TMI Blog2014 (4) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... . [2010 (7) TMI 15 - SUPREME COURT] has to be followed - after 1.4.2002, also the Parliament had not treated the dividend stripping transactions as sham or bogus and in that view of the matter by applying section 94(7) of the Act also loss to be ignored would only be to the extent of dividend received and not the entire loss - The Tribunal committed an error in ignoring the fact that the decision in the case of the assessee for the earlier year was rendered in the background of un-amended section 94 – here, amended section 94 and in particular sub-section(7) had to be applied – the AO is directed to compute the loss – Decided partly in favour of Revenue. - Tax Appeal No. 1316 of 2009 - - - Dated:- 19-3-2014 - Akil Kureshi And Sonia Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on dividend from the mutual funds and on the other hand claiming loss in purchase and sale of the mutual funds cum-dividend and ex-dividend. The issue had to be examined in terms of section 94(7) of the Income Tax Act, ( the Act for short). The decision of Special Bench of the Tribunal in case of Walfort Share Stock Brokers (P.) Ltd vs.ITO, ultimately reached the Supreme Court. For the period prior to 1.4.2002 the Court held that in view of language in question, assessees cannot be prevented from claiming said benefits. However, the statute, in the meantime, was amended by addition of sub-section(7) of section 94 with effect from 1.4.2002. The issue ultimately reached the Supreme Court in the case of Commissioner of Income Tax, Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sections 14A and 94(7) were simultaneously inserted by the same Finance Act, 2001. As stated above, section 14A was inserted with effect from 1-4- 1962 whereas section 94(7) was inserted with effect from 1-4-2002. The reason is obvious. Parliament realized that several public section undertakings and public sector enterprises had invested huge amounts over last couple of years in the impugned dividend stripping transactions so also declaration of dividends by mutual fund are being vetted and regulated by SEBI for last couple of years. If section 94(7) would have been brought into effect from 1-4-1962, as in the case of section 14A, it would have resulted in reversal of large number of transactions. This could be one reason why the Parliam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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