M/S Pumarth Properties & Holding (P) Ltd., Indore V. THE DCIT (CENTRAL)-1, Indore

ITA 954/IND/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2339 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 16-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Deemed to accrue or arise in india; Retrospective amendment
• Section: 69C; 14A; 68; 69; 6; 132; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.954/IND/2016 ASSESSMENT YEAR: 2013-14 PUMARTH PROPERTIES & HOLDING(P) LTD., 5/5A NAVRATAN BAGH BEHIND VISHESH HOSPITAL, INDORE / VS. D CIT, CENTRAL - 1 , INDORE ( REVENUE ) ( RESPONDENT ) P.A. NO. AACCP0838Q APPELLANT BY SHRI SUMIT NEMA SR. ADV. & GAGAN TIWARI ADV., RESPONDENT BY SHRI LAL CHAND , CIT - DR DATE OF HEARING: 16.01.2018 DATE OF PRONOUNCEMENT: 31 .01.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-III, INDORE, (I N SHORT CIT(A)), DATED 18.07.2016 PERTAINING TO A.Y. 2013-14. THE AS SESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.THAT THE LD. CIT HAS ERRED IN NOT ALLOWING THE S ET OFF OF BUSINESS AGAINST THE ADDITIONAL INCOME OFFERED OF PUMARTH PROPERTIES 2 RS.1,80,00,000/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD. CIT HAS ERRED IN INVOKING PROVISION S OF SECTION 115BBE ON THE ADDITIONAL INCOME OFFERED AMOUNTING T O RS.1,80,00,000/- WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT THE ORDER SO PASSED IS BAD IN LAW & WRONG. 2. BRIEFLY STATED FACTS ARE THAT SEARCH AND SEIZURE OPERATION U/S 132 HAS CARRIED OUT ON THE BUSINESS AS WELL AS RESIDENT IAL PREMISES OF THE APOLLO GROUP OF INDORE INCLUDING THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD O FFERED AN ADDITIONAL INCOME OF RS.1,80,00,000/- BUT ALSO CLAI MED SET OFF OF BUSINESS LOSS AGAINST THIS INCOME. THE ASSESSING OF FICER DID NOT ALLOW SET OFF OF LOSS BY RELYING PROVISIONS OF SECT ION 115BBE OF THE ACT. 3. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS AFFIRM THE VIEW OF THE AO. NOW THE ASSESSEE IS IN FURTHER APPEAL. 4. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS DECL INING THE CLAIM OF SET OFF AGAINST THE ADDITIONAL INCOME OFFERED BY TH E ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUT HORITIES BELOW WRONGLY CONSTRUED THE PROVISIONS OF LAW. HE SUBMITT ED THAT THE PROVISIONS SO APPLIED WERE NOT IN EXISTENCE. HE FUR THER SUBMITTED THAT THE AMENDMENT IN SECTION 115BBE OF THE ACT WOU LD BE APPLICABLE FROM A.Y. 2017-18. THE LD. COUNSEL SUBMI TTED THAT THE INCOME OFFERED CANNOT BE TERMED AS INCOME COVERED U /S 68, 69, 69A, 69B & 69C OF THE ACT. HE FURTHER PLACED RELIAN CE ON THE PUMARTH PROPERTIES 3 DECISION OF THE HON'BLE SUPREME COURT RENDERED IN T HE CASE OF CIT, MUMBAI VS. M/S. WALFORT SHARE & STOCK BROKERS P. LT D. IN CIVIL APPEAL NO.4927 OF 2010. THE LD. COUNSEL ALSO DREW O UR ATTENTION TO THE EXPLANATORY NOTES TO THE PROVISIONS OF