TMI Blog2010 (10) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... CE PRESIDENT) J. SHRI T.R.SOOD, ACCOUNTANT MEMBER J. Appellant by : Shri Madhur Agarwal. Respondent by : Shri Hemant Lal. ORDER Per T.R.SOOD, AM: In this case an adjournment application dated 4-10-2010 had been moved on behalf of the assessee. The reason given for seeking the adjournment was that the person who is looking after the tax matters of the assessee was not available. From the records it was noticed that in this case adjournments have already been granted at the request of the assessee on ten earlier occasions starting from 6-11-2008 on one pretext or the other. Therefore, application for adjournment was rejected. 2. The assessee has raised two grounds in this appeal out of which ground No.2 was not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter dated 17-2-2006 that assessee has accepted that the short term capital loss should be disallowed to the extent of dividend received. Accordingly, this sum of Rs.97,90,628/- was disallowed. 4. Before the CIT[A] it was mainly argued that mandate of sec.94(7) shows that the loss should be restricted by the amount of dividend or income received on such securities or units referred to in the said section. Since the dividend was received in F.Y 2001-02 whereas short term capital loss occurred in F.Y 2002-03, therefore, same could not be disallowed. It was also contended that the units held by the assessee were redeemed by the mutual funds, therefore, it could not be said that same have been sold because redemption of units would not be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR submitted that sec.94(7) was introduced by the Finance Act 2001 and was made effective w.e.f. 1-4-2002. He submitted that recently the Hon'ble Supreme Court in the case of CIT vs. Walfort Share And Stock Brokers Pvt. Ltd. (326 ITR 1) has already held that sec.94(7) would be effective from 1st April, 2002 and loss to the extent of dividend income received by the assessee could be ignored by the AO. He then invited our attention to the provisions of sec.94(7) and submitted that a plain reading of the section would clearly show that the only requirement is that once a person acquire securities or units within three months from the record date and same are sold or transferred within three months from such dates, then dividend or income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 unit, 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.] A plain reading of the above section shows that there is no restriction that dividend or income on such securities or units should be received in a particular year. The restriction is that such dividend or income should be exempt and, therefore, there is no force in the argument that since the dividend was received in the earlier, therefore, this provision cannot be applied. 10. It h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. We again find no force in the submission that since it is a case of sale of units, therefore, definition of transfer is not applicable. Though the ld. counsel of the assessee said that the redemption would not be covered under the term sale but under the general law but he did not point out which general law he wanted to rely. Section 2(47) reads as under: Sec.2: In this Act, unless the context otherwise requires, Sub-sec.(47): [ transfer , in relation to a capital asset, includes, (i) the sale , exchange or relinquishment of the asset ; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce shares was `.1000/- and the assessee had purchased the preference shares for `.2,66,550/-. The company decided to redeem the preference shares and assessee received a sum of `.2,97,000/- i.e. the face value of the shares held by her. The question arose whether this could be taxed. The assessee maintained that this profit could not be taxed because the assessee has not sold or transferred the asset. The Hon'ble Supreme Court observed as under: The definition of transfer in section 2(47) of the Income Tax Act, 1961 is not an exhaustive definition. Clause (i) of clause (47) of section 2 speaks of "sale, exchange or relinquishment of the asset". This implies parting with any capital asset for gain which will be taxable under section 45 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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