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2015 (11) TMI 484 - ITAT DELHI

2015 (11) TMI 484 - ITAT DELHI - TMI - Loss claimed as business loss - whether the provisions of section 94(7) are applicable in respect of loss claimed by the assessee? - CIT(A) allowed the claim - Held that:- In the instant case, the assessee has purchased units of SBI Mutual Fund on 27.12.2004 and the same were sold on 29.03.2005. The record date of dividend in the case of SBI Mutual fund for the relevant year was 28.03.2005. Based on these dates, the ld. AR submitted a chart of calculation o .....

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ed. For disallowance of loss u/s 94(7) of the Act, all the three conditions have to be fulfilled simultaneously. As all the three conditions of section 94(7) are not fulfilled, we hold that loss of sale of securities to the extent of dividend income cannot be disallowed or ignored invoking provisions of section 94(7) of the Act in the case of the assessee. Same view has also been upheld in the case of CIT Vs. Alka Bhosle [2010 (6) TMI 16 - BOMBAY HIGH COURT]. There is no error in the findings of .....

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educted and interest recorded in the TDS certificate - Held that:- As it is a matter of verification of the TDS certificate and if TDS has been deducted in excess by a particular deductor and the same has been deposited in the Government Account, the assessee cannot be faulted for that. In view of the above, we remit this matter back to the file of ld.AO and direct him to verify the facts of tax deducted and interest recorded in the TDS certificate. The ld. AO may also verify the TDS and corresp .....

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Per O. P. Kant, AM Out of these appeals, first appeal is of the Revenue, which is directed against order dated 04.11.2008 of the learned Commissioner of Income-tax (Appeals), Karnal. Second and third appeals are cross appeals of the Revenue and the assessee, which are directed against another order dated 04.11.2008 of the learned Commissioner of Income-tax (Appeals), Karnal. Both impugned orders dated 04.11.2008 are in respect of Assessment Year 2005-06. Facts and circumstances of both the cases .....

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31,10,110/-. 2. On the facts and in the circumstances of the case, the Commissioner of Income tax (Appeals) has erred in law in reducing the disallowance of expenses from Rs.l,33,682/- to ₹ 25,000/- in view of the provisions of section 14A the Income tax Act, 1961. 3. The Revenue in ITA No. 197/Del/2009 has raised following grounds: 1. On the facts and in the circumstances of the case, the Commissioner of Income tax (Appeals) has erred in law in allowing loss claimed as business loss on t .....

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of ₹ 3,99,492/- by wrongly linking it with Tax free interest income of the assessee and the Ld C.I.T (Appeals) has un-judiciously confirmed the same to the extent of ₹ 50,000/-. 2. That the Assessing officer has arbitrarily & without any basis disallowed interest expenses of ₹ 4,02,772/- and the Ld C.I.T (Appeals) has failed to properly consider and adjudicate the same. 3. That the Assessing officer without properly appreciating the factual position has arbitrarily increas .....

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of ₹ 36,89,164/- along with exempted income of ₹ 31,30,110/- from the dividend and ₹ 38,38,304/- from interest on tax free bonds. The case of the assessee was selected for scrutiny. In the course of the scrutiny proceedings, the learned Assessing Officer noticed that the assessee had sold units of SBI Mutual Fund for ₹ 79,10,623/- on 29.03.2005, which were purchased for ₹ 1,10,00,000/- on 27.12.2004 , resulting into a loss of ₹ 30,89,377/-. The assessee also e .....

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and allowed the balance loss. The ld.AO also made disallowance of ₹ 1,33,682/- in terms of section 14A of the Act for expenditure incurred towards earning tax-free income. 7. Aggrieved, the assessee filed an appeal before the learned Commissioner of Income-tax (Appeals) [in short CIT(A)‟], who allowed the loss of ₹ 31,10,110/- and reduced the disallowance u/s 14A of the Act from ₹ 1,33,682/- to ₹ 25,000/-. Aggrieved, with the above findings of the ld.CIT(A), the Re .....

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ntative (in short AR‟) submitted that there was no dispute as regards to activity of purchase and sale of securities carried out by the assessee held as trading activity, but he contended that loss has been disallowed invoking section 94(7) of the Act by the ld. AO, which is not applicable in the case of the assessee, being purchase of mutual funds under reference beyond three months from the record date of dividend, and therefore the ld.CIT(A) has rightly allowed the loss as per finding g .....

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f section 94(7) of the Act are reproduced as under:- Where- (a) any person buys or acquires any securities or unit within a period of three months prior to the record date; (b) such person sells or transfers- (i) such securities within a period of three months after such date; or (ii) such unit within a period of nine months after such date; (c) the dividend or income on such securities or unit received or receivable by such person is exempt, then, the loss, if any, arising to him on account of .....

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is not fulfilled, the loss will not be hit by the section. 11. Now, let us examine whether the assessee falls in net of all the three conditions of the section 94(7) of the Act. In the instant case, the assessee has purchased units of SBI Mutual Fund on 27.12.2004 and the same were sold on 29.03.2005. The record date of dividend in the case of SBI Mutual fund for the relevant year was 28.03.2005. Based on these dates, the ld. AR submitted a chart of calculation of no. of days of purchase of secu .....

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94(7) of the Act, all the three conditions have to be fulfilled simultaneously. As all the three conditions of section 94(7) are not fulfilled, we hold that loss of sale of securities to the extent of dividend income of ₹ 31,10,110/- cannot be disallowed or ignored invoking provisions of section 94(7) of the Act in the case of the assessee. Same view has also been upheld in the case of CIT Vs. Alka Bhosle by the Hon‟ble Bombay High Court, reported in 325 ITR 550. In other two cases r .....

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rest income of ₹ 38,38,034/- on tax free bond, which was claimed as exempted. The assessee also claimed total expenditure of ₹ 3,62,134/- in profit and loss account. The ld.AO disallowed expenditure of ₹ 1,33,682/- in terms of section 14A of the Act, out of the total expenses of ₹ 3,62,134/- claimed by the assessee in profit and loss account, in proportion of interest income from tax free bond to the total income. Before the CIT(A) the assessee submitted that no expenses .....

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s, the Sr. DR relied on the order of the ld.AO, whereas, the ld. AR placed his reliance on the order of the ld. CIT(A) and submitted that the assessment year being prior to AY 2008-09, the Rule 8D of the Income-tax Rules was not applicable in the case of the assessee. He further submitted that the learned CIT(A) has already confirmed a reasonable amount of expenses. 14. After considering the rival submissions, we are of the opinion that the disallowance upheld by the ld. CIT(A) is justified in v .....

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the Revenue in ITA No.196/Del/2003. The facts of the case in hand are also similar to the case in ITA No.196/Del/2003 Therefore, following the findings given in appeal in ITA No.196/Del/2003, both the grounds of the Revenue are dismissed. 18. Now, we take up the appeal of the assessee in ITA No.216/Del/2003. 19. Ground No.1 of the appeal of the assessee is covered by findings given in ground No.2 of the Revenue‟s appeal in ITA No.197/Del/2003. Since ground No. 2 of the Revenue‟s app .....

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