DCIT, New Delhi V. M/s Karamchand Appliances Pvt. Ltd., New Delhi

ITA 1079/DEL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69201 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-07-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHUKAR KUMAR BHAGAT
• Keywords: Additional evidence

Judgement Text

ITA NO. 1079/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1079/DEL/2011 A.Y. : 200 4 - 0 5 DCIT, CIRCLE-7(1), NEW DELHI ROOM NO. 312, 3 RD FLOOR, CR BUILDING, I.P. ESTATE, NEW DELHI VS. M/S S.C. JOHNSON PRODUCTS PVT. LTD., (FORMERLY KNOWN AS KARAMCHAND APPLIANCES PVT. LTD.), M-69, M-BLOCK, GREATER KAILASH, NEW DELHI 110 048 (PAN: AAACL 3128 M EARLIER PAN: AAACK 1065G) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. RAVI SHARMA, CA DEPARTMENT BY : SH. MADHUKAR KUMAR BHAGAT, D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-X, NEW DELHI DATED 23.11.2010 PERTAINING TO ASSESSMENT YEAR 2004-05. 2. THE GROUNDS RAISED READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN LAW AS WELL AS ON MERITS IN ACCEPTING ADDITIONAL EVIDENCES WIT H REGARD TO RECORD DATE OF MUTUAL FUNDS FOR ITA NO. 1079/DEL/2011 2 COMPUTATION OF CAPITAL LOSS FROM SALE OF UNITS OF MUTUAL FUNDS, WITHOUT AFFORDING ANY OPPORTUNITY TO THE DEPARTMENT FOR EXAMINATION OF THE SAME, IN CONTRAVENTION OF RULE 46A OF THE I.T. RULES, 1962. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. COMMISSIONER OF INCOME TAX (A) ERRED IN LAW AS WELL AS ON MERITS IN RESTRICTING THE ADDITION OF RS. 11428600/- TO RS. 1199305/- WHICH WAS MADE BY ASSESSING OFFICER BY DISALLOWING CAPITAL LOSS IN PURSUANCE OF SECTION 94(7) OF THE I.T. ACT, 1961. 3. THE APPELLANT CRAVES TO AMEND, MODIFY, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. IN THIS CASE, DURING THE PREVIOUS YEAR, THE ASSE SSEE HAD ENTERED INTO SOME TRANSACTIONS INVOLVING SALE AND P URCHASE OF UNITS OF MUTUAL FUNDS IN WHICH IT HAD INCURRED SHORT TER M CAPITAL LOSSES. DETAILS OF WHICH ARE SHOWN IN THE TABLE A BELOW:- S.NO. BUY DATE DATE OF REDEMPTION SCHEME UNITS BOUGHT UNITS SOLD BUY VALUE SALE VALUE ST. CAPITAL GAINS OR LOSSES 1 5 - 8 - 03 9 - 2 - 04 BIRLA INCOME PLUS INSTITUTION PLAN 1836628 1836628 50000000 48747787 - 1252312 2 13 - 10 - 03 9 - 2 - 04 DSP MERRILL LYNCH BOND INSTITUTIONAL 4797221 4797221 50000000 48553638 - 1446362 3 25 - 7 - 03 9 - 2 - 04 GRINDLAYS SUPER SAVER INCOME INSTITUTIONAL 9062814 9060814 100000000 98675017 - 1324983 4 25 - 7 - 03 18 - 3 - 04 JM INCOME FUND INSTITUTIONAL PLANL 1888806 1888806 20000000 19847384 - 152616 5 7 - 11 - 03 01 - 03 - 04 SUNDARAM BOND SAVER DIVIDEND YEARLY 705255 705255 15000000 7837359 - 7162641 6 22 - 8 - 03 18 - 03 - 04 TEMPLETON INDIA INCOME BUILDER A/C 1855064 1855065 20000000 19910215 - 89785 ITA NO. 1079/DEL/2011 3 3.1 THE ASSESSING OFFICER INVOKED THE PROVISION OF