income itself shall be allowed. The first Rs. 5,000 of the long term capital gains is not liable to any tax and has to be excluded from the amount of long-term capital gains and, on the balance, the relief is allowable at the prescribed percentage.;