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2008 (2) TMI 467 - AT - Income TaxDisallowing exemption under section 10(34) - Avoidance Of Tax in other words "Interest stripping Transaction" - Transactions did not satisfy all the conditions as specified u/s 94(7) - expression 'or' nor the expression 'and' - Clauses (a), (b), and (c) of section 94(7) need to be satisfied cumulatively or not? - HELD THAT:- We find that a plain reading of the provision of section 94(7) of the Act shows that it has neither used the expression 'or' nor the expression 'and'. We would place a construction on the provisions of section 94(7) so as to place least restriction on an individual's (assessee) rights. Therefore, hold that the claim of the assessee that all the conditions laid down in clauses (a), (b), (c) have to be satisfied before the said provisions can be applied in a given case, should be accepted. Therefore, the absence of word 'or' at the end of clauses (a) and (b) does not provide for the interpretation that sub-section (7) of section 94 apply, where transactions satisfy at least one condition. Rather, simple reading of the clauses even without the expression 'and' can lead only to one condition that all the three conditions cumulatively is required to be satisfied before invoking section 94(7). The use of words as 'such person', 'such unit', 'such date', 'such securities or units' in clauses (b) and (c) of section 94(7), also indicates that the three clauses have to be read together. Thus they advocate for cumulative application of conditions and not otherwise. In view of the CBDT Circular, which explains the Finance Act, 2001 is that all the conditions prescribed in section 94(7) are to be cumulatively satisfied and not otherwise. Therefore, we find no reason to interfere with the order of learned CIT(A) and the grounds raised by revenue in appeal, being devoid of merit, are rejected. In the result, the appeal by the revenue is dismissed.
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