SECTION 94(7) OF THE I.T. ACT AND HELD THAT THE ABOVE LOSSES INCURRE D IN THE PURCHASES AND SALE OF UNITS OF MUTUAL FUNDS NEED TO BE DISAL LOWED FOR THE FOLLOWING REASONS:- I) THE COMPANY HAS NOT FILED DETAILS ESTABLISHING THE RECORD DATE ACCORDING TO EXPLANATION (AA) TO SECTION 94(8) OF THE I.T. ACT. II) SHE ALSO REFERRED TO THE OBJECT BEHIND THE INSERTIO N OF CLAUSE OF SECTION 94(7) IN THE ACT. ACCORDING TO HE R, THE PURPOSE WAS TO CURTAIL SCOPE FOR TAX AVOIDANCE BY PURCHASE/ SALE OF SECURITIES AND UNITS PRIOR TO THE RECORD DATE AND SALE, THE SAME IMMEDIATELY AFTER DECLARATI ON OF DIVIDEND WITH A VIEW TO AVAILING DOUBLE BENEFIT OF DIVIDEND REMAINING EXEMPT AND THE LOSS ON SHARES/ U NITS TO BE SET OFF AGAINST OTHER CAPITAL GAINS. 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) IT WAS SUBMITTED THAT ALL THE ESSENTIAL DETAILS WITH REGAR D TO THE SALE AND PURCHASE OF UNITS OF VARIOUS MUTUAL FUNDS WERE FURN ISHED BEFORE THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT EX CEPT FOR ONE TRANSACTION IN RELATION TO DSP MERRIL LYNCH BOND I NSTITUTIONAL, ALL OTHER FIVE TRANSACTIONS MENTIONED IN TABLE ABOVE FA LL OUTSIDE THE SCOPE OF SECTION 94(7) OF THE I.T. ACT IN AS MUCH A S IN ALL SUCH CASES, THE SALE HAS TAKEN PLACE MORE THAN 3 MONTHS AFTER T HE RECEIPT OF DIVIDEND ON SUCH UNITS. IT WAS FURTHER SUBMITTED TH AT ASSESSING OFFICER HAS WRONGLY APPLIED THE PROVISIONS OF SECT ION 94(7)(B)(II) WHICH WAS APPLICABLE ONLY W.E.F. ASSESSMENT YEAR 20 05-06 WHEREAS THE IMPUGNED ASSESSMENT YEAR WAS 2004-05. IT WAS F URTHER SUBMITTED THAT THE CORRECT PROVISION TO BE APPLIED WAS NOT SECTION 94(7)(B)(II), WHICH CAME INTO STATUE BOOK W.E.F. 1. 4.2005, BUT SECTION 94(7)(B) AS IT STOOD UPTO 31.3.2005. ITA NO. 1079/DEL/2011 4 4.1 IT WAS FURTHER SUBMITTED THAT THE PROVISION OF SECTION 94(7) ARE APPLICABLE TO DSP MERRIL LYNCH BOND INSTITUTIONAL UNITS, BUT THE DISALLOWABLE AMOUNT WAS WORKED OUT AT RS. 11,99,305 /- BECAUSE THAT IS THE AMOUNT OF DIVIDEND RECEIVED ON THE RECORD DA TE AND NOT TO THE ACTUAL LOSS SUFFERED ON SALE OF UNITS WHICH WORKED OUT TO RS. 14,46,362/-. 4.2 CONSIDERING THE ABOVE, LD. COMMISSIONER OF INC OME TAX (A) REFERRED TO THE PROVISIONS OF SECTION 94(7) OF THE I.T. ACT AS IT STOOD AT RELEVANT POINT OF TIME, PRIOR TO AMENDMENT BY F INANCE (NO. 2) ACT, 2004 W.E.F. 1.4.2005 AS UNDER:- S. 94(7) WHERE (A) ANY PERSON BUYS OR ACQUIRES ANY SECURITIES OR UNIT WITHIN A PERIOD OF THREE MONTHS PRIOR TO THE RECORD DATE; (B) SUCH PERSON SELLS OR TRANSFERS SUCH SECURITIES OR U NIT WITHIN A PERIOD OF THREE MONTHS AFTER SUCH DATE; (C) THE DIVIDEND OR INCOME ON SUCH SECURITIES OR UNIT RECEIVED OR RECEIVABLE BY SUCH PERSON IS EXEMPT, THEN, THE LOSS, IF ANY, ARISING TO HIM ON ACCOUNT O F SUCH PURCHASE AND SALE OF SECURITIES OR UNIT, TO TH E EXTENT SUCH LOSS DOES NOT EXCEED THE AMOUNT OF DIVIDEND OR INCOME RECEIVED OR RECEIVABLE ON SUCH SECURITIES OR UNIT, SHALL BE IGNORED FOR THE PURPOS E OF COMPUTING HIS INCOME CHARGEABLE TO TAX. EXPLANATION FOR THE PURPOSES OF THIS SECTION (A) INTEREST INCLUDES A DIVIDEND; (AA) RECORD DATE MEANS SUCH DATE AS MAY BE FIXED BY A COMPANY OR A MUTUAL FUND OR THE UNIT TRUST OF IND IA FOR ITA NO. 1079/DEL/2011 5 THE PURPOSE OF ENTITLEMENT OF THE HOLDER OF THE SEC URITIES OR THE UNIT HOLDER, TO RECEIVE DIVIDEND OR INCOME, AS THE CASE MAY BE; (B) SECURITIES INCLUDES STOCKS AND SHARES; (C) SECURITIES SHALL BE DEEMED TO BE SIMILAR IF THEY ENTITLE THEIR HOLDERS TO THE SAME RIGHTS AGAINST TH E SAME PERSONS AS TO CAPITAL AND INTEREST AND THE SAME REMEDIES FOR THE ENFORCEMENT OF THOSE RIGHTS, NOTWITHSTANDING ANY DIFFERENCE IN THE TOTAL NOMINA L AMOUNTS OF THE RESPECTIVE SECURITIES OR IN THE FORM IN WHICH THEY ARE HELD OR IN THE MANNER IN WHICH THEY CAN BE TRANSFERRED; (D) UNIT SHALL HAVE THE MEANING ASSIGNED TO IT IN THE CLAUSE (B) OF THE EXPLANATION TO SECTION 115AB. I.E . (B) UNIT MEANS UNIT OF MUTUAL FUND SPECIFIED UNDE R CLAUSE (23D) OF SECTION 10 OR THE UNIT TRUST OF IN DIA; 4.3 LD. COMMISSIONER OF INCOME TAX (A) REFERRED T O THE CBDTS CIRCULAR NO. 5 OF 2005 DATED JULY 15, 2005 WHICH EX PLAINED THE PROVISIONS OF AMENDMENT MADE IN SECTION 94(7) BY FI NANCE (NO. 2) BILL, 2004 WITH EFFECT FROM 1.4.2005 AS UNDER:- MEASURES TO CURB TAX AVOIDANCE VIA DIVIDEND AND BO NUS STRIPPING THE EXISTING PROVISIONS CONTAINED IN SUB-SECTION (7 ) OF SECTION 94 PROVIDE THAT WHERE A PERSON BUYS OR ACQUIRES ANY SECURITIES OR UNIT WITHIN A PERIOD OF THREE MONTHS PRIOR TO TH E RECORD DATE FIXED FOR DECLARATION OF DIVIDEND OR INCOME IN RESP ECT OF SUCH SECURITY OR UNIT, AND SELLS OR TRANSFERS THE SAME W ITHIN A PERIOD OF THREE MONTHS AFTER SUCH RECORD DATE, AND THE DIV IDEND OR ITA NO. 1079/DEL/2011 6 INCOME RECEIVED OR RECEIVABLE ON SUCH SECURITIES OR UNIT IS EXEMPT, THEN THE LOSS, IF ANY, ARISING FROM SUCH PU RCHASE AND SALE SHALL BE IGNORED TO THE EXTENT SUCH LOSS DOES NOT EXCEED THE AMOUNT OF SUCH DIVIDEND OR INCOME FOR THE PURP OSE OF COMPUTING THE INCOME CHARGEABLE TO TAX OF SUCH PERS ON. IT WAS FELT THAT FOR UNITS, THE HOLDING OF THREE MO NTHS PRIOR TO SALE AS SPECIFIED IN THE SAID SUB-SECTION DID NOT P ROVIDE SUFFICIENT DETERRENCE TO TAX AVOIDANCE. THE FINANCE (NO. 2) ACT, 2004, HAS AMENDED SUB-SECT ION (7) OF SECTION 94 SO AS TO INCREASE THE HOLDING PERIOD IN RESPECT OF UNITS FROM THREE MONTHS TO NINE MONTHS AFTER THE RE CORD DATE. 4.4 CONSIDERING THE ABOVE PROVISIONS AND CIRCULAR, LD. COMMISSIONER OF INCOME TAX (A) OBSERVED THAT IT WAS CLEAR THAT IN ORDER TO ATTRACT THE PROVISIONS OF SECTION 94(7) OF THE ACT FOR THE IMPUGNED ASSESSMENT YEAR FOLLOWING THREE CONDITIONS MUST BE SATISFIED NAMELY :- I) A PERSON BUYS OR