VASUDEO PANDURANG GINDE, MUMBAI V. ITO 10(3)(4), MUMBAI

ITA 4285/MUM/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62530 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 10-05-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 15-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Assessee Lawyers: C N VAZE
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F , MUMBAI BEFORE SHRI VIJAY PAL RAO, J.M. AND SHRI N. K. BILL AIYA, A.M. ITA NO. : 4285/MUM/2009 ASSESSMENT YEAR : 2004-05 SHRI VASUDEO PANDURANG GINDE HOUSE NO.16, ETERNITY KANAKIA SPACES, BH. TATA MOTORS, TEEN HATH NAKA, THANE (W) 400 602 PAN NO: AASPG 1787 G VS. THE INCOME TAX OFFICER - 10(3)(4), ROOM NO.452, AAYAKAR BHAVAN, 4 TH FLOOR, M. K. MARG, MUMBAI-400 020 (APPELLANT) (RESPONDENT) & ITA NO. : 4540/MUM/2009 ASSESSMENT YEAR : 2004-05 THE INCOME TAX OFFICER - 10(3)(4), ROOM NO.452, AAYAKAR BHAVAN, 4 TH FLOOR, M. K. MARG, MUMBAI-400 020 VS. SHRI VASUDEO PANDURANG GINDE HOUSE NO.16, ETERNITY KANAKIA SPACES, BH. TATA MOTORS, TEEN HATH NAKA, THANE (W) 400 602 PAN NO: AASPG 1787 G (APPELL ANT) (RESPONDENT) A SSESSEE BY : SHRI C. N. VAZE DEPARTMENT BY : SHRI M. RAJAN DATE OF HEARING : 2 1 .05.2012 DATE OF PRONOUNCEMENT : 06.06. 20 12 ORDER PER N. K. BILLAIYA, A.M.: THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSE E ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-X, MUMBAI DATED 25.05.2009. ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 2 ITA NO. : 4285/MUM/2009 ASSESSMENT YEAR : 2004-05 2. THE FIRST APPEAL RAISED BY THE ASSESSEE. THE SO LITARY GRIEVANCE OF THE ASSESSEE IS THE DENIAL OF EXEMPTION CLAIMED U/S .54 OF THE ACT AMOUNTING TO `. 1,23,90,428/-. FACTS GIVING RISE TO THIS GRIEVANCE SHOW THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAS MADE LONG TERM CAPITAL GAIN ON SALE OF SHARES AT `. 5,02,03,292/-. OUT OF THE SALE PROCEEDS, THE ASSESSEE HAS INVESTED `. 1,33,48,000/- FOR PURCHASING ROW HOUSE AND CLAIMED EXEMPTION U/S.54F OF THE ACT. ON GOING THROUGH THE PURCHASE DETAILS, DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAS PURCHASED TWO ROW HOUSES ONE LOCATED AT THE GROUND FLOOR AND THE OTHER LOCATED AT THE 1 ST & 2 ND FLOOR. THE A.O. FURTHER NOTED THAT BOTH THE HOUSES WERE PURCHASED A LONG WITH SMT. MANISHA V. GINDE, WIFE OF THE ASSESSEE. THE A.O. CO NCLUDED THAT AS THE ASSESSEE HAS PURCHASED TWO ROW HOUSES AND THAT TO I N THE JOINT NAME ALONG WITH HIS WIFE AND AS PER THE PROVISIONS OF SE CTION 54F, THE EXEMPTION IS AVAILABLE IN RESPECT OF ONE RESIDENTIA L HOUSE AND THAT TO IN THE NAME OF THE INDIVIDUAL. THE ASSESSEE HAS VIOLA TED BOTH THE CONDITIONS, THEREFORE, EXEMPTION U/S.54F IS NOT AVA ILABLE TO HIM. ACCORDINGLY, THE A.O. DENIED THE EXEMPTION AS CLAIM ED BY THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) 3. