Smt. Vijaya Joshi, New Delhi V. ACIT, New Delhi

ITA 979/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74309 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 31-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: A K KHURANA
• Keywords: Cost of acquisition
• Section: 234B

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI J. S REDDY, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 979/DEL/2013 (ASSESSMENT YEAR: 2007 - 08) VIJAYA JOSHI J - 18851, CHITTARANJAN PARK, KALKAJI, NEW DELHI, PAN AAHPJ0350P VS. ACIT CIRCLE - 23(1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : A.K. KHURANA, CA RESPONDENT BY: SAMEER SHARMA, SR. DR O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORD ER OF THE LD CIT(A) - XXIII, NEW DELHI DATED 22.11.2012 FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS: - 1. THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW AND ON THE FACTS OF THE CASE. 2. T HAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS. 4,88,918/ - ON THE SALE OF MUTUAL FUNDS, UNITS U/S 94(7) OF INCOME TAX ACT, 1961. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS), HAS ERRED IN SUSTAINING THE INTEREST CHARGED U/S 234B OF THE INCOME TAX ACT. 3. APROPOS GROUND NO. 2. CONFIRMATION OF THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS. 4,88,918/ - ON THE SALE OF MUTUAL FUNDS, UNITS U/S 94(7) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . 4. BRIEF FACT OF THE CASE IS AS FOLLOWS. THE APPELLANT FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 ON 31.07.2007, DISCLOSING AN INCOME OF RS. 32,37,650/ - . THE APPELLANT HAS EARNED INCOME FROM CAPITAL GAINS AND OTHER SOURCES DURING THE YEAR. THE ASSESSING OFFICER EXAMINED THE DETAILS OF DIVIDEND VIS - AS - VIS THE SHORT TERM CAPITAL LOSS. VIDE LETTER DATED 17.09.2009 THE APPELLANT WITHDREW HER CLAIM OF SHORT TERM CAPITAL LOSS TO THE EXTENT OF RS. 1,42,932/ - PERTAINING TO UNITS OF MUTUAL FUNDS OF PRUDENTIAL ICICI EMERGING STAR FUND AND RELIANCE GROWTH FUND, IN ACCORDANCE WITH SECTION 94(7) OF THE ACT. HOWEVER, THE ASSESSING PAGE NO. 2 ITA NO. 979/DEL/2013 OFFICER AFTER CONSIDERING THE DIVIDEND RECORD DATE AND THE DATES OF PURCHASE AND SALE OF MUTUAL FUNDS FOUND THAT FURTHER SHORT TERM CAPITAL LOSS OF RS. 4,88,918/ - PERTAINING TO UNITS OF BIRLA BASIC INDU. SEL. SEC. AND RELIANCE VISION FUND NEED TO BE DISALLOW ED AS PER THE PROVISION OF SECTION 94(7) OF THE ACT . THUS THE APPELLANT WAS ASSESSED AT TOTAL INCOM E OF RS. 38,92,070/ - AFTER DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS. 6,31,850/ - (1,42,932/ - + 4,88,918/ - ). AGGRIEVED BY THE SAID ORDER OF THE LD ASSESSING OFFICER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A), WHO VIDE ORDER DATED 22.11.2012 U PHELD THE ORDER OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL PREFERRED BY THE ASSESSEE. AGGRIEVED BY THE SAID ORDER OF THE LD CIT(A) THE ASSESSEE IS BEFORE US. 5. THE RELEVANT DETAILS OF TRANSACTION OF PURCHASE AND SALE ARE AS UNDER: - PARTICULARS BI RLA BASIC INDU. SEL SEC. FUND RELIANCE VISION FUND RECORD DATE 19/01/2007 19/01/2007 DATE OF PURCHASE 19/10/2006 19/10/2006 DATE OF SALE 23/01/2007 23/01/2007 SALE CONSIDERATION 11,56,730.53 23,54,350.56 COST OF ACQUISITION 15,00,000.00 25.00.00 0.00 AMOUNT OF DIVIDEND 4,29,038.40 3,99,281.00 LOSS ON TRANSFER 3,43,269.47 1,45,649.44 6 . THE AR SUBMITTED THAT THE RECORD DATE HAS TO BE EXCLUDE D BECAUSE THE LA N GUAGE OF THE SECTION USES THE TERM PRIOR TO RECORD DATE . THEREFORE ACCORDING TO HIM THE DATE SHOULD BE TAKEN AS ON 20.01.2007 , FOR THE PURPOSE OF CALCULATING THREE MONTHS AND THEREBY HE HAD PURCHASED THE SECURITIES PRIOR TO THREE MONTHS AND THUS DOES NOT FALL WITHIN THE KEN OF SECTION 94 (7) (A) OF THE ACT. ON THE OTHER HAND THE LD DR SUBM ITTED THAT EVEN IF SUCH AN INTERPRETATION IS TAKEN, THEN ALSO THE ASSESSEE FALLS WITHIN THE PROVISION OF SECTION 94(7) (B) OF THE ACT , SINCE , SALE OF THE SECURITIES HAPPENED JUST AFTER FOUR DAYS FROM THE RECORD DATE AND THEREFORE FALLS WITHIN THE KEN OF SEC TION 94(7) AND THEREFORE WE MAY NOT INTERFERE WITH THE ORDER OF THE LD CIT(A). . 7 . WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RECORD AND THE CASE LAWS CITED BEFORE US. 8 . LET US PERUSE SECTION 94(7) WHICH IS REPRODUCED BELOW: - 94(7)WHERE - (A) A NY 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 - (I) SUCH SECURITIES WITHIN A PERIOD OF THREE MONTHS AFTER SUCH DATE; OR PAGE NO. 3 ITA NO. 979/DEL/2013 (II) SUCH UNIT WITHIN A PERIOD OF N INE 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 OF SUCH PURCHASE AND SALE OF SECURITIES OR UNIT , TO THE EXTEND SUCH LOSS DOE S NOT EXCEED THE AMOUNT OF DIVIDEND OR INCOME RECEIVED OR RECEIVABLE ON SUCH SECURITIES OR UNIT, SHALL BE IGNORED FOR THE PURPOSE OF COMPUTING HIS INCOME CHARGEABLE TO TAX. 9 . A PLAIN READING OF THE PROVISION INDICATES THAT THE CONDITIONS STIPULATED IN THE PROVISION ARE CUMULATIVE FOR DISALLOWANCE OF LOSS DUE TO SALE OF SAID SECURITIES OR UNIT. THE REASON BEING THAT CLAUSE (A) AND (B) OF SUB - SECTION 7 OF THE SECTION 94 PROVIDED IN A STATUTORY PERIOD BOTH P RIOR TO AND AFTER THE RECORD DATE IN RESPECT OF SEC URITIES AND UNITS (AS PROVIDED IN CLAUSE (C)) THE DIVIDEND INCOME ON WHICH WHETHER RECEIPT OR RECEIVABLE IS EXEMPT UNDER THE ACT. IT IS ONLY IN CASE WHERE A TRANSACTION OF THE THREE COMPONENT AS PRESCRIBED IN CLAUSE (A)(B)(C) OF SUB - SECTION (7) OF SECTION 94 AND IF A LOSS OCCASIONED ON PURCHASE AND SALE OF SUCH SECURITIES OR UNITS THEN TO THE EXTENT SUCH LOSS DOES NOT EXCEED THE AMOUNT OF DIVIDEND OR INCOME RECEIVED OR RECEIVABLE, IT IS TO BE IGNORED FOR THE PURPOSE OF COMPUTING INCOME BY THE ASSESSEE CHARG EABLE TO TAX. 10 . THE INFORMATION PERTAINING TO TRANSACTION IN ISSUE IS SET OUT IN A TABULAR FORM AS GIVEN BELOW: - SL NO. NAME OF MUTUAL FUND DATE OF PURCHASE PURCHASE AMOUNT RECORD DATE OF DIVIDEND DIVIDEND AMOUNT (IN RS. DATE OF SALE 1. BIRLA BA SIC INDU. SEL. SEC. FUND 19.10.2006 15 ,00,000 19.01.2007 4,29,038.40 23.01.2007 2. RELIANCE VISION FUND 19.10.2006 25,00,000 19.01.2007 3,99,281 23.01.2007 11 . A PERUSAL OF THE TABLE WOULD SHOW THAT THE ASSESSEE DURING THE RELEVANT YEAR UNDER CONSIDERAT ION HAD BOUGHT AND SOLD UNITS OR MUTUAL FUNDS OF BIRLA BASIC INDU. SEL. SEC. FUND AND RELIANCE VISION FUND. A PERUSAL OF INFORMATION WITH RESPECT TO TRANSACTION SET OUT AGAINST SL NO. ONE WOULD SHOW THAT THE RECORD DATE IS 19.0 1 .2007 AND THE DATE OF PURCHA SE IS 19.10.2006 WHICH IS WITHIN A THREE MONTHS FROM THE RECORD DATE. THE ASSESSEE RECEIVED BY WAY OF DIVIDEND OF SUM OF RS. 4,29,038.40 / - ON 19.01.2007. THE SALE OF THE SAID SECURITIES TOOK PLACE ON 23.01.2007 WHICH WAS ALSO WITHIN A PERIOD OF THREE MONTH S FROM THE RECORD DATE, I.E. 19.01.2007. IN RESPECT OF TRANSACTION AGAINST SL. NO. 2, THE RECORD DATE WAS AGAIN ON 19.01.2007. THE ASSESSEE PURCHASED THE UNITS ON 19.10.2006 WHICH WAS WITHIN THE PERIOD OF THREE MONTHS OF THE RECORD DATE AND RECEIVE D DIVIDE ND OF RS. 3,99,281/ - . THE UNITS HOWEVER WERE SOLD ON 23.01.2007, WHICH WAS SALE WITHIN NINE MONTHS FROM THE RECORD DATE, I.E. 19.01.2007. IN THIS CASE IT IS CLEAR THAT THE PURCHASE DATE AS WELL AS THE DATE OF SALE WAS NOT IN PAGE NO. 4 ITA NO. 979/DEL/2013 CONSENSUS WITH THE STATUTORY PE RIOD OF TIME PRESCRIBED BY SECTION 94(7). THEREFORE WE DO NOT FIND ANY FAULT IN THE REASONED DECISION OF THE LD CIT(A), THEREFORE WE CONFIRM THE ORDER OF THE LD CIT(A) AND DISMISS THIS GROUND RAISED BY THE ASSESSEE. 12 . APROPOS GROUND NO. 3 IN RESPECT TO INTEREST CHARGED U/S 234B OF THE ACT. THE INTEREST CHARGED U/S 234B IS CONSEQUENTIAL IN NATURE ; THEREFORE THIS GROUND OF THE APPEAL IS ALSO DISMISSED. 13 . IN THE RESULT THE APPEAL PREFERRED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPE N COURT ON 14 . 03 .2014. - SD/ - - SD/ - ( J. S REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :14 / 03 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI