TMI Blog2010 (9) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... non-related parties and the AO has not given any finding as to how the transaction is bogus - This issue is decided against the revenue and in favour of the assessee - ITA NO. 183/MUM/2008 - - - Dated:- 30-9-2010 - ORDER Per Vijay Pal Rao, Judicial Member This appeal by the revenue is directed against the order dated 3.10.2007 of CIT(A)-IX, Mumbai for the assessment year 2004-05. 2. The revenue has raised the following grounds in this appeal: "1. On the facts and in the circumstances of the case and in law ,the ld. CIT(A) erred in deleting the AO's disallowance of loss of Rs. 30,74,808 u/s 94(7) of the IT Act, 1961, without appreciating the facts of the case.; 2. on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting AO's disallowance balance of loss of Rs. 3,70,393 u/s 94(7) of the IT Act, 1961 without appreciating the fact of the case" 3. Brief facts of the case are that the assessee company is carrying on the business as general merchants and traders in goods and commodities on ready or forward basis, commission agents, buying and selling agents, brokers importers, exporters etc and to act as manufacturer's representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition as the purchase has been made on 26th Dec 2003 itself, which is the record date, thus it cannot be said that the units were purchased within three months prior to record date. It can be said to purchase securities prior to record date only when the same has been purchased within a period 26/9/03 to 25.12.2003 Also the second clause of the sec. do not apply to the assessee as the securities has been sold on 27.3.04 the day on which the assessee received the cheque as evident from the letter of the company M/s Sundaram Mutrual Funds Further the three months from the record dated i.e. 26th Dec. ends on 25th March 2004 and not on 26th March, because one cannot be count both the days; The words after the record date means three-months period consisting of record date accordingly the assessee does not fall within the preview of section 94 further the assessee is not buying and selling for the purpose of avoidance of tax and thus earning of dividend in the only transaction. The assessee do not employing the systematic device to avoid tax but this is an exceptional transaction, we further states as under : 5. The AO did not accept the contention of the assessee. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e do no understand how the learned AO taken the view that the word prior means inclusive the record-date. 10. The learned AR also contended the theme of logical interpretation and submitted that if the logical interpretation of see. Into account then also the assessee is outside the provisions of section 94(7). The assessee has brought the units on 26/12/2003 on a NAV of 25/12/2003. At the time of sale units were sold on the basis of NAV of 26/3/2004. Thus effectively and logically the transaction for sale was entered only on 27/12/2004, which was after three months from the record date i.e., 26.12.2003, three months from the record date completes on 25.3.2004, even we take the shelter of word after the record date then the 26/3/2004 is the date after the record date and 3 months starting from 27/12/2003 ends on 26/3/2004 that is the day on which NAV was taken for redemption, thus the transaction can only be entered on 27.3.2004 which is beyond the 3 months time from record date. She contended that the assessee had submitted counterfoil of cheque received from the company to prove that the cheque date was 27.3.2004. Relying on the submissions and inviting to the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e units were purchased on the date of record (date of dividend), then, the person did not hold the units for even a day prior to the date of record. If the contention of the learned A.R. of the assessee is accepted that the date of purchase does not fall within the period of three months before the date of record and therefore the provisions of section 94(7) would not apply, it would render the provision as well as general law of computation of limitation/period meaningless, unworkable and absurd. As per the general rule of computation of period as well as the General Clauses Act, the day on which cause of action arises is excluded and the limitation reckons from the next day for counting the period of limitation but it does not mean that if an action is taken on the day when cause of action arises, then it would not be said that the said action is not within limitation. For example, if the assessee received the order of Commissioner of Income-tax (Appeals) on 26.12.2003, then the limitation for filing the appeal would reckon from 27.12.2003 and would expire on the expiry of 60th day. If the assessee prefers to file an appeal before this Tribunal on 26.12.2003 itself, then it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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