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT THE ALLEGATION OF THE AO THAT ASSESSEE HAS PURCHASED TWO HOUSES IS IN CORRECT, AS, THE ASSESSEE HAS PURCHASED ONLY ONE ROW HOUSE WITH TWO SEPARATE DEEDS AND THE DWELLING SO PURCHASED HAS ONLY ONE ENTRANCE AND IS OCCUPIED BY ONLY ONE FAMILY. TO SUPPORT HIS CONTENTION, THE ASSESSE E FILED THE FOLLOWING DOCUMENTS:- ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 3 I. ACCOUNT OF THE ASSESSEE IN THE ACCOUNT OF THE BUILD ER. II. COPIES OF CIVIL CONTRACTORS BILL III. COPY OF RATION CARD. IV. COPY OF TELEPHONE BILL. V. COPY OF ELECTRICITY BILL. VI. CERTIFICATE FROM SOCIETY. VII. ACKNOWLEDGMENT OF RETURN FOR A.Y. 2004-05 TO PROVE THAT THE ASSESSEES WIFE IS SEPARATELY ASSESSED TO TAX. VIII. COPY OF STATEMENT OF ACCOUNT AND BALANCE SHEET FOR THE A.Y. 2004-05 WHEREIN THE PAYMENT TO THE BUILDER TO THE TUNE OF `. 1 CRORE IS SHOWN IN THE BALANCE SHEET. 3.1 AFTER CAREFULLY EXAMINING THE SUBMISSIONS AND T HE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE LD. CIT(A) HELD THAT THE ASSESSEE HAS PURCHASED TWO ROW HOUSES VIDE TWO SEPARATE AGREEMEN TS AND AS BOTH THE AGREEMENTS ARE SEPARATELY REGISTERED WITH THE AUTHO RITIES, EVEN THOUGH SUBSEQUENTLY BOTH THE HOUSES ARE USED AS ONE SINGLE UNIT , AT THE TIME OF PURCHASE THOUGH WERE SOLD BY THE BUILDER AS TWO SEP ARATE UNITS. THE LD. CIT(A) FINALLY REJECTED THE CONTENTION OF THE ASSES SEE AND HELD THAT THERE ARE TWO DWELLING UNITS AND CONFIRMED THE FINDINGS O F THE A.O. AS THE LD. CIT(A) HAS HELD THAT THE ASSESSEE HAS PURCHASED TWO DWELLING UNITS, HE DID NOT GO INTO THE ISSUE OF JOINT OWNERSHIP. 4. AGGRIEVED BY THIS FINDING OF THE LD. CIT(A), THE ASSESSEE IS BEFORE US. 5. THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE R EITERATED ITS STAND THAT THE TWO ROW HOUSES PURCHASED BY TWO SEPARATE D EEDS ARE NOTHING BUT ONE DWELLING UNIT AND, THEREFORE, EXEMPTION U/S.54F CANNOT BE DENIED. THE COUNSEL RELIED UPON THE DECISION OF ITO VS. MS. SUSHILA M. JHAVERI REPORTED IN 292 ITR 0001 TBOMS, WHEREIN A SIMILAR MATTER WAS BEFORE THE BENCH, WHEREIN THE BENCH HAS OBSERVED THAT THE INTENTION OF THE LEGISLATURE IS THAT INVESTMENT SHOULD BE MADE IN ON E RESIDENTIAL HOUSE. SO LONG AS THE HOUSE PURCHASED IS ONE EVEN AFTER CO NVERSION, THE EXEMPTION WOULD BE AVAILABLE. ON THE OTHER HAND, I F THE INVESTMENT IS MADE IN TWO INDEPENDENT RESIDENTIAL HOUSES, EVEN LO CATED IN THE SAME ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 4 COMPLEX, THEN, IN OUR OPINION, EXEMPTION CANNOT BE ALLOWED FOR INVESTMENT IN BOTH THE HOUSES. THE COUNSEL FURTHER DREW OUR ATTENTION TO THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. ANANDA BASAPPA REPORTED IN [2009] 309 I TR 0329, WHEREIN THE HON'BLE HIGH COURT HAS OBSERVED AS UNDER :- ON FACTS, IT IS SHOWN BY THE ASSESSEE THAT THE APA RTMENTS ARE SITUATED SIDE BY SIDE. THE BUILDER HAS ALSO STATED THAT HE HAS EFFECTED MODIFICATION OF THE FLATS TO MAKE IT AS ON E UNIT BY OPENING THE DOOR IN BETWEEN TWO APARTMENTS. THE FA CT THAT AT THE TIME WHEN THE INSPECTOR INSPECTED THE PREMISES, THE FLATS WERE OCCUPIED BY TWO DIFFERENT