Appeal No 4851 NT of 1990
From the Judgment and Order dated 31189 of the Madras High Court in Tax Case No 900 of 1979 KN Shukla R Satish for Ms A Subhashini for the Appellant
TA Ramachandran and Mrs Janaki Ramachandran for the Respondent
The Judgment of the Court was delivered by BP JEEVAN REDDYJ
This appeal is preferred by the assessee against the judgment of the Madras High Court answering the question referred to it under section 256 1 of the Income tax Act in favour of the Revenue and against the assessee
The question stated at the instance of the High Court reads Whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in holding that the assessable capital gain would be only Rs 181671 computed in the manner set out in paragraph 14 of the order of the tribunal The assessee is a registered firm
The assessment year concerned is 1973 74 the relevant previous year being the financial year 1972 73
During the said previous year the assessee sold shares held by him in several companies
From the sale of shares in three companies it secured a gross long term capital gain of Rs 561508
However in the sale of shares in six other companies it sustained a long term capital loss in a sum of Rs 96583
The assessee computed the capital gains on the aforesaid transaction of sale of shares in the following manner Gross long term capital gains Rs 56150800 LESS Deduction under Rs 500000 Section 80 T b Rs 56550800 LESSDeduction under section 80 T b ii at 50 Rs 27825400 449 LESS Loss on sale Rs 27625400 of shares Rs 9658300 Profits Rs 18167100 The Income tax Officer did not agree with said mode of computation
He set off the long term capital loss against the long term capital gain in the first instance and then applied the deductions provided by section 80 T to the balance figure of Rs 464925
His computation was in the following terms Gross long term capital gain Rs 561508 LESS Long term capital loss of the same year Rs 96583 Balance of long term capital gains of the year Rs 464925 LESS Deduction under section 80 Tb ii at 50 Rs 229962 Capital gains included in the total income Rs 229963 Aggrieved by the order of assessment the assessee preferred an appeal which was dismissed by the Appellate Assistant Commissioner
On further appeal however the Tribunal agreed with his mode of computation
Thereupon the Revenue asked for and obtained the said reference
The High Court answered the said question in the negative ie in favour of the Revenue on the following reasoning the income from capital gains constitutes a separate head of income under the Act
Capital gains are bifurcated into long term capital gains and shurt term capital gains
In this case the Court is concerned only with long term capital gains
Section 70 2 ii prescribes the manner in which the loss from sale of longterm capital asset is to be set off
According to the said provision the assessee  shall be entitled to have the amount of such loss set off against the income if any as arrived at under the similar computation made for the assessment year in respect of any other capital asset not being a short term capital asset
Support for the said proposition was derived from the decision in Commissioner of Income Tax vs 450 Sigappi Achi The correctness of the view taken by the High Court is questioned in this appeal
Shri TA Ramachandran learned counsel for the appellant submitted that according to the provisions and scheme of the Act capital gains have to be computed in respect of each asset separately
Section 80 T prescribes different percentages of deduction for different types of capital assets If the capital asset sold consists of buildings or land or any rights in buildings or lands the deduction provided is 35 in addition to the standard deduction of Rs 5000 Whereas in the case of any other capital asset the percentage of deduction provided is 50 in addition to the standard deduction of Rs 5000 
The deductions have to be worked out separately where the capital assets transferred during a previous year fall in both the categories
Even the proviso to section 80T shows that the gains arising from the transfer of these two types of capital assets must be treated as separate and distrinct
If the capital gains arising from the transfer of both the types of capital assets are clubbed together it would not be possible to work out the provisions of section 80 T
The correct method therefore is to compute the capital gains with respect to each asset transferred separately in accordance with section 80 T before setting off the losses
We are afraid the arguments advanced by Mr Ramachandran travel far beyond the controversy involved herein
This is not a case where the assets transferred by the assessee during the relevant previous year consisted both the types of capital assets
They were of only one type namely shares
From the sale of certain shares the assessee derived profit and from the sale of certain other shares he suffered loss
The simple question is how to work out and apply the deductions provided by section 80 T in such a case
