The ITO, Ward-8(4), Ahmedabad V. Shri Ashish Navnitlal Shah, Ahmedabad

ITA 2843/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8657 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 29-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: MUKESH M PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MAHAVIR SINGH, JUDICIAL MEMBER) ITA.NO.2843/AHD/2007 ASSTT.YEAR : 2004-2005 ITO, WARD-8(4) AHMEDABAD. VS. SHRI ASHISH NAVNITLAL SHAH SHITAL CHAYA APARTMENTS NR.HIRABAUGH, AMBAWADI AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SMT. NEETA SHAH ASSESSEE BY : SHRI MUKESH M. PATEL O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS REVENUES APPEAL AGAINST ORDER OF THE CIT(A)-XIV, AHMEDABAD DATED 27 -4-2007 FOR A.Y.2004- 2005. THE ONLY GROUND RAISED IN THIS APPEAL IS AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.21,65,988/- ON ACCOUNT OF LOSS CLAIM ED IN RESPECT OF TATA MUTUAL FUND (TATA INDEX NIFTY PLAN) 2. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED DR THAT AS PER THE PROVISIONS OF SECTION 94(7) OF THE INCOM E TAX ACT, AS IT STOOD AT THE RELEVANT TIME, IF THE ASSESSEE SOLD A UNIT WITHIN T HE PERIOD OF THREE MONTHS AFTER ITS PURCHASE, THE LOSS ARISING THEREFROM IS TO BE D ISALLOWED; THAT THE ASSESSEE PURCHASED THE UNIT ON 25-11-2003 AND SOLD THE SAME ON 25-2-2004. THUS, THE SALE WAS WITHIN THE PERIOD OF THREE MONTHS FROM THE DATE OF PURCHASE; THAT THE CIT(A) HELD THAT THE SALE WAS AFTER 92 DAYS FROM TH E DATE OF PURCHASE AND THEREFORE IT WAS NOT WITHIN THE THREE MONTHS, IS NO T THE CORRECT VIEW, BECAUSE, SECTION 94(7) DOES NOT PROVIDE TIME LIMIT OF 90 DAY S AND IT PROVIDE TIME LIMIT OF THREE MONTHS. THEREFORE, IF THE UNITS ARE SOLD BEF ORE THE THREE MONTHS FROM THE DATE OF PURCHASE, THE LOSS IS TO BE DISALLOWED. TH EREFORE, SHE SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF THE AO SHOULD BE RESTORED. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STATED THAT UNDER THE ITA.NO.2843/AHD/2007 -2- INCOME TAX ACT THE WORD MONTH IS NOT DEFINED, BUT IT IS INTERPRETED BY SEVERAL COURTS. THE HONBLE ALLAHABAD HIGH COURT I N THE CASE OF CIT VS. LAXMI RATTAN COTTON MILLS CO. LTD., 97 ITR 285 HEL D THAT THE WORD MONTH IS TO BE TAKEN AS A PERIOD OF 30 DAYS. SIMILARLY, THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT THE TERM MONTH DENOTES A PERIOD TER MINATING WITH THE DAY OF SUCCEEDING MONTH NUMERICALLY CORRESPONDING TO THE D AY OF ITS BEGINNING LESS ONE; THAT THE RBI HAS ALSO CLARIFIED IN RESPECT OF CALCULATION OF INTEREST ON THE SECURITIES THAT EACH MONTH IS TO BE TAKEN AS THE PE RIOD OF 30 DAYS. HE THEREFORE SUBMITTED THAT IF A MONTH IS TAKEN AS 30 DAYS, THRE E MONTHS WOULD BE 90 DAYS. THE ASSESSEE HAS SOLD THE UNIT AFTER 92 DAYS FROM I TS PURCHASE. IF THE DEFINITION OF THE MONTH IS TAKEN AS TAKEN BY THE HO NBLE CALCUTTA HIGH COURT, THEN ALSO THREE MONTHS WOULD BE COMPLETED ON 24-2-2 003 WHILE THE ASSESSEE HAS SOLD THE UNIT ON 25-2-2003. HE THEREFORE SUB MITTED THAT EITHER WAY THE CONDITIONS PRESCRIBED UNDER SECTION 94(7) ARE NOT S ATISFIED AND THE CIT(A) RIGHTLY DELETED THE DISALLOWANCE OF THE LOSS. 3. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE CIT(A) HAS DISCUSSED THE FACTS AND LEGAL ISSUES AS UNDER: THE COUNSEL OF THE APPELLANT FURTHER RELIED ON THE FOLLOWING DEFINITION OF MONTH AS INTERPRETED IN JUDICIAL PRONOUNCEMENT S AND LAW LEXICON: (I) THE WORD MONTH OCCURRING IN SEC. 271(1)(A) MU ST BE TAKEN TO MEAN A PERIOD OF 30 DAYS (CIT VS. LAXMI RATTAN COTT ON MILLS CO. LTD., 97 ITR 285 (ALL.) (II) THE TERM MONTH REFERS TO SPAN OF TIME BETWEEN TWO DATES OF TWO CONTINUOUS MONTHS AND NOT A CALENDAR MONTH. (BHIKHA LAL VS. NOORMOHAMMED ABDUL KARIM AIR 1978 (GUJ) 149) (III) THE MONTH WHETHER EMPLOYED IN MODERN STATUTE OR C ONTRACTS AND NOT APPEARING TO HAVE BEEN USED IN DIFFERENT SE NSE, DENOTES A PERIOD TERMINATING WITH TH4E DAY OF SUCCEEDING MONT H NUMERICALLY CORRESPONDING TO THE DAY OF ITS BEGINNI NG LESS ONE. IF ITA.NO.2843/AHD/2007 -3- THERE BE NO CORRESPONDING DAY OF SUCCEEDING MONTH , IT TERMINATES TO THE LAST DAY THEREOF (36 CAL 516) (IV) THE COUNSEL ALSO RELIED ON FAQS ON THE DEBT MARKETS AS PR THE CLARIFICATION ISSUED BY THE BOMBAY STOCK EXCHANGE L TD. AND THE CLARIFICATION AS PER THE RESERVE BANK OF INDIAS BU LLETIN, WHEREIN IT HAS BEEN OPENED THAT MONTH IS TO BE TAKEN AS HA VING 30 DAYS. 25 Q. WHAT ARE THE CONTENTION FOLLOWED FOR THE CALC ULATION OF ACCRUED INTEREST A. THE DAY COUNT CONVENTION TO BE FOLLOWED FOR THE CALCULATION OF ACCRUED INTEREST IN CASE OF TRANSACT IONS IN G-SEC IS 30/360 I.E. EACH MONTH IS TO BE TAKEN AS HAVING 30 DAYS AN EACH YEAR IS TO BE TAKEN AS HAVING 360 DAYS, IRRESPECTIV E OF THE ACTUAL NUMBER OF DAYS IN THE MONTH. SO, MONTHS LIKE FEBRU ARY, MARCH, JANUARY, MAY, JULY, AUGUST, OCTOBER AND DECEMBER AR E TO BE TAKEN AS HAVING 30 DAYS. (FAQS ON THE DEBT MARKETS BY BSE DEBT. SEGMENT, BOMBAY STOCK EXCHANGE LIMITED (BSE)] 2.3 I HAVE GONE THROUGH THE OBSERVATIONS OF THE AO AS CONTAINED IN THE ASSESSMENT ORDER AND ALSO CONSIDERED THE SUBMIS SIONS MADE ON BEHALF OF THE APPELLANT. ON CAREFUL CONSIDERATION OF THE SAME, I FIND FAVOUR WITH THE CONTENTION OF THE APPELLANT THAT TH E AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 94(7) ON THE FAC TS OF THE CASE AND RESULTANTLY DISALLOWING THE LOSS OF RS.21,65,988/- CLAIMED BY THE APPELLANT IN RESPECT OF REDEMPTION OF UNITS OF TATA MUTUAL FUND (TATA INDEX FUND NIFTY PLAN). IT IS NOT A MATTER OF DISP UTE THAT THE PERIOD OF HOLDING OF THE UNITS BETWEEN THE RECORD DATE (THE D ATE OF DECLARATION OF DIVIDEND) AND THE DATE OF REDEMPTION IS 92 DAYS. T HE QUESTION FOR CONSIDERATION IS WHETHER SAID PERIOD OF 92 DAYS SHO ULD MEAN THE PERIOD OF THREE MONTHS AS REFERRED TO IN SEC.94(7) . THE LEARNED AR HAS RIGHTLY POINTED OUT THAT AS THE PROVISIONS OF SEC.9 4(7) STOOD FOR A.Y.2004-05, THE LOSS IS REQUIRED TO BE IGNORED ONL Y IF THE UNITS ARE TRANSFERRED WITH8N THE PERIOD OF THREE MONTHS FROM THE RECORD ATE. THE AO H8IMSELF HAS ALLOWED THE LOSS IN REGARD TO THE S CHEMES OF J.M. BALANCED FUND GROWTH PLAN AND IL & FS INDEX FUND NIFTY PLAN, THOUGH THE PERIOD OF HOLDING IN THESE TWO CASES IS 94-92 DAYS RESPECTIVELY. 4. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDE S AND FACTS AND CIRCUMSTANCES OF THE CASE, WE ENTIRELY AGREE WITH T HE FINDING OF THE CIT(A). THE ASSESSEE PURCHASED THE UNIT ON 25-11-2003 AND T HE SAME WAS SOLD ON 25-2- 2004, WHICH WAS AFTER 92 DAYS FROM THE DATE OF PURC HASE. EVEN IF MONTH TO ITA.NO.2843/AHD/2007 -4- MONTH BASIS IS TO BE CONSIDERED THEN THE THREE MONT HS AFTER THE DATE OF PURCHASE WOULD COMPLETE ON 24-4-2004. THE UNITS WERE SOLD O N 25-2-2004 WHICH WAS NOT WITHIN THE PERIOD OF THREE MONTHS FROM THE DATE OF THE PURCHASE I.E. 25-11- 2003. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 5 . IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 26 TH MARCH, 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 26-03-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD