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2012 (9) TMI 514 - HC - Income TaxDisallowance of short term capital loss on sale of mutual funds units - assessee contested that the capital loss on sale of units would be covered by Section 94(7)(b)(i) and in such case the units which are in fact securities are required to be kept only for a period of three months after the recorded date and not for a period of nine months as required under Section 94(7)(b)(ii) - Held that:- The submission made by assessee that “units” are included within the meaning of the word ”securities” and therefore, Section 94(7)(b)(i) is applicable and the period of holding has to be only three months does not impress us. The Parliament has not only used two different terms namely “securities” and “units” in Section 94(7)(b)(i) and 94(7)(b)(ii) but has dealt with them separately providing different minimum periods of holding for “securities” and “units”. It is settled position in law that Parliament would not have used words in vain and a construction which renders redundant any part of the statute must be avoided. Therefore, units would be governed by the provisions in respect thereof in Section 94(7)(b)(ii). A view to the contrary would render the provisions of Section 94 relating to units otiose. Further, there is no warrant to read the meaning of the word securities as defined in the Securities Contract (Regulation) Act, 1956 to interpret the meaning of the word securities in Section 94(7). Clause (d) of the Explanation to Section 94(7) provides that units shall have the meaning assigned to it in clause (b) of the Explanation to Section 115AB. Section 115AB Explanation (b) defines units to mean a unit of a mutual fund specified in Section 10(23D) or of the Unit Trust of India. The definition therefore identifies the type of unit. It does not equate units with securities or vice versa. Section 10(23D) does not do so either. The reliance upon Section 10(23D) Explanation (c) is entirely misplaced. It refers not to securities but to the SEBI - No substantial questions arises - against assessee.
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