ACQUIRES SHARES OR UNITS WITHIN A PERIOD OF THREE MONTHS PRIOR TO THE RECORD DATE FIX ED FOR DECLARATION OF DIVIDEND, AND II) SELLS OR TRANSFERS SUCH SECURITIES OR UNITS WIT HIN A PERIOD OF THREE MONTHS AFTER SUCH RECORD DATE, AND III) THE DIVIDEND RECEIVED OR RECEIVABLE IS EXEMP T. THEN, THE LOSS, IF ANY, ARISING FROM SUCH PURCHASE OR SALE SHALL BE IGNORED TO THE EXTENT SUCH LOSS DOES NOT EXCEED THE AMOUNT OF SUCH DIVIDEND. LD. COMMISSIONER OF INCOME TAX (A) FURTHER OBSERVED THAT THAT TO ATTRACT THE PROVISION OF SECT ION 94(7), THE PRIMARY TEST WAS TO CHECK WHETHER THE PURCHASE OF U NITS WAS MADE ITA NO. 1079/DEL/2011 7 WITHIN A PERIOD OF THREE MONTHS PRIOR TO THE RECOR D DATE AND REDEEMED WITHIN THE PERIOD OF THREE MONTHS, AFTER T HE RECORD DATE. THAT IN ADDITION THE ASSESSEE MUST HAVE RECEIVED DIVIDEND WHICH WAS TAX FREE. ALL OF THE THREE CONDITIONS SHOULD BE SATISFIED CUMULATIVELY AS MENTIONED U/S. 94(7). 4.5 CONSIDERING THE ABOVE BACKGROUND, LD. COMMISSIO NER OF INCOME TAX (A) OBSERVED THAT IN ASSESSMENT PROCEEDI NGS AS WELL AS APPELLATE PROCEEDINGS, THE ASSESSEE COMPANY HAD FUR NISHED PHOTOCOPIES OF THE MUTUAL FUNDS STATEMENTS FROM WHI CH EVEN THE ASSESSING OFFICER HAS COMPUTED THE DISALLOWABLE A MOUNTS. LD. COMMISSIONER OF INCOME TAX (A) REFERRED TO THE FOLL OWING TABLE AND HELD AS UNDER:- S.NO. S.NO. S.NO. S.NO. NAME OF THE NAME OF THE NAME OF THE NAME OF THE BOND/UNIT BOND/UNIT BOND/UNIT BOND/UNIT BUY DATE BUY DATE BUY DATE BUY DATE RECORD DATE RECORD DATE RECORD DATE RECORD DATE REDEMPTION REDEMPTION REDEMPTION REDEMPTION DATE DATE DATE DATE SHORT TERM SHORT TERM SHORT TERM SHORT TERM CAPITAL LOSS CAPITAL LOSS CAPITAL LOSS CAPITAL LOSS REMARKS REMARKS REMARKS REMARKS 1 BIRLA INCOME PLUS INSTITUTIONAL PLAN 05 SEPT 03 15 SEP 03 24-DEC-03 09 FEB 04 12,52,213 PURCHASE AND REDEMPTION NOT WITHIN 3 MONTHS FROM RECORD DATE, HENCE, SECTION 94(7) NOT APPLICABLE. 2 DSP MERRILL LYNCH BOND INTERNATIONAL 13 - OCT - 03 29 - DEC - 03 09 - FEB - 04 14,46,362 3 GRINDLAYS SUPER SAVER INCOME INSTITUTIONAL 25 - JUL - 03 8 - SEP - 03 8-DEC-03 09 - FEB - 04 13,24,983 PURCHASE AND REDEMPTION NOT WITHIN 3 MONTHS FROM RECORD DATE, HENCE, SECTION 94(7) NOT APPLICABLE. 4 JM INCOME FUND INSTITUTIONAL PLAN 25 - JUL - 03 14 - SEP - 03 24 DEC 03 18 - MAR - 04 1,52,616 PURCHASE AND REDEMPTION NOT WITHIN 3 MONTHS FROM RECORD DATE, HENCE, SECTION 94(7) NOT APPLICABLE. 5 SUNDARAM BOND SAVER DIVIDEND YEARLY 07 - NOV - 03 7 - NOV - 03 01 - MAR - 04 71,62,641 PURCHASE AND REDEMPTION NOT WITHIN 3 MONTHS FROM RECORD DATE, HENCE, SECTION 94(7) NOT APPLICABLE. 