TMI Blog2009 (2) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... ly exempted under section 10(33) of the Act. Nothing has also been indicated in the appeal which would lead us to believe that there was material which could have been looked into had the Tribunal permitted the Revenue to take up the said additional ground pertaining to section 14A of the Act. - - - - - Dated:- 13-2-2009 - VIKRAMAJIT SEN, RAJIV SHAKDHER, JJ JUDGMENT This is an appeal preferred by the Revenue under section 260A of the Income-tax Act, 1961 (hereinafter referred to in short as the "Act") against the judgment dated December 7, 2007 passed by the Income-tax Appellate Tribunal (hereinafter referred to in short as the "Tribunal") in I. T. A. No. 1101/Del/05 pertaining to assessment year 2001-02. 2. In this appeal, the Revenue has essentially raised two issues. The first issue being that the Income-tax Appellate Tribunal misdirected itself in law in deleting the disallowance of a loss of Rs. 19,67,450 claimed by the asses-see on account of purchase and redemption of units of Kothari Pioneer Mutual Fund, Mumbai (hereinafter referred to in short as the "mutual fund"). The second issue pertains to the rejection of the plea of the Revenue for permitting it to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ghee, coffee, baby food, processed food, etc. OnOctober 31, 2001, the assessee had filed a return declaring an income of Rs. 1,74,32,909. The assessee's case was picked up for scrutiny. Accordingly, notices under section 143(2) and 142(1) of the Act were issued. The Assessing Officer after examining the response to queries raised by him assessed the assessee's total income at Rs. 1,94,65,360. In doing so, the Assessing Officer made several disallowances. We are in the appeal concerned with the disallowance with respect to loss incurred on account of purchase and subsequent redemption of units of the aforementioned mutual fund amounting to Rs.19,67,450. 7. In arriving at the conclusion that the transaction was "collusive" and really in the nature of an "accommodation entry" provided by the mutual fund to the assessee, and hence the loss was not allowable, the Assessing Officer took into account the following apparent discrepancies : (i) the units worth Rs. 1 crore which the assessee had purchased as indicated in the statement of the mutual fund datedMarch 9, 2001, evidently were not purchased on the said date as the bank statement produced by the assessee indicated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was issued additional units numbering 1,34,631.298 at net asset value (NAV) of Rs. 11.63 per unit. Resultantly, the assessee onMarch 12, 2001, held a total number of 8,30,525.222 units. As per the mutual fund's statement datedMarch 14, 2001, the assessee redeemed 6,95,894.224 units at NAV of Rs. 11.54 per unit and similarly, 1,34,631.298 units at NAV of Rs. 11.63 per unit. Consequently, the assessee received a total amount of Rs. 95,98,312.46. (iii) The assessee received the redeemed amount by way of a cheque in the sum of Rs. 80,32,550.46 drawn on ABN Amro Bank and a sum of Rs.15,65,762 by another cheque drawn on ABN Amro N.V. These cheques had been deposited in the Punjab National bank. In so far as the first cheque was concerned, the Commissioner of Income-tax (Appeals) observed in his order that even though the date of realization was not given in the bank statement since the bank statement was for a period from March 14, 2001 to March 16, 2001 it may have been credited either on March 15, 2001 or March 16, 2001. The second cheque, however, was found credited in the bank statement of Punjab National Bank, Mumbai branch onMarch 15, 2001. 9. Based on the aforesaid find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional ground would result in authorizing a fresh investigation into the matter by the Commissioner of Income-tax (Appeals) which was not permissible. Aggrieved by the impugned judgment, the present appeal was preferred before us. 12. In our view, in so far as the first issue with regard to allow ability of loss incurred by the assessee on account of the impugned transaction involving the purchase and thereafter redemption of the units of the mutual fund is concerned, the same does not involve any infraction as contended by the Revenue. Both the Commissioner of Income-tax (Appeals) as well as the Tribunal have examined the transactions in respect of the said issue in detail. Briefly, the analysis of the transaction revealed that the assessee had purchased a certain number of units by making an application to the mutual fund onMarch 9, 2001. The said units were purchased at a price of Rs. 14.37 per unit. The number of units purchased were 6,95,894.224. The total purchase value was Rs. 1 crore. This was reflected in the mutual funds statement datedMarch 11, 2001. It has also come on record that even though the assessee had made an application accompanied by a cheque onMarch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n only to avoid payment of tax, in our view, both the Tribunal and the Commissioner of Income-tax (Appeals) have rightly come to the conclusion that at the relevant time there was no provision under the Act which could be invoked to disallow a loss of the nature incurred by the assessee. As correctly held by the Tribunal the provisions of section 94(7) of the Act were inserted in the Act with effect from April 1, 2002 and hence, would impact, if at all, transactions undertaken in the assessment year 2002-03. The assessment year which is under consideration in the present appeal is the assessment year 2001-02. A Division Bench of this court, as correctly noted by the Tribunal, in Vimgi Investment [2007] 290 ITR 505 (Delhi) and Vikram Aditya and Associates [2006] 287 ITR 268 (Delhi) has sustained such transactions which were undertaken prior to the insertion of section 94(7) in the Act. On this count too, we find no fault with the decision of the Tribunal. 15. As regards the second issue, that is, the rejection of the Revenue's plea in so far as the Tribunal did not permit the Revenue to take up an additional ground pertaining to section 14A of the Act, it is our view that the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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