AJIT K. SENGUPTA, J. ( 1 ) AT the instance of the Commissioner of Income-tax, West Bengal-III, the following questions have been referred to this court under Section 256 (1) of the Income-tax Act, 1961, for the assessment year 1974-75 :" (1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee was entitled to the deduction under Section 80t (b) (i) of the Income-tax Act, 1961, on the gross capital gains arising on the sale of house property ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in ignoring the provisions of Sections 70 (2) (ii) and 80b (5) of the Income-tax Act, 1961, and thereby ignoring the long-term capital loss on the sale of shares in computing the deduction under Section 80t (b) (i) of the Income-tax Act, 1961 ?" ( 2 ) THE facts are that the assessee made long-term capital gains on the sale of his share in property at 9, Circus Avenue, Calcutta, for Rs. 2,78,250. The assessee also incurred long-term capital loss on sale of certain shares amounting to Rs. 10,266. In addition, it had long-term capital loss brought forward from the assessment year 1966-67 amounting to Rs. 94,675. After adjustment, the net capital gains included in the total income for the year under consideration came to Rs. 1,73,309. The Income-tax Officer allowed deduction under Section 80t on the amount of Rs. 1,73,309. ( 3 ) THE assessee appealed to the Commissioner of Income-tax (Appeals) and contended that it was entitled to deduction under Section 80t on the entire amount of Rs. 2,78,250. It was argued that Section 80t was an independent section and was not subject to any other provisions of the Act. It was next urged that the assessee's gross total income included the sum of Rs. 2,78,250 as income chargeable under the head "capital gains" and, therefore, by virtue of Clause (b) (i) of Section 80t, the deduction should have been given on the entire amount, and not on the net amount of capital gains that was included in the assessment. The Commissioner of Income-tax (Appeals) agreed with the submissions made on behalf of the assessee and directed the Income-tax Officer to recompute the total income after giving deductions under Section 80t on the amount of Rs. 2,78,250. The Commissioner of Income-tax (Appeals) agreed with the submissions made on behalf of the assessee and directed the Income-tax Officer to recompute the total income after giving deductions under Section 80t on the amount of Rs. 2,78,250. ( 4 ) THE Revenue submitted that the Commissioner of Income-tax (Appeals) was wrong in his direction that deduction under Section 80t would be allowed on the capital gains before adjustment of capital losses brought forward from earlier years. On the other hand, learned counsel for the assessee supported the order of the Commissioner of Income-tax (Appeals ). The Tribunal upheld the order of the Commissioner of Income-tax (Appeals) on this point by observing as under :"we have heard the submissions of both the parties and considered the High Court decisions relied on by both the parties and the Tribunal order relied on by the assessee's counsel. It is to be noted that there are different views on the point at issue. It is well-settled that in interpreting fiscal statutes, if two views are possible, then the benefit of the view favourable to the taxpayer must be given to him. That being the legal position, we are of the opinion that the Commissioner of Income-tax (Appeals) was justified in directing the Income-tax Officer to allow deduction under Section 80t on the gross amount of capital gain that was made on the sale of the house property in question during the year under appeal. Accordingly, we would uphold the order of the Commissioner of Income-tax (Appeals) on this point. " ( 5 ) AT the hearing before us, it was contended by the Revenue that in view of the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 and Distributors (Baroda) (P.) Ltd. v. Union of India [1985] 155 ITR 120, the question should be answered in favour of the Revenue. In our view, the Revenue is entitled to succeed in this case. ( 6 ) SECTION 80t which is included in Chapter VI-A provides for an allowance of a straight deduction in the computation of the total income of non-company assessees in respect of long-term capital gains included in the gross total income. In our view, the Revenue is entitled to succeed in this case. ( 6 ) SECTION 80t which is included in Chapter VI-A provides for an allowance of a straight deduction in the computation of the total income of non-company assessees in respect of long-term capital gains included in the gross total income. The basis of taxation which continued up to the assessment year 1967-68 was to calculate tax on the long-term capital gains separately and then to add it to the other tax liability. Thereafter, the basis was changed allowing a straight deduction to the extent of the prescribed percentage, etc. , of such gains from the gross total income itself and then to calculate tax on the net total income. Under Section 2 (24), "income" included capital gains chargeable under Section 45 of the Act. One of the heads of income is "capital gains". Income under the head "capital gains" shall be computed after deducting from the full value of consideration the items mentioned in Section 48. The resultant positive figure shall represent capital gains and a negative figure shall represent capital loss. Chapter VI provides for the aggregation of income and set off or carry forward of loss. Sections 70 and 71 provide for the set off of loss from one source against income from another source under the same head of income and set off of loss from one head against income from another respectively. The question of carry forward and set off of business loss against different heads of income for subsequent years is dealt with by Section 72 onwards. Section 74 deals with the question of carrying forward of losses under the head "capital gains" for any assessment year. ( 7 ) CHAPTER VI-A follows thereafter which pertains to the deductions to be made in computing total income. Section 80t which is included in Part C of Chapter VI-A, provides that where the gross total income of an assessee includes any income chargeable under the head long-term "capital gains", there shall be allowed, in computing the total income of the assessee, a deduction from such income of the amounts specified therein. Such deduction shall be allowed after the total income of the assessee is computed. The total income of the assessee has to be computed for the given assessment year according to the provisions of the Income-tax Act. Such deduction shall be allowed after the total income of the assessee is computed. The total income of the assessee has to be computed for the given assessment year according to the provisions of the Income-tax Act. If the contention of the assessee that, after the computation of the assessable capital gains accruing to the assessee for the year, deduction under Section 80t has to be effected first and thereafter the setting off such net capital gain against carry forward capital loss of previous year has to be considered is accepted, in that event, the whole scheme of Chapter VI-A would be frustrated. In Cambay Electric Supply Industrial Co. Ltd. 's case, the question was whether unabsorbed depreciation and unabsorbed development rebate were liable to be deducted in arriving at the figure of profits and gains eligible to deduction of 8% contemplated in Sub-section (1) of Section 80e. The contention of the assessee was that these items were not liable to be deducted. Rejecting the contention of the assessee, the Supreme Court held that the profits and gains eligible to the deduction of 8% were profits and gains computed in accordance with the provisions of the Act and forming part of the total income and hence unabsorbed depreciation and unabsorbed development rebate were liable to be excluded from profits and gains attributable to the specified business in arriving at the figure eligible to 8% deduction. Tulzapurkar J,, speaking on behalf of the court, analysed the provision of Sub-section (1) of Section 80e and held that the total income of the assessee has to be computed first in accordance with the other provisions of the Act, i. e. , in accordance with all the provisions except Section 80e. Tulzapurkar J,, speaking on behalf of the court, analysed the provision of Sub-section (1) of Section 80e and held that the total income of the assessee has to be computed first in accordance with the other provisions of the Act, i. e. , in accordance with all the provisions except Section 80e. ( 8 ) THE Supreme Court proceeded to hold (at p. 94) ;"as indicated earlier, Sub-section (1) contemplates three steps being taken for computing the special deduction permissible thereunder and arriving at the net income exigible to tax and the first two steps read together contain the legislative mandate as to how the total income--of which the profits and gains attributable to the business of the specified industry forms a part--of the concerned assessee is to be computed and according to the parenthetical clause, which contains the key words, the same is to be computed in accordance with the provisions of the Act except Section 80e and since in this case it is income from business, the same will have to be computed in accordance with Sections 30 to 43a which would include Section 32 (2) (which provides for carry forward of depreciation) and Section 33 (2) (which provides for carry forward of development rebate for eight years ). In other words, in computing the total income of the concerned assessee, items of unabsorbed depreciation and unabsorbed development rebate will have to be deducted before arriving at the figure that will become exigible to the deduction of 8% contemplated by Section 80e (1 ). " ( 9 ) THE Supreme Court in Distributors (Baroda) (P.) Ltd. 's case [1985] 155 ITR 120, after extracting the above observation held (at p. 140) :"it will thus be seen that, according to this decision, the words 'such profits and gains' in the latter part of Sub-section (1) of Section 80e were referable to the quantum of the profits and gains attributable to the specified business included in the total income as referred to in the earlier part of the provision. If this decision lays down the correct interpretation of Sub-section (1) of Section 80e, the same interpretation must also govern the language of Sub-section (1) of Section 80m. If this decision lays down the correct interpretation of Sub-section (1) of Section 80e, the same interpretation must also govern the language of Sub-section (1) of Section 80m. Structurally, there is hardly any difference between Section 80e, Sub-section (1), and Section 80m, Sub-section (1), and the reasoning which appealed to the court in the interpretation of Sub-section (1) of Section 80e must apply equally in the interpretation of Sub-section (1) of Section 80m. We find ourselves wholly in agreement with the view taken by this court in Cambay Electric Supply Co. 's case [1978] 113 ITR 84 and we must, therefore, dissent from the interpretation placed on Sub-section (1) of Section 80m by the decision in Cloth Traders' case. " ( 10 ) WE may also refer to Section 80b (5 ). According to this section, gross total income means the total income computed in accordance with the provisions of the Act before making any deduction under Chapter VI-A and under Section 280-0. ( 11 ) THESE decisions and the provisions of Section 80b (5)clearly lay down the proposition that total income has to be computed in accordance with the provisions of the Act without making any deductions in terms of the provisions of Chapter VI-A. It may be mentioned that in CIT v. Amul Transmission Line Hardware P. Ltd. [1976] 104 ITR 771, the Gujarat High Court held that carried forward losses should be set off against the income of the subsequent year in terms of Section 72 (1) before considering the special deduction as provided by Section 80-I. The Supreme Court in Cambay Electric Supply Industrial Co. Ltd. 's case [1978] 113 ITR 84, approved the said reasoning of the Gujarat High Court that, for computation of total income for the purpose of special deduction under Chapter VI-A, the provisions of Section 72 have got to be given full effect. Section 72 deals with carry forward and set off of business loss whereas Section 74 deals with the question of carrying forward of loss under the head "capital gains". ( 12 ) IN the premises, we are of the view that before any deduction is allowed under Chapter VI-A, the total income under each of the heads, as disclosed by the assessee, have to be determined and computed in accordance with the provisions of the Act, including Section 74. ( 12 ) IN the premises, we are of the view that before any deduction is allowed under Chapter VI-A, the total income under each of the heads, as disclosed by the assessee, have to be determined and computed in accordance with the provisions of the Act, including Section 74. In other words, the income under each head has to be first computed according to the provisions of the Act before considering the special deduction under Chapter VI-A. Thereafter, for the purpose of deduction under Section 80t, the computation of capital gains is to be made under Section 45 read with Section 48 and after the capital losses carried forward from the previous year have been set off against capital gains. If any balance of capital gains remains during the relevant accounting year which is to be added to the gross total income of the year, the question of effecting further deduction as contemplated by Section 80t read with Section 80b (5) will arise for consideration. If the net result of computation under the long-term capital gains is a profit or positive figure, deduction will be available under Section 80t. If the net result is a loss, no deduction will be available. ( 13 ) FOR the reasons aforesaid, both the questions in this reference must be answered in the negative and in favour of the Revenue. ( 14 ) THERE will be no order as to costs.