TaxTMI 
TaxTMI 
2010 (10) TMI 372
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....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 pressed and, therefore, same is dismissed as not pressed. Ground No.1 reads as under: 1. The learned CIT[A] erred in applying the provisions of section 94(7) and setting off dividend income of Rs..97,90,628 of assessment year 2002-03 against the short term capital loss of Rs. .1,06,03,428 of the assessment year 2003-04. Consequently, the learned CIT[A] erred in reducing the appellant's claim for short term capital loss by Rs..97,90,628 on the ground that provisions of section 94(7) ....
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....al 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 covered by the definition of transfer. 5. The Ld. CIT[A] after examining the submissions observed that perusal of sec.94(7) reveals that the directions contained in this section is to restrict the amount of loss by the amount of dividend or income earned on such securities and the section does not talks of any restriction that dividend should be earned in the same year. What is required is that dividend income which is earned and is exempt then short term capital loss to that e....
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.... 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 such securities has to be reduced from the loss which arises on account of sale or transfer of such units. Therefore, there is no restriction that dividend should be received in a particular year. Further, the provision uses both the expressions i.e. 'sale' and 'transfer' and, therefore, even redemption would be covered by the definition of transfer. He strongly placed reliance on the decision of the Tribunal in the case of Mrs. Parviz Wang Chuk Basi vs. JCIT [supra] and al....
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....rities 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 has been held by the Hon'ble Supreme Court in the recent decision in the case of CIT vs. Walfort Share And Stock Brokers Pvt. Ltd. [supra] as under: "Held, affirming the decision of the High Court, (i) that on facts it was established that there was a sale, the assessee received a dividend, and that dividend was tax-free. The assessee had made use of the said provision of section 10(33) and such use could not be said to be abuse of law. Even assuming that the tra....
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....on 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, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment ;] [or] [(iva) the maturity or redemption of a zero coupon bond; or] [(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or (vi) any transaction (whether by w....
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....: "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 of the Act. When preference shares are redeemed by the company, the shareholder has abandon or surrender the shares in order to get the amount of money in lieu thereof. There is, therefore, also a relinquishment which brings the transaction within the meaning of section 2(47)(i) of the Income Tax Act. The appellant had purchased preference shares in a company at less than their face value and held them as capital assets. The company redeemed th....