FINANCE ACT, 2016. HE DREW OUR ATTENTION TO PARA 46.1 TO 46.3 OF THE EXPL ANATORY NOTES TO THE PROVISION OF FINANCE ACT, 2016. FOR THE SAKE OF CLARITY SAME IS REPRODUCED HEREIN BELOW: 46.1 SECTION 115BBE OF THE INCOME TAX ACT INTER AL IA PROVIDES THAT THE INCOME RELATING TO SECTION 68 OR SECTION 6 9 OR SECTION 69A OR SECTION 69C OR SECTION 69D IS TAXABLE AT THE RATE OF THIRTY PER CENT AND FURTHER PROVIDES THAT NO DEDUCTION IN RESPECT OF ANY EXPENDITURE OR ALLOWANCES IN RELATION TO INCOME REFERRED TO IN THE SAID SECTIONS SHALL BE ALLOWABLE. 46.2 CURRENTLY, THERE IS UNCERTAINTY ON THE ISSUE O F SET-OFF OF LOSSES AGAINST INCOME REFERRED TO IN SECTION 115BBE OF THE INCOME TAX ACT. THE MATTER HAS BEEN CARRIED TO JUDI CIAL FORUMS AND COURTS IN SOME CASES HAS TAKEN A VIEW THAT LOSS ES SHALL NOT BE ALLOWED TO BE SET OFF AGAINST INCOME REFERRED TO IN SECTION 115BBE. HOWEVER, THE CURRENT LANGUAGE OF SECTION 11 5BBE OF THE INCOME TAX ACT DOES NOT CONVEY THE DESIRED INTE NTION AND AS A RESULT THE MATTER IS LITIGATED. IN ORDER TO AVOID UNNECESSARY LITIGATION, THE PROVISION OF THE SUB-SECTION (2) OF SECTION 115BBE OF THE INCOME TAX ACT HAS BEEN AMENDED AS TO EXPRES SLY PROVIDE THAT NO SET OFF OF ANY LOSS SHALL BE ALLOWA BLE IN RESPECT OF INCOME UNDER THE SECTIONS 68 OR SECTION 69 OR SE CTION 69A OR SECTION 69B OR SECTION 69C OR SECTION 69D. 46.3 APPLICABILITY: THIS AMENDMENT TAKES EFFECT FRO M 1 ST OF APRIL, 2017 AND WILL, ACCORDINGLY, APPLY FROM ASSESSMENT Y EAR 2017- 18 AND SUBSEQUENT ASSESSMENT YEARS. HE DREW OUR ATTENTION TO CLAUSE 46.3 WHICH IS RELA TED TO APPLICABILITY OF THE AMENDMENT. ON THE CONTRARY LD. DR VEHEMENTLY OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDERS OF THE PUMARTH PROPERTIES 4 AUTHORITIES BELOW, HE ALSO FILED A SHORT SYNOPSIS. THE CONTENTS OF THE SAME ARE REPRODUCED AS UNDER: IT IS A SETTLED RULE OF CONSTRUCTION THAT EVERY ST ATUE IS PRIMA FACIE PROSPECTIVE UNLESS IT IS EXPRESSLY OR BY NECE SSARY IMPLICATION MADE TO HAVE RETROSPECTIVE OPERATION. O RDINARILY THE COURT ARE REQUIRED TO GATHER THE INTENTION OF THE L EGISLATURE FROM THE OVERT LANGUAGE OF THE PROVISION AS TO WHETHER I T HAS BEEN MADE PROSPECTIVE OR RETROSPECTIVE, AND IF RETROSPEC TIVE, THEN FROM WHICH DATE. HOWEVER, SOME TIMES WHAT HAPPENS I S THAT THE SUBSTANTIVE PROVISION, AS ORIGINALLY ENACTED OR LATER AMENDED, FAILS TO CLARIFY THE INTENTION OF THE LEGI SLATURE. IN SUCH A SITUATION IF SUBSEQUENTLY SOME AMENDMENT IS CARRI ED OUT TO CLARIFY THE REAL INTENT, SUCH AMENDMENT HAS TO BE C ONSIDERED AS RETROSPECTIVE FROM THE DATE WHEN THE EARLIER PROVIS IONS WAS MADE EFFECTIVE. SUCH CLARIFICATORY OR EXPLANATORY A MENDMENT IS DECLARATORY. AS THE LATER AMENDMENT CLARIFIES THE R EAL INTENT AND DECLARES THE POSITION AS WAS ORIGINALLY INTENDED, I T TAKES RETROACTIVE EFFECT FROM THE DATE WHEN THE