TaxTMI 
TaxTMI 
2010 (9) TMI 416
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....e 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 representative and also to acquire, hold by way of investment or deal in shares, stocks debentures bonds, obligations units securities jewelleries and precious metals. During the course of assessment proceedings the AO found that the assessee company entered into transaction of purchase and sale of Sundaram Bond S....
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....the falls under the provisions of section 94(7) of the Act. The AO asked the assessee as to why the provisions of section 94(7) would not be invoked. The assessee contended before the AO as under : "In continuation to our earlier submission and under the instructions of our above named client we further submit explanation about application of section 94 of the IT Act, 1961: The assessee is not fulfilling any of the 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 A....
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....., the CIT(A) has held that since the transaction of purchase and sale of the mutual funds was done not related to parties, therefore, the same cannot be held non-genuine transaction only because the transaction resulted into loss. 7. We have heard the learned DR as well as the leaner AR of the assessee and considered the relevant record. The learned DR has submitted that when the date of purchase and record date are same then how the units are purchased beyond the three months from the date of record and therefore, the assessee's transactions false under the clause (a) of sub-section 7 of section 94 of the Income-tax act. The ld. DR has further contended that the sale and purchase transaction for the purpose of section 94(7) would be wh....
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....tively 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 section 94(7), the le....
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....(1) ...................... Explanation.- ...................... (2) ...................... (3) ...................... (4) ...................... (5) ...................... (6) ...................... [(7) 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,  ....
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....prefers to file an appeal before this Tribunal on 26.12.2003 itself, then it cannot be said that the appeal of the assessee is not within the period of limitation because the limitation started only on 27.12.2003. The object and purpose of excluding the day on which cause of action arises is to make available clear days of limitation prescribed under the Statute and, therefore, the said day is excluded for the purpose of counting the latest or the outer limit of period of limitation and not for the earliest or nearest point of time to the cause of action. Hence, we are not impressed or convinced with the contention of the learned A.R. that the units purchased on the date of record does not fall within the period of three months before the d....