H.H. SIR RAMA VARMA (DEAD) BY L.RS. versus COMMISSIONER OF INCOME-TAX, KERALA

Citation: [1993] SUPP. 3 S.C.R. 512 · Decided: 02-11-1993 · Supreme Court of India · Bench: B.P. JEEVAN REDDY, S.P. BHARUCHA · Disposal: Dismissed

Judgment (excerpt)

j A 
B 
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H.H. SIR RAMA VARMA (DEAD) BY L.RS. 
v. 
COMMISSIONER OF INCOME-TAX, KERALA 
NOVEMBER 2, 1993. 
[B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.] 
Income Tax Act, 1961: Section BOT-Capital gains-Capital loss-Set-
off-Deduction-Whether to be given only for the amount of capital gains after 
set-o!f-"Expression "such income''-Meanings of. 
. 
Words & Phrases : "Such income" in the context of S.BOT of Income 
Tax Act.· 1961-Meanings of. 
During the accounting year relevant to the assessment year 1970-71, 
the appellant-assessee made long-term capital gains, brought forward a 
· D long-term capital loss from previous year to be set-off against the capital 
gains and claimed a deduction u/s. SOT of the Income Tax, 1961, . of an 
amount as it stood before the set-off. The Income Tax Officer rejected bis 
claim and allowed deduction of the amount after set-off. Assessee 
preferred an appeal which was allowed by the Appellate Assistant Com-
E missioner. Revenue pre_ferred an appeal to the Tribunal and which al-
lowed the same and referred to the High Court the question whether 
deduction under S.SOT was to be given only for the amount of capital gains 
after the capital loss was set off. The High Court answered the question in 
the affirmative. Aggrieved by the said judgment or the High Court, assessee 
preferred the present appeal, contending that the words "such income" in 
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S.SOT referred only to capital gains received in the relevant accounting 
year, and that the capital loss carried forward was required to be set-off 
only after the chargeable capital gains bad been assessed es reduced by 
the deduction under S.80T. 
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Dismissing the appeal, this Court 
HELD : 1.1. Section 80T of the Income Tax Act, 1961 opens with the 
words 'Where the gross total income of an assessee .. includes any income 
chargeable under the bead "Capital gains • ." This clearly indicates that the 
gross total income of an assessee has to be determined before the provision 
H of section SOT can be applied. This is clear also from the provisions of 
512 
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H.H. SIR RAMA v. COMMR. OF I.T. [BHARUCHA, J.] 
513 
section SOA which says that in computing the total income of an assessee A 
there shall be allowed from his gro~s total income the deduction specified 
in, inter alia, section SOT. [517-G-H, 51S·A] 
1.2. Where the gross total income of an assessee, determined in 
accordance with the provisions of the Act, includes any income by way of 
long-term capital gains a deduction is permissible therefrom under the B 
provisions of section SOT in computing his total income. The deduction is 
from "such income", viz., the assessee's long-term capital gains. [SlS·A·BJ 
Distributors (Baroda) P. Ltd. v. Union of India & Ors., 155 I.T.R. 120, 
relied on. 
CIT, Kera/a,., H.H. Sir Rama Vanna, 123 I.T.R.156, affirmed. 
C.I. T., Gujarat v. Gautam Sarabhai, 129 I.T.R. 166; C./. T. v. M. 
Seshasayee, 129 I.T.R. 166, C./. T. v. Vim/a P. Kapadia, lSl I.T.R. 394 and 
Gouri Prasad Goenka and others v. C.I. T., 190 I.T.R. Sl, approved. 
C./.T. v. V. Venkatachalam, 201 I.T.R. 737, referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1489 
(NT) of 1979. 
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From the Judgment and order dated November 2, 1978 of the Kerala E 
High Court in I.T.R. Case No. 13/1977. 
Ms. Janki Ramachandran for the Appellant. 
J. Ramamurthy, D.S. Mehra, Manoj Arora and Ms. A Subhashini 
(N.P.) for the Respondent. 
F 
The Judgment of the Court was delivered by 
BHARUCHA, J. The assessee made long-term capital gains during 
the accounting year relevant to the Assessment year 1970-71. He had 
brought a long term capital loss from previous assessment years to be set G 
off there against. The assessee claimed a deduction under section 80-T of 
the lncome·truc Act, 1%1 (hereinafter referred to as 'the Act'). For the 
purposes of determining the amount on which such deduction was available 
to the assessee, the Income· true Officer ~ook into account the figure arrived 
at after setting of the capital loss of previous assessment ye!lrs against the H 
514 
SUPREME COURT REPORTS [1993) SUPP. 3 S.C.R. 
A 
capital gains for the Assessment Year 1970-71. He rejected the contention 
of the assessee 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 Com-
missioner allowed the assessee's appeal. The Revenue preferred an appeal 
B to the 

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