ORIGINAL PROVISION WAS MADE EFFECTIVE. NORMALLY SUCH CLARIFICATORY AMENDME NT IS MADE RETROSPECTIVELY EFFECTIVE FROM THE EARLIER DATE. IT MAY ALSO HAPPEN THAT THE CLARIFICATORY OR EXPLANATORY PROVIS ION INTRODUCED LATER TO DEPICT THE REAL INTENTION OF TH E LEGISLATURE IS NOT SPECIFICALLY MADE RETROSPECTIVE BY THE STATUTE. NOTWITHSTANDING THE FACT THAT SUCH AMENDMENT TO THE SUBSTANTIVE PROVISION HAS BEEN GIVEN PROSPECTIVE EF FECT, THE JUDICIAL OR QUASI-JUDICIAL AUTHORITIES, ON A CHALLE NGED MADE TO IT, CAN JUSTIFIABLY HOLD SUCH AMENDMENT TO BE RETROSPEC TIVE. THE JUSTIFICATION BEHIND GIVING RETROSPECTIVE EFFECT TO SUCH AMENDMENT IS TO APPLY THE REAL INTENTION OF THE LEG ISLATURE FROM THE DATE SUCH PROVISION WAS INITIALLY INTRODUCED. T HE INTENTION OF THE LEGISLATURE WHILE INTRODUCING THE PROVISION IS GATHERED, INTER ALIA, FROM THE FINANCE BILL, MEMORANDUM EXPLAINING THE PROVISIONS OF THE FINANCE BILL ETC. RELIANCE IS PLA CED ON THE DECISION OF B BENCH OF HON'BLE I.T.A.T. KOLKATA I N THE CASE OF SHUBHLAKSHMI VINIJA PVT. LTD. 60 TAXMANN.COM 60 WHE REIN HON'BLE I.T.A.T, WHILE EXAMINING THE RETROSPECTIVE APPLICABILITY OF PROVISO TO SECTION 68 OF THE IT ACT 1961 HAS BEA UTIFULLY ANALYZED THE ISSUE OF APPLICABILITY OF AMENDMENTS A ND LAID PUMARTH PROPERTIES 5 DOWN THE ABOVE PRINCIPLES WHILE EXAMINING THE ISSUE . THEREFORE, IT IS IMPERATIVE TO EXAMINE THE APPLICABILITY OF AM ENDMENT IN SECTION 115BBE(2) W.E.F. 04.01.2017 IN THE LIGHT OF PRINCIPLES LAID DOWN IN THE DECISION AS DISCUSSED SUPRA. 5. THE LD. DR PLACED RELIANCE ON THE DECISION OF CO ORDINATE BENCH, KOLKATA IN THE CASE OF SUBHALAKSHMI VANIJYA (P.) LT D. VS. CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL AVAILABLE ON THE RECORD. THE LD. CIT(A) HAS DECIDED THIS ISSUE BY OBSERVING AS UNDER: 3.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE APPELLANTS CONTENTIONS. THE FINANCE ACT, 2012 INTR ODUCED A NEW SECTION 115BBE WHICH STATES THAT WHERE ANY INCO ME OF THE NATURE REFERRED TO IN SECTION 68,69,69A,69B,69C OR 69D FORMS PART OF THE TOTAL INCOME, THEN SUCH INCOME SHALL BE CHARGEABLE TO TAX AT THE FLAT RATE OF 30%. THE CASH CREDITS, UNEX PLAINED INVESTMENTS, EITHER IN PART OR IN FULL, INCOME FROM UNDISCLOSED SOURCE AND UNEXPLAINED EXPENDITURES ARE NOT CHARGEA BLE TO TAX AT THE FLAT RATE OF 30%, SIMILAR TO INCOME FROM LOT TERY, CROSSWORD PUZZLE, GAMBLING, BETTING, ETC. 3.4 THE APPELLANT HAS SUBMITTED THAT THE AMENDMENT IN SECTION 114BBE(2) BY INSERTION OF WORDS SET OFF OF ANY LOS S IS NOT RETROSPECTIVE IN NATURE AND WILL BE APPLICABLE W.E. F. 01.04.2017. THE APPELLANT HAS ALSO RELIED ON THE MEMORANDUM EXP LAINING THE BUDGET PROVISIONS CONSIDERED TO BE PART OF FINA NCE BILL, 2016 WHERE IN IT IS STATED THAT THE CURRENT LANGUAG E OF SECTION 115BBE OF THE ACT DOES NOT CONVEY THE DESIRED INTEN TION AND AS A RESULT THE MATTER IS LITIGATED. IN ORDER TO AVOID UNNECESSARY LITIGATION, IT IS PROPOSED TO AMEND THE PROVISION O F SUB-SECTION (2) OF SECTION 115BBE TO EXPRESSLY PROVIDE THAT NO SET OFF OF ANY LOSS SHALL BE ALLOWED IN RESPECT OF INCOME UNDER TH E SECTION 68 OR SECTION 69A OR SECTION 69B OR SECTION 69C OR SEC TION 69D. THE APPELLANT HAS SUBMITTED THAT SINCE THE INSERTION OF WORDS IN SECTION 115BBE(2) SET OFF OF ANY LOSS IS NOT RETR OSPECTIVE IN PUMARTH PROPERTIES 6 NATURE AND WILL BE APPLICABLE W.E.F. 01.04.2017 AND THE APPELLANTS MATTER PERTAINS TO A.Y. 2013-14, THE AP PELLANT IS SQUARELY OUT OF THE PURVIEW OF SECTION 115BBE(2). 3.5 THE REASON FOR INTRODUCING SECTION 115BBE IS EX PLAINED IN THE EXPLANATORY MEMORANDUM OF THE ACT WHICH RUNS AS UNDER WITH THE CAPTION MEASURES TO PREVENT GENERATION AND CIRCULATION OF UNACCOUNTED MONEY: UNDER THE EXISTING PROVISION OF THE INCOME-TAX ACT , CERTAIN UNEXPLAINED AMOUNTS ARE DEEMED AS INCOME UNDER SECT ION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C A ND SECTION 69D OF THE ACT AND ARE SUBJECT TO TAX AS PER THE TA X RATE APPLICABLE TO THE ASSESSEE. IN CASE OF INDIVIDUALS, HUF, ETC. NO TAX IS LEVIED UP TO THE BASIS EXEMPTION LIMIT. THER EFORE, IN THESE CASES, NO TAX CAN BE LEVIED ON THESE DEEMED INCOMES IF THE AMOUNT OF SUCH DEEMED INCOME IS LESS THAN THE AMOUN T OF BASIC EXEMPTION LIMIT AND EVEN IF IT IS HIGHER, IT IS LEV IED AT THE LOWER SLAB RATE. IN ORDER TO CURB THE PRACTICE OF LAUNDERING OF UNAC COUNTED MONEY BY TAKING ADVANTAGE OF BASIC EXEMPTION LIMIT, IT IS PROPOSED TO TAX THE UNEXPLAINED CREDITS, MONEY, INV ESTMENT, EXPENDITURE ETC. WHICH HAVE BEEN DEEMED AS INCOMES UNDER SECTION 68, SECTION 69, SECTION 69A, SECTION 69B, S ECTION 69C OR SECTION 69D, AT THE RATE OF 30% IS CLEAR. THE AMEND MENT IN SECTION 115BBE(2) W.E.F. 01.04.2017 IS ONLY CLARIFI CATORY AND TO AVOID LITIGATION. THE INCOME SURRENDERED BY THE APP ELLANT DURING THE COURSE OF THE SEARCH HAS THE CHARACTER OF ITEMS INCLUDED IN SECTION 115BBE AND THEREFORE WILL BE CHARGEABLE AT THE FLAT RATE OF TAX AT 30%. 3.6 IN VIEW OF THE ABOVE, THE ADDITIONAL INCOME OF RS.1,80,00,000/- ADMITTED DURING THE SEARCH AND OFF ERED BY THE APPELLANT IN ITS RETURN OF INCOME IS TAXABLE @ 30% AND NO SET OFF OF BUSINESS LOSS IS TO BE ALLOWED AGAINST THE SAID INCOME. GROUND NOS. 1 AND 2 ARE THEREFORE DISMISSED. 7. FROM THE ABOVE IT IS CLEAR THAT THE LD. CIT(A) H AS APPLIED THE MEMORANDUM OF EXPLANATION AND TREATED THE AMENDMENT OF RETROSPECTIVE NATURE, TREATING THE SAME AS CLARIFIC ATORY IN NATURE. PUMARTH PROPERTIES 7 WE ARE UNABLE TO AFFIRM THIS VIEW OF THE AUTHORITIE S BELOW. IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT RENDERED IN THE CASE OF CIT, MUMBAI VS. M/S. WALFORT SHARE & STOCK BROKERS P. LTD.(SUPRA). THE HON'BLE APEX COURT WHILE EXAMINING THE AMENDMEN T MADE IN SECTION 94 OF THE ACT, AFTER CONSIDERING THE LAW IN DETAIL HELD AS UNDER: IN THE LEAD CASE, WE ARE CONCERNED WITH THE ASSESSM ENT YEARS PRIOR TO INSERTION OF SECTION 94(7)VIDE FINANCE ACT , 2001 W.E.F. 1.4.2002. WE ARE OF THE VIEW THAT THE AO HAD ERRED IN DISALLOWING THE LOSS. IN THE CASE OF VIJAYA BANK V. ADDITIONAL COMMISSIONER OF INCOME TAX [1991] 187 ITR 541, IT WAS HELD BY THIS COURT THAT WHERE THE ASSESSEE BUYS SECURITI ES AT A PRICE DETERMINED WITH REFERENCE TO THEIR ACTUAL VALUE AS WELL AS INTEREST ACCRUED THEREON TILL THE DATE OF PURCHASE THE ENTIRE PRICE PAID WOULD BE IN THE NATURE OF CAPITAL OUTLAY AND N O PART OF IT CAN BE SET OFF AS EXPENDITURE AGAINST INCOME ACCRUI NG ON THOSE SECURITIES. THE REAL OBJECTION OF THE DEPARTMENT AP PEARS TO BE THAT THE ASSESSEE IS GETTING TAX-FREE DIVIDEND; THA T AT THE SAME TIME IT IS CLAIMING LOSS ON THE SALE OF THE UNITS; THAT THE ASSESSEE HAD PURPOSELY AND IN A PLANNED MANNER ENTERED INTO A PRE- MEDITATED TRANSACTION OF BUYING AND SELLING UNITS Y IELDING EXEMPTED DIVIDENDS WITH FULL KNOWLEDGE ABOUT THE FA LL IN THE NAV AFTER THE RECORD DATE AND THE PAYMENT OF TAX-FR EE DIVIDEND AND, THEREFORE, LOSS ON SALE WAS NOT GENUINE. WE FI ND NO MERIT IN THE ABOVE ARGUMENT OF THE DEPARTMENT. AT THE OUT SET, WE MAY STATE THAT WE HAVE TWO SETS OF CASES BEFORE US. THE LEAD MATTER COVERS ASSESSMENT YEARS BEFORE INSERTION OF SECTION 94(7) VIDE FINANCE ACT, 2001 W.E.F. 1.4.2002. WITH REGARD TO S UCH CASES WE MAY STATE THAT ON FACTS IT IS ESTABLISHED THAT T HERE WAS A SALE.THE SALE-PRICE WAS RECEIVED BY THE ASSESSEE. THAT, THEASSESSEE DID RECEIVE DIVIDEND. THE FACT THAT THE DIVIDEND RECEIVED WAS TAX-FREE IS THE POSITION RECOGNIZED UN DER SECTION 10(33) OF THE ACT. THE ASSESSEE HAD MADE USE OF THE SAID PROVISION OF THE ACT. THAT SUCH USE CANNOT BE CALLE D ABUSE OF LAW. EVEN ASSUMING THAT THE TRANSACTION WAS PRE-PL ANNED THERE IS NOTHING TO IMPEACH THE GENUINENESS OF THE TRANSACTION. PUMARTH PROPERTIES 8 WITH REGARD TO THE RULING IN MCDOWELL & CO. LTD. V. COMMERCIAL TAX OFFICER [154 ITR 148(SC)], IT MAY BE STATED THAT IN THE LATER DECISION OF THIS COURT IN UNION OF INDIA V. AZADI BACHAO ANDOLAN [263 ITR 706(SC)] IT HAS BEEN HELD THAT A CITIZEN IS FREE TO CARRY ON ITS BUSINESS WIT HIN THE FOUR CORNERS OF THE LAW. THAT, MERE TAX PLANNING, WITHOU T ANY MOTIVE TO EVADE TAXES THROUGH COLOURABLE DEVICES IS NOT FR OWNED UPON EVEN BY THE JUDGMENT OF THIS COURT IN MCDOWELL & CO. LTD.S CASE (SUPRA) . HENCE, IN THE CASES ARISING BEFORE 1.4.2002,LOSSES PERTAINING TO EXEMPTED INCOME CANNO T BE DISALLOWED. HOWEVER, AFTER 1.4.2002, SUCH LOSSES TO THE EXTENT OF DIVIDEND RECEIVED BY THE ASSESSEE COULD BE IGNOR ED BY THE AO IN VIEW OF SECTION 94(7). THE OBJECT OF SECTION 94(7) IS TO CURB THE SHORT TERM LOSSES.APPLYING SECTION 94(7) IN A C ASE FOR THE ASSESSMENT YEAR(S) FALLING AFTER 1.4.2002, THE LOSS TO BE IGNORED WOULD BE ONLY TO THE EXTENT OF THE DIVIDEND RECEIVE D AND NOT THE ENTIRE LOSS. IN OTHER WORDS, LOSSES OVER AND ABOVE THE AMOUNT OF THE DIVIDEND RECEIVED WOULD STILL BE ALLOWED FROM W HICH IT FOLLOWS THAT THE PARLIAMENT HAS NOT TREATED THE DIV IDEND STRIPPING TRANSACTION AS SHAM OR BOGUS. IT HAS NOT TREATED THE ENTIRE LOSS AS FICTITIOUS OR ONLY A FISCAL LOSS. AF TER 1.4.2002,LOSSES OVER AND ABOVE THE DIVIDEND RECEIVE D WILL NOT BE IGNORED UNDER SECTION 94(7). IF THE ARGUMENT OF THE DEPARTMENT IS TO BE ACCEPTED, IT WOULD MEAN THAT BE FORE 1.4.2002 THE ENTIRE LOSS WOULD BE DISALLOWED AS NOT GENUINE BUT, AFTER 1.4.2002, A PART OF IT WOULD BE ALLOWABL E UNDER SECTION 94(7) WHICH CANNOT BE THE OBJECT OF SECTION 94(7) WHICH IS INSERTED TO CURB TAX AVOIDANCE BY CERTAIN TYPES OF TRANSACTIONS IN SECURITIES. THERE IS ONE MORE WAY O F ANSWERING THIS POINT. SECTIONS 14A AND 94(7) WERE SIMULTANEOU SLY INSERTED BY THE SAME FINANCE ACT, 2001. AS STATED ABOVE, SEC TION 14A WAS INSERTED W.E.F. 1.4.1962 WHEREAS SECTION 94(7) WAS INSERTED W.E.F. 1.4.2002. THE REASON IS OBVIOUS. PA RLIAMENT REALIZED THAT SEVERAL PUBLIC SECTOR UNDERTAKINGS AN D PUBLIC SECTOR ENTERPRISES HAD INVESTED HUGE AMOUNTS OVER L AST COUPLE OF YEARS IN THE IMPUGNED DIVIDEND STRIPPING TRANSAC TIONS SO ALSO DECLARATION OF DIVIDENDS BY MUTUAL FUND ARE BEING V ETTED AND REGULATED BY SEBI FOR LAST COUPLE OF YEARS. IF SECT ION 94(7) WOULD HAVE BEEN BROUGHT INTO EFFECT FROM 1.4.1962, AS IN THE PUMARTH PROPERTIES 9 CASE OF SECTION 14A, IT WOULD HAVE RESULTED IN REVE RSAL OF LARGE NUMBER OF TRANSACTIONS. THIS COULD BE ONE REASON WH Y THE PARLIAMENT INTENDED TO GIVE EFFECT TO SECTION 94(7) ONLY W.E.F. 1.4.2002. IT IS IMPORTANT TO CLARIFY THAT THIS LAST REASONING HAS NOTHING TO DO WITH THE INTERPRETATIONS GIVEN BY US TO SECTIONS 14A AND 94(7). HOWEVER, IT IS THE DUTY OF THE COURT TO EXAMINE THE CIRCUMSTANCES AND REASONS WHY SECTION 14A INSER TED BY FINANCE ACT 2001 STOOD INSERTED W.E.F. 1.4.1962 WHI LE SECTION 94(7) INSERTED BY THE SAME FINANCE ACT AS BROUGHT I NTO FORCE W.E.F. 1.4.2002. FURTHER IN VIEW OF THE FACT THAT IN THE EXPLANATORY NOTES ITSELF STATES THAT THIS AMENDMENT TAKES EFFECT FROM 1 ST APRIL 2017 AND WOULD ACCORDINGLY BE APPLICABLE FROM ASSESSMENT YEAR 2017 -18 AND SUBSEQUENT ASSESSMENT YEARS. THE YEAR UNDER APPEAL IS 2013-14, THEREFORE, IN OUR CONSIDERED VIEW THE AUTHORITIES B ELOW HAVE WRONGLY DISALLOWED THE SET OFF OF LOSS AND TAXED THE SAME @ 30%. WE, THEREFORE, REVERSE THE FINDING OF LD. CIT(A) AND DI RECT THE ASSESSING OFFICER TO ALLOW THE SET OFF OF LOSS AS CLAIMED BY THE ASSESSEE. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31 .01. 2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 31 / 01/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE