Judgment:
ASHOK BHAN, J. :
This petition has been filed under s. 256(2) of the IT Act, 1961, (for short the Act) by the CIT, seeking a mandamus to the Tribunal, Chandigarh to refer the following question of law stated to be arising from the order of the Tribunal :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that short-term capital loss be not mingled with long-term capital gain - rather deduction under s. 80T should be allowed on the entire amount of long-term capital gain as shown and short-term capital loss be treated as loss of current year in accordance with provisions of s. 74 ignoring the specific provisions of sub-s. (2)(i) of s. 70 of the IT Act, 1961 ?'
2. In short the facts are :
The assessee is an individual. His source of income is salary, house property, share from profit and from other sources. Return of income for the accounting period ending 31st March, 1981 relevant for the asst. yr. 1981-82 was filed on 27th August, 1981 declaring net income of Rs. 62,724. During the course of assessment proceedings, it was found that the assessee had transferred/sold 950 equity shares of face value of Rs. 25 showing capital gain at Rs. 1,51,169 and Rs. 10,125 - 4 per cent irredeemable non-cumulative preference shares with cost of acquisition @ Rs. 45 each at sale price of Rs. 30. The ITO, not satisfied with the cost of acquisition taken by the assessee at the rate of Rs. 45 per share in respect of irredeemable non-cumulative preference shares adopted the value @ Rs. 30 and computed the short-term loss at Rs. 1519 against Rs. 1,53,394 claimed by the assessee. After adjusting this short-term loss of Rs. 1519 against the long-term capital gain shown by the assessee at Rs. 1,51,169 in respect of transfer of 950 equity shares, the AO allowed the statutory deduction under s. 80T at Rs. 73,255 and assessed the remaining amount to tax. Assessment was accordingly framed by the ITO, Central Circle-I, Ludhiana on a total income of Rs. 2,39,330 vide order dt. 16th July, 1984.
Aggrieved against the findings recorded by the ITO, assessee filed an appeal before the CIT (A), Ludhiana, who vide his order dt. 8th August, 1986, while allowing relief in respect of deduction under s. 80T, confirmed AOs action in the working out of capital gains.
Not satisfied with the findings of the CIT(A), the assessee filed a second appeal before the Tribunal, Chandigarh Bench, Chandigarh, who vide its order dt. 20th April, 1992 allowed assessees appeal by allowing short-term capital loss of Rs. 1,53,394 including Rs. 1519 with further directions that deductions under s. 80-T should be allowed on the entire amount or Rs. 1,51,169 being long-term capital gains, and the short-term capital loss was directed to be treated as loss of the current year in accordance with the provisions of s. 74.
Petition filed by the Revenue under s. 256(1) seeking to refer the aforesaid question of law to this Court was dismissed by the Tribunal by observing that the Tribunal had decided the matter in accordance with and subject to the provisions of law and, therefore, no question of law arises. Thereafter, the Revenue filed the present petition under s. 256(1) seeking a mandamus directing the Tribunal to refer the question of law stated to be arising from the order of the Tribunal.
3. Assessee is not present despite service. Learned counsel for the Department has been heard. Mr. R. P. Sawhney, Senior Advocate has contended that Tribunal has not appreciated the legal position as per s. 80AB wherein it has been provided that the net amount of income assessable under a particular head has only to be considered for deduction under Chapter VI, and if the assessee has short term capital loss, then the same is to be adjusted against the income in respect of any other capital gain.
4. Interpretation of a statutory provision of law gives rise to a question of law. We are satisfied that question of law does arise from the order of the Tribunal and we modify the question claimed by the Department to the following effect and direct the Tribunal to refer the question of law alongwith the statement of the case to this Court for its opinion :
'Whether the Tribunal was right in law in holding that the short-term capital loss be not deducted from the long-term capital gain of the assessee while allowing statutory deduction under s. 80T of the IT Act, 1961 ?'