For answering this question it is necessary to notice the provisions of section 80 T and section 70 as they stood during the relevant previous year 80 T 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 such income being hereinafter  referred to as long term capital gains there shall be allowed in computing the total income of the assessee a deduction from such income of an amount equal to ain a case where the gross total income does not exceed ten thousand rupees or where the long term capital gains do not exceed five thousand rupees the whole of such long term capital gains 451 bin any other case five thousand rupees as increased by a sum equal to ithirty five percent of the amount by which the long term capital gains relating to capital assets being buildings or lands or any rights in buildings or lands exceed five thousand rupees iififty per cent of the amount by which the long term capital gains relating to any other capital assets exceed five thousand rupees Provided that in a case where the long term capital gains relate to buildings or lands or any rights in buildings or lands as well as to other assets the sum referred to in sub clause ii of clause b shall be taken to be Awhere the amount of the long term capital gains relating to the capital assets mentioned in sub clause i is less than five thousend rupees fifty percent of the amount by which the long term capital gains relating to any other capital assets exceed the difference between five thousand rupees and the amount of the long term capital gains relating to the capital assets mentioned in sub clause i and Bwhere the amount of the long term capital gains relating to the capital assets mentioned in sub clause i is equal to or more than five thousand rupees fifty percent of the long term capital gains relating to any other capital assets
701 Save as otherwise provided in this Act where the net result for any assessment year in respect of any source falling under any head of income other than Capital gains  is a loss the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head
2i Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any short term capital asset is a loss the assessee shall be entitled to have the amount of such loss set off against the income if any as arrived at under a similar computation made for the assessment year in respect of any other capital asset
452 iiWhere the result of the computation made for any assessment year under sections 48 to 55 in respect of any capital asset other than a short term capital asset is a loss the assessee shall be entitled to have the amount of such loss set off against the income if any as arrived at under a similar computation made for the assessment year in respect of any other capital asset not being a short term capital asset
 The opening words of section 80 T are relevant
If the gross total income of an assessee not being a company includes any income chargeable under the head capital gains relating to capital assets referred to as long term capital gains there shall be allowed in computing the total income of the assessee a deduction from such income of an amount equal to    
In our Judgment delivered on April 13 1993 in Civil Appeal No 3044 of 1983 Commissioner of Income Tax vs V Venkatachalam we have held that the deductions provided by section 80 T have to be applied to the capital gains arising from sale of long term capital assets
In other words the deductions provided by the said section have to be applied to the amount representing the capital gains during the relevant previous year
The amount of capital gains during the relevant previous year means the profits derived minus the losses suffered
This is precisely the opinion of the High Court with which view we agree
It is not possible to treat the transfer of each asset separately and apply the deductions separately
If the argument of the learned counsel for the appellant is logically extended it would mean that even the deduction of Rs 5000 should be applied in each case separately
Learned counsel however did not take that stand
He agreed that the standard deduction of Rs 5000 must be applied to the totality of the capital gains
At the same time he says the deductions provided in clause b should be applied separately to each asset
We have not been able to appreciate the logic behind the contention of the learned counsel
This is not a case where the capital assets transferred consist of two types mentioned in sub clauses i and ii of clause b of section 80 T
They are only of one type namely those falling under sub clause ii
We need not therefore deal with or answer the hypothetical contention raised by the learned counsel
Further as pointed out by the High Court the provision contained in clause ii of subsection 2 of section 70 as it stood at the relevant time supports the conclusion arrived at by us
The learned counsel for the appellant relied upon the decision of this Court in Commissioner of Income Tar Central Madras vs Canara Workshops Private 453 Limited That was a case arising under section 80 E of the Act as it stood during the assessment years 1966 67 and 1967 68
On the language of section 80 E it was held that in computing the profits for the purpose of deduction under the said section each priority industry  must be treated separately
We do not see how the principle of the said decision has any application to the facts of this case which has to be decided on the language of a different provision namely section 80 T read with section 70 2 ii