6 TEMPLETON INDIA INCOME BUILDER A/C 25 - JUL - 03 26 - SEP - 03 18 - MAR - 04 89,785 PURCHASE AND REDEMPTION NOT WITHIN 3 ITA NO. 1079/DEL/2011 8 22-AUG 03 MONTHS FROM RECORD DATE, HENCE, SECTION 94(7) NOT APPLICABLE. TOTAL TOTAL TOTAL TOTAL 1,14,28,600 1,14,28,600 1,14,28,600 1,14,28,600 FROM THE BUY DATES, RECORD DATES AND REDEMPTION DATES AVAILABLE IN RESPECT OF THE ABOVE UNITS, IT I S SEEN THAT EXCEPT FOR DSP MERRILL LYNCH BOND INSTITUTIONAL BON D, IN ALL OTHER CASES, THE THREE CONDITIONS NOTED AT PARA 6.7 OF THIS ORDER ARE NOT SATISFIED. IN ALL SUCH CASES EITHER T HE DATE OF PURCHASE OR THE DATE OF REDEMPTION IS FALLING OUTSI DE THE PERIOD OF THREE MONTHS FROM THE RECORD DATE. HENCE, THE PR OVISIONS OF SECTION 94(7) AS IT STOOD FOR A.Y. 2004-05, WILL NOT BE APPLICABLE TO SUCH TRANSACTIONS EXCEPT FOR THE ONE MENTIONED ABOVE. HENCE, THE ADDITION MADE BY THE ASSESSING OF FICER WITH RESPECT TO THE FOLLOWING TRANSACTIONS ARE DELETED AS THE ASSESSING OFFICER HAS WRONGLY APPLIED THE PROVISIO NS APPLICABLE TO A.Y. 2005-06 ONWARDS TO THE ASSESSEE S CASE WHICH RELATES TO A.Y. 2004-05. S.NO. BUY DATE DATE OF REDEMPTION SCHEME UNITS BOUGHT UNITS SOLD BUY VALUE SALE VALUE ST. CAPITAL GAINS OR LOSSES 1 5 - 8 - 03 9 - 2 - 04 BIRLA INCOME PLUS INSTITUTION PLAN 1836628 1836628 50000000 48747787 - 1252312 3 25 - 7 - 03 9 - 2 - 04 GRINDLAYS SUPER SAVER INCOME INSTITUTIONAL 9062814 9060814 100000000 98675017 - 1324983 4 25 - 7 - 03 18 - 3 - 04 JM INCOME FUND INSTITUTIONAL PLANL 1888806 1888806 20000000 19847384 - 152616 5 7 - 11 - 03 01 - 03 - 04 SUNDARAM BOND SAVER DIVIDEND YEARLY 705255 705255 15000000 7837359 - 7162641 6 22 - 8 - 03 18 - 03 - 04 TEMPLETON INDIA INCOME BUILDER A/C 1855064 1855065 20000000 19910215 - 89785 TOTAL TOTAL TOTAL TOTAL - -- - 9982337 9982337 9982337 9982337 4.6 LD. COMMISSIONER OF INCOME TAX (A) FURTHER ACCE PTED THE CONTENTION OF THE ASSESSEE THAT ALTHOUGH IN THE CAS E OF UNITS OF DSP ITA NO. 1079/DEL/2011 9 MERRILL LYNCH BOND INSTITUTIONAL BOND THE PROVISION S OF SECTION 94(7) AS IT STOOD AT THE RELEVANT TIME ARE APPLICABLE, TH E ASSESSING OFFICER WAS WRONG IN DISALLOWING THE ENTIRE LOSS OF RS. 14, 46,362/- AND NOT IN LIMITING THE AMOUNT OF LOSS TO THE EXTENT OF DIVIDE ND RECEIVED FROM THESE UNITS, WHICH WAS TO THE TUNE OF RS. 11,99,305 /-. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT LD. COMMISSI ONER OF INCOME TAX (A) HAS NOT ACCEPTED ANY DOCUMENT/ INFORMATION IN CONTRAVENTION OF RULE 46A OF I.T. RULES. HE SUBMITT ED THAT ASSESSEE HAS ONLY SUBMITTED INFORMATION WHICH WAS IN PUBLIC DOMAIN. HE FURTHER SUBMITTED THAT THE ISSUE IN THIS CASE WAS W HAT WAS CORRECT LAW TO BE APPLIED IN THIS CASE. WHETHER THE SAME SH OULD BE SECTION 94(7) PRIOR TO AMENDMENT VIDE FINANCE ACT NO. 2/200 4 OR SECTION 94(7) POST AMENDMENT VIDE THE FINANCE ACT NO. 2, 20 04. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IT WAS CLEAR THAT TH E ASSESSMENT YEAR CONCERNED IS ASSESSMENT YEAR 2004-05 AND HENCE, COR RECT PROVISIONS TO BE APPLIED IS NOT SECTION 94(7)(B)(II ) WHICH CAME INTO STATUTE BOOK W.E.F. 1.4.2005, BUT SECTION 94(7)(B) AS IT STOOD UPTO 31.3.2005. HENCE, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT LD. COMMISSIONER OF INCOME TAX (A) HAS TAKEN A CORR ECT VIEW AND THE SAME NEEDS TO BE AFFIRMED. LD. COUNSEL FURTHER PLACED RELIANCE UPON THE DECISION OF I.T.A.T., AHMEDABAD DECISION I N I.T.A. NO. 3974/AHD/2007 DATED 2.2.2011. 7. LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAN D COULD NOT CONTRADICT THE SUBMISSIONS OF THE LD. COUNSEL OF T HE ASSESSEE AS ABOVE. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AN D PERUSED THE RECORDS. WE FIND THAT THE LD. COMMISSIONER OF INCOM E TAX (A) IS ITA NO. 1079/DEL/2011 10 CORRECT IN HOLDING THAT EXCEPT FOR ONE TRANSACTION IN RELATION TO DSP MERRILL LYNCH BOND INSTITUTIONAL BOND ALL OTHER 5 T RANSACTIONS IN THIS CASE FALL OUTSIDE THE SCOPE OF SECTION 94(7) OF THE I.T. ACT, IN AS MUCH AS IN ALL SUCH CASES THE SALE HAS TAKEN PLACE MORE THAN THREE MONTHS AFTER THE RECEIPT OF DIVIDEND ON SUCH UNITS. IN THIS CONNECTION, LD. COMMISSIONER OF INCOME TAX (A) IS C ORRECT IN HOLDING THAT ASSESSING OFFICER HAS WRONGLY APPLIED THE PRO VISIONS OF SECTION 94(7)(B)(II) WHICH WAS APPLICABLE ONLY W.E.F. ASSES SMENT YEAR 2005- 06 WHEREAS THE IMPUGNED ASSESSMENT YEAR WAS 2004-05 . SECTION 94(7)(B) AS IT STOOD AT THE RELEVANT POINT OF TIME READS AS UNDER:- SUCH PERSON SELLS OR TRANSFERS SUCH SECURITIES OR UNIT WITHIN A PERIOD OF THREE MONTHS AFTER SUCH DATE. 8.1 A PERUSAL OF THE ABOVE PROVISIONS SHOWS THAT PR IOR TO 1.4.2005, NO DISTINCTION WAS MADE IN RESPECT OF TRANSACTION I N SHARES OR UNITS OF MUTUAL FUNDS AS FAR AS TIME PERIOD OF HOLDING BE YOND THE RECORD DATE WAS CONCERNED. THE PERIOD WAS UNIFORM AT THR EE MONTHS FOR BOTH SHARES AS WELL AS UNITS OF MUTUAL FUNDS. HENC E, WE FIND THAT LD. COMMISSIONER OF INCOME TAX (A) IS CORRECT IN HOLDIN G THAT IF THE PROVISIONS OF LAW AS IT STOOD AT THE RELEVANT POINT OF TIME IS TAKEN INTO CONSIDERATION, THEN EXCEPT FOR TRANSFER DSP M ERRILL LYNCH BOND INSTITUTIONAL FUNDS NO OTHER TRANSACTION WAS HIT BY THE PROVISIONS OF SECTION 94(7)(B). FURTHERMORE, WE ALSO AGREE WITH THE LD. COMMISSIONER OF INCOME TAX (A) THAT IN CASE OF DSP MERRILL LYNCH BOND INSTITUTIONAL FUNDS UNITS, THE DISALLOWABLE AMOUNT HAS TO BE WORKED AT RS. 1199305/- I.E. THE AMOUNT OF DIVIDEND RECEIVED ON THE ITA NO. 1079/DEL/2011 11 RECORD DATE AND NOT TO THE ACTUAL LOSS SUFFERED ON SALE OF UNITS WHICH WORKED OUT TO RS. 14463662/-. 9. THUS, IN THE BACKGROUND OF THE ABOVE DISCUSSIONS , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISS IONER OF INCOME TAX (A), ACCORDINGLY, WE UPHOLD THE SAME. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/8/2013. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 08/8/2013 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 1079/DEL/2011 12