TMI Blog2019 (2) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the assessee and against the Revenue. We notice that the Tribunal has also considered the second issue of the assessee's purchase of securities being capital investment made, with which we do not think we have to deal with as we have found on the other issue that the assessee cannot be mulcted with the liability by adding back the loss claimed. There is also an ancillary ground raised on the application of sub-section (7) of Section 94, which is held in favour of the assessee and against the Revenue holding it to be prospective in application from 01.04.2002. The Hon'ble Supreme Court in CIT v. Walfort Share and Stock Brokers Private Limited [2010 (7) TMI 15 - SUPREME COURT] has upheld the judgment relied on by the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer having treated the loss on sale of securities as capital loss in an earlier year and the same having acquired finality at the Tribunal stage, with the Revenue accepting the same ? 3. The transactions by virtue of which the Assessing Officer invoked Section 94 is purchase and sale of units. Admittedly, the assessee had purchased units of the Unit Trust of India in the earlier years and also in the subject year and sold a considerable portion of the same in the subject year itself. For the units/bonds purchased and held for about 25 months, short term capital gain of ₹ 22,81,871/- was computed. The assessee claimed a loss of ₹ 2,14,65,000/-, which was claimed as loss occurred on the purchase and sale of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid shall, whether it would or would not have been chargeable to income-tax apart from the provisions of this sub-section, be deemed, for all the purposes of this Act, to be the income of the owner and not to be the income of any other person. Explanation.-The references in this subsection to buying back or reacquiring the securities shall be deemed to include references to buying or acquiring similar securities, so, however, that where similar securities are bought or acquired, the owner shall be under no greater liability to incometax than he would have been under if the original securities had been bought back or reacquired. xx xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (1). 7. Sub-sections (1) and (4) of Section 94 are interlinked. We are of the opinion that the enquiry should commence from sub-section (1); where the owner of securities attempts to sell and repurchase, so that the interest income is not taxed in his hands. In that circumstances, the person to whom the securities are sold and then repurchased from; who actually earns the interest income and is liable to income-tax, but however is absolved from it by reason only of sub-section (1); would not in his assessment be entitled to claim for any loss that occurred in the transaction. Section 94 at one stroke discourages both the owner of securities, who sells and the purchaser from entering into a transaction, ostensibly to be one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied on the interest income obtained by the assessee by reason only of which the interest receivable by him is exempted from taxation. The fact that Section 10(15) exempts such interest income is not relevant, insofar as sub-section (4) speaking only of the interest received by an assessee being deemed to be not his income by reason of the provisions under sub-section (1). In such circumstances, we answer the first question of law framed in favour of the assessee and against the Revenue and uphold the order of the Tribunal. We notice that the Tribunal has also considered the second issue of the assessee's purchase of securities being capital investment made, with which we do not think we have to deal with as we have found on the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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