Judgment B. P. JEEVAN REDDY, J. :- This appeal is directed against the judgement of the Madras High Court (reported in 120 ITR 688): (1980 Tax LR 410). 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 assessees 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." 4. S. 80-T, as it was in force at the relevant time, provided for deductions in the case of long-term capital gains. S. 80-T, in so far as is relevant, read as follows: "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,-" 5. The language of S. 80-T is plain and unambiguous. It says,- (i) where the gross total income of an assessee (not being a company), (ii) includes any income chargeable under the head Capital gains in the nature of long term capital gains, (iii) there shall be allowed, in computing the total income of the assessee, a deduction from such income or an amount equal to............ 6. Evidently, the deductions provided for by the said provision has to be made from out of the capital gains in this case the capital gains was Rs. 1,02,740. It is on the said sum that the deductions provided for by S. 80-T had to be applied. In such a case, no question lean arise of the business loss being set off against this capital gain. The profits and gains (and loss) from business had to be computed in accordance with a different set of provisions namely Ss. 30 to 43A, as they obtained at that time. Room for argument had arisen on account of the use of the words "from such income" in the main limb of S. 80-T. Relying upon the said words, the Revenue contends that the Income-tax Officer must apply the deductions under S. 80-T to the total income computed by him in accordance with the Act. The order of the Income-tax Officer is sought to be justified on this basis. It is not possible to agree. The language of S. 80-T, reasonably understood is not capable of and does not admit such construction. Probably, the placement of S. 80-T is wrong. It ought to have been placed alongside S.48, as has since been done by the Finance Act, 1987, with effect from 1-4-88. By the said Act, S. 80-T has been omitted and its provisions, with certain changes, have been placed in S. 48. Probably, the placement of S. 80-T is wrong. It ought to have been placed alongside S.48, as has since been done by the Finance Act, 1987, with effect from 1-4-88. By the said Act, S. 80-T has been omitted and its provisions, with certain changes, have been placed in S. 48. (Of course, S.48 has been totally recast with effect from 1-4-93 by Finance Act, l992). The words "such income", in our opinion meant and referred to the capital gains and not the total income of the assessee. 7. The learned counsel for the Revenue, Shri Shukla, pointed out that the High Court has, while answering the question referred against the Revenue applied the principle of Cloth Traders Private Ltd. v. AddI. Commr. of Income-tax, 118 ITR 243 while construing the words such income. Inasmuch as the said decision has been overruled by this Court in Distributors (Baroda) v. Union of India, 155 ITR 120 ( AIR 1985 SC 1585 ) it is argued, the very basis of the High Courts judgment gets knocked out. In our opinion, the said argument is beside the point. The character of deduction provided by S. 80-M, which was the provision considered in the said two decisions of this Court, is different from the character of deduction provided by S. 80-T. Because the same words occur in both the sections, it does not necessarily follow that they must carry the same meaning. The High Court has referred to the decision in Cloth Traders by way of an additional factor supporting its understanding and nothing more. The fact that Cloth Traders had since been overruled makes no difference to the ratio of the decision of the High Court. 8. Reliance is then placed upon the decision of this Court in Cambay Electric Supply Industrial Co. Ltd. v. Commr. of Income-tax, Gujarat, 113 ITR 84: The said decision was rendered with reference to S. 80-E, as it then stood. 8. Reliance is then placed upon the decision of this Court in Cambay Electric Supply Industrial Co. Ltd. v. Commr. of Income-tax, Gujarat, 113 ITR 84: The said decision was rendered with reference to S. 80-E, as it then stood. Two questions arose for consideration in that case viz., (i) whether the balancing charge (i.e., deemed profits) computed under S. 4 1(2) of the Income-tax Act should be added to the business income before applying the deduction provided by Sec. 80-E and (ii) whether the unabsorbed depreciation and development rebate should be deducted out of such income before applying the deduction provided by S. 80-E. This Court held on the first question that the deemed profits arising under S.41(2) shall have to be added to the business income before making the said deduction. On the second question, it was held that unabsorbed depreciation and development rebate shall have to be deducted before making the said deduction. In short, the principle of the decision is that the Income-tax Officer must first have to arrive at the profits and gains of the business in accordance with Ss.28 to 43-A before granting the deduction provided for by S. 80-E. We do not think that the principle of the said decision has any relevance herein. 9. For the above reasons, the appeal fails and is accordingly dismissed. There shall, however, be no order as to costs. Appeal dismissed. For Citation : AIR 1994 SC 1267