For the above reasons we agree with the opinion expressed by the High Court and dismiss this appeal
No order as to costs
NVK Appeal dismissed


Summary:
The appellant Mills claimed that the toilet soaps produced by them were bath soaps failing under tariff item 15 1 of the First Schedule Household to the  but the Assistant Collector classified the same as other sorts under tariff item 152 of the schedule attracting higher levy of excise duty
On appeal the Collector held that they fell under tariff item No 15 1 household
On second appeal the Tribunal reversed the appellate order against which the appellant Mills preferred the instant appeals
The appellants contended that in 1954 toilet soap was treated as an independent tariff sub item and household and laundry soaps were treated as separate entity and separately subjected to varied rates of tariff  that on amendment in 1964 toilet soap was omitted as a separate entity and brought toilet soap as part of genus namely soap household as toilet soap has always been a household soap
The respondents contended that statute always kept distinction between soap household and laundry and other sorts and that toilet soap was kept in the packet of other sorts that household and laundry soaps were being used for cleaning household articles and utensils and washing the clothes while toilet soaps are for bathing purpose
The latter composed of diverse varieties based on personal liking and taste are being used and that they are commercially known as other sorts but not household
379 Allowing the appeals and remitting the matter to primary authority this Court HELD11 The provisions of the Tariff do not determine the relevant entity of the goods
They deal whether and under what entry the identified entity attracts duty
The goods are to be identified and then to find the appropriate heading sub heading under which the identified goodsprod ucts would be classified
To find the appropriate classification the description employed in the tariff nomenclature should he appreciated having regard to the terms of the headings read with the relevant provisions or statutory rules or interpretation put up thereon
For exigibility to excise duty the entity must he specified in positive terms under a particular tariff entry
In its absence it has to be deducted from a proper construction of the tariff entry
There is neither intendment nor equity in a taxing statute
Nothing is implied
It should be interpreted and construed as per the words the legislature has chosen to employ in the Act or Rules
There is no room for assumptions or presumptions
The object of Parliament has to be gathered from the language used in the statute
383 H 384 A B 12toilet soap being of everyday household use for the purpose of the bath and having removed its sperate identity which it enjoyed preceding amendment and having been not specifically included in other sorts  it took its shelter In commercial parlance under household 
If any body goes to the market and asked for toilet soap he must asked any for household bathing purpose and not for industrial or other sorts
Even the people dealing with it would supply it only for household purpose
It may be true that household consists of soap used for cleaning utensils laundry used for cleaning soiled clothes and soap toilet is used for bathing but house hold is compendiously used toilet soap is used only by the family for bathing purpose
Individual preference or choice or taste of a particular soap for bath is not relevant
The soap toilet would therefore fall within the meaning the word of household in sub item 1 of item 15 of the Schedule
384 B C Ajoy kumar Bannerjee and Ors
vs Union of India and Ors
  and Urkal Contractors and Joinery Pvt Ltd and Ors
vs State of Orissa and Ors
   distinguished Manmohan Das v Vishnu Das   Ramavatar Budhaipasad etc
vs Asstt
Sales Tax Officer Akola and Anr  Motipur Zamindari Co Pvt  Ltd vs State of Bihar 380 1962 Supp 1 SCR 498 State of West Bengal and Ors
vs Washi Ahmed etc
   Porritts  Spencer Asia Ltd vs State of Haryana   Indo International Industries vs Commissioner of Sales Tax UP  at 297 C PA Chillai Chidambara Nadar vs Addl
Appellate Asstt
Commissioner Madurai and Anr   Khandelwal Metal Works vs Union of India 1985 Supp
1 SCR 750 at 774 B C Shri Bharuch Coconut Trading Co and Ors
vs Municipal Corporation of the city of Ahmedabad and Ors 1992 Supp 1 SCC 298 Hansraj Gordhan Das vs HH Dave Assti
Collector of Central Excise  Customs and Ors
  Dunlop India Ltd vs Union of India  Ors   Anant B Timbodia vs Union of India   Superintendent of Central Excise Surat vs Vac Metal Corporation Ltd AIR 1986 SC 1167 Spaco Carburettors India Ltd vs Collector of Customs Bombay   Shashikant Laxman Kale and Anr
vs Union of India and Anr
  at 376 Para 17 Mitra Prakashan Pvt Ltd vs Collector of Customs para 15 Desh Bandhu Gupta and Ors
vs Delhi Stock Exchange   JK Coton Spinning and Weaving Mills Ltd and Anr
vs Union of India and Ors 1987 Supp
SCC 350 Dovack Systems Pvt Ltd etc
vs Union of India  Ors
etc1988 2 SCR 2 at 1000 F to H and State of Madhya Pradesh vs Ms G section Dall and Flour Mills 1992 Supp
1 SCC 150 at 153 para 18 referred to Craises on Statute Law 7th Edition at Page 164 referred to