TENANTS IS NOT THE G ROUND TO HOLD THAT THE APARTMENT IS NOT A ONE RESIDENTIAL UN IT. THE FACT THAT THE ASSESSEE COULD HAVE PURCHASED BOTH THE FLA TS IN ONE SINGLE SALE DEED OR COULD HAVE NARRATED THE PURCHAS E OF TWO PREMISES AS ONE UNIT IN THE SALE DEED IS NOT THE GR OUND TO HOLD THAT THE ASSESSEE HAD NO INTENTION TO PURCHASE THE TWO FLATS AS ONE UNIT. 6. THE LEARNED DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL PARTIES AND CAREFULLY PE RUSED THE ORDERS OF THE LOWER AUTHORITIES. THE FACTS IN DISPUTE HAVE G IVEN RISE TO TWO QUESTIONS. (I) WHETHER ON FACTS, THE ASSESSEE HAS PURCHASED O NE RESIDENTIAL UNIT ENTITLING HIM FOR EXEMPTION U/S.54 F AND ; (II) WHETHER THE PURCHASE OF THE RESIDENTIAL UNIT JOINTLY WITH WIFE ENTITLES THE ASSESSEE FOR THE EXEMPTION U/S.54 F. SO FAR AS THE FIRST QUESTION IS CONCERNED, WE FIND THAT FROM THE AGREEMENTS OF PURCHASE OF HOUSE, THE ASSESSEE HAS PURCHASED HO USE 16A FOR A CONSIDERATION OF `. 45 LAKHS AND HOUSE 16B FOR A CONSIDERATION OF `. 30 LAKHS VIDE TWO SEPARATE PURCHASE DEEDS. WE ALSO FO UND THAT THE ASSESSEE HAS ENTERED INTO TWO SEPARATE AGREEMENTS FOR PROVID ING FURTHER AMENITIES WITH THE BUILDER FOR A CONSIDERATION OF `. 20 LAKHS EACH FOR THE TWO ROW ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 5 HOUSES. BE THAT AS IT MAY, WHAT IS IMPORTANT TO BE DETERMINED IS WHETHER THESE ARE TWO ROW HOUSES, OR ONE SINGLE DWELLING UN IT PURCHASED BY TWO DIFFERENT PURCHASE DEEDS. WE FIND THAT HOUSE 16B I S THE 1 ST AND THE 2 ND FLOOR OF HOUSE 16A WHICH ITSELF SHOW THAT BOTH ARE THE PART OF SAME BUILDING. WE FIND THAT THE A.O. AT THE ASSESSMENT STAGE HAS REJECTED THE CLAIM AND THE SUBMISSIONS OF THE ASSESSEE. WITHOUT MAKING ANY PHYSICAL VERIFICATION, WE ARE OF THE OPINION THAT THIS ISSUE REQUIRES SOME DUE DILIGENCE ON THE PART OF THE A.O. WE, THEREFORE, R ESTORE THIS MATTER BACK TO THE FILES OF THE A.O. THE A.O. IS DIRECTED TO VER IFY WHETHER THE DWELLING UNIT BEARS A SINGLE MUNICIPAL NUMBER. THE A.O. IS FURTHER DIRECTED TO VERIFY WHETHER THE DWELLING UNITS HAVE ONLY ONE ACC ESS AND COMMON ENTRANCE. IF THE ANSWERS TO BOTH THE AFORESAID QUE STIONS ARE IN AFFIRMATIVE, THEN THE GROUND FLOOR AND THE FIRST AN D SECOND FLOOR CANNOT BE REGARDED AS A SEPARATE RESIDENTIAL HOUSE AND TO BE TREATED AS A SINGLE DWELLING UNIT ENTITLED FOR EXEMPTION U/S.54F. THIS WOULD BE IN LINE WITH THE FINDINGS OF THE DECISION OF ITO VS. MS. SUSHILA M. JHAVERI REPORTED IN 292 ITR 0001 TBOMS AND TO THE DECISION OF THE HON 'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT AND ANOTHER VS. ANANDA BAS APPA REPORTED IN [2009] 309 ITR 0329 7.1 ON THE SECOND ISSUE RAISED BY THE A.O. THAT THE DWELLING UNITS SO PURCHASED ARE ALSO IN THE JOINT NAME WITH HIS WIFE, THE COUNSEL RELIED UPON THE DECISION OF THE ITAT, MUMBAI BENCHES IN TH E CASE OF ITO VS. ARVIND T. THAKKAR IN ITA NO.7338/MUM/2005 VIDE ORDE R DATED 29.04.2011 AND ON THE ORDER OF THE ITAT, DELHI BENC H IN THE CASE OF RAVINDER KUMAR ARORA VS. ACIT IN ITA NO.4998/DEL/20 10 VIDE ORDER DATED 11.03.2011. THE COUNSEL FURTHER RELIED UPON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DIT VS. MRS. JENNIFER BHIDE REPORTED IN [2011] 15 TAXMANN.COM 82 (KAR.) AND CLA IMED THAT IN ALL THE ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 6 ABOVE CITED CASES EVEN WHERE THE PROPERTY HAS BEEN PURCHASED IN THE JOINT NAME, THE EXEMPTION U/S.54F WAS ALLOWED. 8. WE HAVE PERUSED THE ORDERS SUPPLIED BY THE LEARN ED COUNSEL. WE FIND FORCE IN THE CONTENTION OF THE COUNSEL. WE FI ND THAT IN THE PRESENT CASE, THE NAME OF THE WIFE HAS BEEN ADDED ONLY FOR THE SAKE OF CONVENIENCE. WE ALSO FIND THAT THE TOTAL CONSIDERA TION HAS BEEN MET FROM THE ACCOUNT OF THE ASSESSEE. WE ALSO DREW SUPPORT FROM THE PROVISIONS OF SECTION 45 OF THE TRANSFER OF THE PROPERTY ACT WHIC H PROVIDES THAT THE SHARE IN THE PROPERTY WILL DEPEND ON THE AMOUNT CON TRIBUTED TOWARDS THE PURCHASE CONSIDERATION AND AS IN THE PRESENT CASE, THE TOTAL CONTRIBUTION HAS COME FROM THE ASSESSEE, THE EXEMPTION CANNOT BE DENIED. 9. HERE WE WOULD LIKE TO MAKE IT CLEAR THAT THE ENT ITLEMENT OF EXEMPTION UNDER SECTION 54F WOULD DEPEND UPON THE V ERIFICATION BY THE A.O. AS PER THE DIRECTIONS GIVEN AT PARA 7 HERE IN ABOVE 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. : 4540/MUM/2009 ASSESSMENT YEAR : 2004-05 11. THE REVENUE HAS SHOWN ITS GRIEVANCE AGAINST THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE IS ENTITLED FOR THE SET OF F OF SHORT TERM CAPITAL LOSS OF `. 1,29,94,149/-. THE FACTS GIVING RISE TO THIS DISPU TE SHOWS THAT THE ASSESSEE HAS PURCHASED SUNDARAM BOND SAVER UNIT S ON 26.12.2003. ON THE VERY SAME DATE, THE ASSESSEE RECEIVED A DIVI DEND OF `. 1,16,03,049/-. ON 29.03.2004, THE ASSESSEE REDEEME D THE UNITS FOR A SUM OF `. 1,70,05,850/- AND THEREBY, BOOKED A SHORT TERM CAPI TAL LOSS OF `. 1,29,94,149/-. THIS TRANSACTION WAS NOT ACCEPTED B Y THE A.O. HE WAS OF THE OPINION THAT THE LOSS ON SALE OF REDEMPTION OF UNITS CLEARLY SHOWS ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 7 THAT IT IS A CASE OF DIVIDEND STRIPPING AND IS COV ERED BY THE PROVISIONS OF SECTION 94(7) OF THE ACT. THE A.O. BASED HIS FIND INGS SOLELY ON THE GROUND THAT THE CHEQUE OF `. 3 CRORES FOR THE PURCHASE OF UNITS OF SUNDARAM BOND SAVER WAS ACTUALLY REALISED ON 30.12.2003 AND, THER EFORE, THE PERIOD OF HOLDING BEFORE THE REDEMPTION OF THE SAID UNITS ON 29.03.2004 WAS ONLY 88 DAYS I.E. LESS THAN 3 MONTHS. THEREFORE, THE CA SE OF THE ASSESSEE WAS HIT BY THE PROVISIONS OF SECTION 94(7) OF THE ACT. THE A.O. WAS ALSO OF THE VIEW THAT THE ENTIRE TRANSACTION OF SALE AND PURCHA SE OF MUTUAL FUND UNITS WAS NOTHING BUT A COLOURABLE DEVICE FOR SETTI NG OFF OF THE CAPITAL GAINS ARISING ON SALE OF SHARES. THE A.O. DENIED T HE SET OFF OF SHORT TERM CAPITAL LOSS AND COMPLETED THE ASSESSMENT. THE ASS ESSEE ASSAILED THIS FINDING OF THE A.O. BEFORE THE LD. CIT(A). 12. BEFORE THE LD. CIT(A), THE ASSESSEE STRONGLY CO NTENTED THAT THE DATE OF PURCHASE OF BOND SHOULD BE TAKEN AS 26.12.2003 A ND NOT AS 30.12.2003 WHEN THE CHEQUE WAS ACTUALLY REALISED AN D IS AS PER SEBI GUIDELINES / MUTUAL FUND GUIDELINES WHICH PERMITS T HE ISSUE OF UNITS PRIOR TO THE REDEMPTION OF THE CHEQUE AND, THEREFOR E, ACCORDING TO THE ASSESSEE THE DATE SHOULD BE TAKEN AS 26.12.2003 AND IF THIS STAND IS TAKEN, TRANSACTION OF THE ASSESSEE IS CLEARLY OUTSI DE THE PURVIEW OF SECTION 94(7) OF THE ACT. THE LD. CIT(A) CONSIDERED THE S UBMISSIONS AND THE FACTS OF THE CASE AND ALSO THE PROVISIONS OF SECTION 94(7 ) OF THE ACT. THE LD. CIT(A) THUS HELD AS FOLLOWS :- 2.5 THE FIRST CASE OF THE A.O IS THAT THE CHEQUE FOR THE PURCHASE CONSIDERATION WAS REDEEMED ON 30.12.2003, I.E. AFTER THE RECORD DATE 26.12.2003 AND THEREFORE, THE LOSS NEEDS TO BE DISALLOWED. APPARENTLY, THE A.O HAS WRONGLY I NTERPRETED THE PROVISIONS OF SECTION 94(7). THE PROVISIONS OF THIS SECTION LAY DOWN THE CONDITIONS FOR DISALLOWANCE OF LOSS. I F THE SECURITIES HAVE NOT BEEN PURCHASED WITHIN THREE MON THS PRIOR TO THE RECORD DATE, AS MADE OUT BY THE A.O, THEN OB VIOUSLY CONDITION NO. (I), SUPRA, HAS NOT BEEN FULFILLED. A S ALL THE THREE CONDITIONS ARE CUMULATIVE, THEN IN ANY CASE THE PRO VISIONS OF ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 8 SECTION 94(7) WOULD NOT BE APPLICABLE. THE SECOND A RGUMENT OF THE A.O IS THAT THE APPELLANT HAS SOLD THE SECURITI ES WITHIN THREE MOTHS OF THEIR PURCHASE. THE A.O HAS BASED HI S REASONING ON THE FACT THAT THE UNITS SHOULD BE DEEM ED TO HAVE BEEN PURCHASED ON 30.12.2003, AND NOT 26.12.2003, T HE DATE ON WHICH THE CHEQUE WAS REDEEMED. HOWEVER, I FIND T HAT THE ASSET MANAGEMENT CO., MANAGING THE ABOVE MENTIONED SCHEME, VIDE THEIR LETTER DATED 29-12-2008, HAVE VE RY CLEARLY SUBMITTED THAT THE UNITS WERE ALLOTTED ON THE BASIS OF TIME STAMP; ON THE BASICS OF CONFIRMATION RECEIVED FROM THE BANK. THEY HAVE ALSO STATED THAT THIS IS AS PER SEBI GUID ELINES. THE ONLY ARGUMENT OF THE A.O IS THAT THE PROSPECTUS OF THE MUTUAL FUND SCHEME MENTIONS THAT THE DIVIDEND WILL BE PAID ONLY WHEN THE CHEQUE IS REALISED. BE THAT AS IT MAY, THE FACT IS THAT THE MUTUAL FUND ACCEPTED 26.12.2003 AS THE DATE ON WHICH THEY HAVE ALLOTTED THE UNITS TO THE APPELLANT ON TH E BASIS OF A TIME STAMP. IN THE CIRCUMSTANCES, THE SECOND COND ITION IS ALSO NOT FULFILLED. AND ON THE POINT RAISED BY THE A.O. THAT THE ENTIRE TRANSACTION IS A COLOURABLE DEVICE TO EVADE TAX, THE LD. CIT(A) FURT HER OBSERVED AS UNDER:- 2.7 NOW LET US EXAMINE, WHETHER THE ENTIRE TRANSA CTION IS A COLORABLE ONE. THE A.O HAS RELIED UPON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VINEET J AM. NOW THERE IS NO DOUBT THAT IN THAT CASE THE TRANSACTION OF DIVIDEND STRIPING WAS HELD TO BE A COLORABLE DEVICE. THE DEC ISION OF THE PUNJAB & HARYANA HIGH COURT, REFERRED TO HEREINABOV E, HAS BEEN SET ASIDE BY THE APEX COURT, REPORTED IN 294 I TR 435 (S.C.) AND