TMI Blog2014 (5) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... ute w.e.f. 1-4-2005 will not be applicable to the impugned assessment year 2004-05 - loss from units which were held for more than three months after the record date and sold thereafter cannot be subjected to disallowance as per the amended provision of section 94(7) – the matter is remitted back to the AO for verification of the details of period of holdings of units from the record date and compute the disallowance of loss u/s 94(7) of the Act as applicable for the assessment year 2004-05 – Decided in favour of Assessee. - ITA.No.1730/Hyd/2012 - - - Dated:- 7-5-2014 - Shri Chandra Poojari, A.M. And Saktijit Dey, J.M.,JJ. For the Petitioner : Mr. P. Muralimohan Rao For the Respondent : Mr. Solgy Jose T Kottaram ORDER Per Saktijit Dey, J.M. This appeal by the assessee is directed against the order dated 13-5-2011 of CIT (A)-III, Hyderabad pertaining to assessment year 2004-05. 2. Briefly stated facts are, the assessee company has filed its return of income for the asst. Year 2004-05 admitting loss of Rs.5,74,517/- under the head business loss and loss of Rs.1,60,58,189/- under the head capital gains . Assessment in case of the assessee was compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contended that as the assessee sold the securities after three months as per the existing provision of section 94(7) prior to its amendment w.e.f. 1-4-2005, there cannot be any disallowance. 4. The CIT (A) after considering the submissions of the assessee called for a remand report from the Assessing Officer. As observed by the CIT (A) in para 4.8 of his order, the Assessing Officer in his report dated 11-5-2011 acknowledged that transaction in case of equity funds mentioned in serial Nos. 5,7,8,10 and 11 of the list, the assessee has sold the units after three months and in respect of transaction at serial No.13, there is no record date and the assessee has not received any dividend. The CIT (A) however held that in view of the provision contained u/s 94(7) of the Act the loss claim cannot be allowed even in case where the units were sold after holding them for a period of more than three months. The finding of the CIT (A) in this regard is extracted hereunder for the sake of convenience. 5.4 After carefully going through the provisions of section 94(7) of the Act, even through in the preamended provisions i.e., prior to such substitution vide Finance (No.2) Act,2004 w.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same units are claimed exempt, cannot be allowed in the hands of the appellant. Hence, the same has to be disallowed. However, from the table furnished by the Assessing Officer at page-3of the assessment order, it is seen that the date of redemption of the units in the case of dfc Top 200 was after a period of more than nine months, i.e., 2 years in this case, from such record date. Under the circumstances, the said loss of Rs.2,44,757/- incurred by the appellant on such redemption cannot be disallowed. Further, in absence of any record date mentioned by the Assessing Officer and also in absence of any dividend receipt in case of units of DSP Mer Linen (mentioned at the last sl. No. of the said table), loss of Rs.644/- incurred by the appellant from redemption of such units, cannot be disallowed. Hence, out of such loss incurred by appellant on redemption of units of different equity funds, loss to the extent of Rs.2,45,401/- (Rs.2,44,757 +Rs.644) cannot be disallowed. Accordingly, out of such disallowance of Rs.39,85,180/- made by the Assessing Officer in the assessment u/s 94(7) of the Act, disallowance to the extent of Rs.37,39,779/- (Rs.39,85,180-Rs.2,45,401) is confirmed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2005 read as under: 7 Where (a) Any 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 such securities or unit within a period of three moths after such date. 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 nit, to the extent such loss does not exceed the amount of dividend or income received or receivable on such securities or unit, shall be ignored for the purposes of computing his income chargeable to tax. After the amendment of the provision w.e.f. 1-4-2005 it reads as under:- 7 Where (a) Any 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 ii) such unit within a period of nine months after such date; 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 acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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