THE MATTER HAS BEEN REMANDED BACK FOR DE NOVO CONSIDERATION. THEREFORE, RELIANCE PLACED ON THE D ECISION OF PUNJAB & 1-LARYANA HIGH COURT, IN THE CASE OF VANEE T JAM (SUPRA), IS MISPLACED. FURTHER, I FIND THAT THE BOM BAY HIGH COURT IN THE CASE OF CIT VS. WALFORT SHARE & STOCK BROKERS PVT. LTD., APPEAL NO. 18 OF 2006, HAVE TAKEN A CONTRARY VIEW ON SIMILAR FACTS AND HELD: IT IS PERTINENT TO NOTE THAT THE APEX COURT IN THE CASE OF AZADI BACHAO ANDOLAN (SUPRA) HAS HELD THAT EVERY TRANSACTION OR ARRANGEMENT WHICH IS PERFECTLY PERMISSIBLE IN LAW, BUT HAS THE EFFECT OF REDUCING THE TAX BURDEN OF THE ASSESSEE CANNOT BE TREATED AS ILLEGIT IMATE AND IGNORED. IN THE PRESENT CASE, THE ASSESSEE HAS DEMONSTRATED THAT THE UNITS WERE PURCHASED FOR EARN ING ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 9 DIVIDEND INCOME AND THAT THE SALE OF THE UNITS IMMEDIATELY AFTER RECEIVING THE DIVIDEND WAS A COMMERCIAL DECISION TAKEN BY THE ASSESSEE. EVEN THE MAJORITY DECISION IN THE CASE OF GRIFFITHS (SUPRA,) SUPPORTS THE CASE OF THE ASSESSEE THAT THE TRANSACT ION IN QUESTION WAS A TRADING TRANSACTION AND IN THE ABSEN CE OF ANY ALLEGATION THAT IT WAS A SHAM TRANSACTION, THE ASS WAS ENTITLED TO CLAIM SET OFF OF THE LOSS IRRESPECT IVE OF THE FISCAL IMPACT. AND FINALLY, THE LD. CIT(A) CONCLUDED THAT AS THE C ONDITIONS OF SECTION 94(7) HAVE NOT BEEN FULFILLED, NO DISALLOWANCE WAS PERMISSIBLE IN THAT SECTION. THE APPEAL ON THIS GROUND IS ALLOWED. 13. THE LEARNED DR SUPPORTED THE ASSESSMENT ORDER. 14. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPO N THE FINDINGS OF THE LD. CIT(A). 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT HERE THE WHOLE ISS UE REVOLVES AROUND THE DATE OF PURCHASE OF UNITS WHICH ACCORDING TO THE AS SESSEE SHOULD BE TAKEN AS 26.12.2003 I.E. THE DATE ON WHICH THE CHEQ UE IS TENDERED AND ACCORDING TO THE A.O. SHOULD BE TAKEN AS 30.12.2003 THE DATE ON WHICH THE CHEQUE WAS ACTUALLY REALISED. WE ARE MORE INCL INED TOWARDS THE SUBMISSION OF THE ASSESSEE AND THE FINDINGS OF THE LD. CIT(A) THAT THE DATE OF TENDERING THE CHEQUE I.E. 26.12.2003 SHOULD BE TAKEN AS THE DATE OF THE PURCHASE OF UNITS. ONCE THIS DATE IS TAKEN FOR CONSIDERATION, THEN THE PROVISIONS OF SECTION 94(7) WOULD ULTIMATELY NO T APPLY ON THE FACTS OF THE TRANSACTION. FURTHER ON THE ISSUE OF TREATING THE WHOLE TRANSACTION AS A COLOURABLE DEVICE, WE FIND THAT THE LD. CIT(A) HA S CLEARLY DISTINGUISHED FACTS OF THE CASE WITH THE DECISION OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT AS RELIED UPON BY THE A.O. WE DO NOT FI ND ANY REASON FOR INTERFERENCE WITH THE FINDINGS OF THE LD. CIT(A) ON THIS GROUND. ITA NOS : 4285 & 4540/MUM/2009 SHRI VASUDEO PANDURANG GINDE 10 16. THE APPEAL BY THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 06 TH DAY OF JUNE, 2012. SD/ - SD. - ( VIJAY PAL RAO ) ( N. K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 06.06.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI