2011 (12) TMI 411

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e property income. The assessee had claimed before the Assessing Officer that for certain transactions done by the assessee, as reproduced in paragraph 5 of the order of the ITAT, the provisions of Section 94(7) of the Income Tax Act (for short "the Act") can not be attracted since the conditions contained in clauses (a) (b) & (c) of Section 94(7) of the Act are not cumulatively satisfied. The Assessing Officer rejected the said contention of the assessee by observing that in respect of the given securities of Sundaram Mutual Fund, Sundaram Mutual Fund (Midcap), Tata Mutual Fund, Birla Midcap Fund-A and ILFS-Index-Nifty, the provisions of Section 94(7) of the Act are attracted. In appeal, CIT (appeal) took the view that in respect of the sa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... provision by observing thus :- "4.3 Now to decide the first and main controversy involved, it will be necessary to appreciate the provision of sec. 94(7) as there is no dispute to the fact that such mutual fund units were sold beyond the period of 3 months from the record date except in respect of Sundaram S05 Midcap and Tata Mutual Fund Units discussed in para E & F of the assessment order. The provisions have been reproduced as above, being part of the order of AO as well as in the written submission of the appellant and hence are not being reproduced once again. The provisions of sec. 94(7) have 3 limbs. First limb talks of purchase of securities or units within a period of 3 months prior to the record date; 2nd limb talks of sale of s....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f sec. 94(7) of the IT Act. The ld. DR cited several decisions in support of the contention that Income Tax Act being taxing statute, the provisions should be interpreted strictly. These decisions would not support the case of the revenue because if the strict interpretation of sec. 94(7) is applied, it would lead to irresistible conclusion that all the three conditions above shall have to be satisfied cumulatively as is held by Delhi Bench in the above case. None of the above decision therefore would support the contention of the ld. DR. We find that units were not purchased prior to three months from the record date but they were sold after three months from the record date. Wherever the units were sold prior to three months, ld. counsel ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the facts and circumstances above, we are of the view that issue is squarely covered in favour of the assessee by the order of Delhi Bench in the case of Shambhu Mercantile Ltd. and decision of Bombay High Court in the case of CIT v. Walfort Shares and Stock Brokers P. Ltd. (supra). We, therefore, do not find any infirmity in the order of the ld. CIT(A) in deciding the issue in favour of the assessee. The departmental appeal on ground no.1 has no merit. The same is accordingly dismissed. 8. The decision of the Tribunal in the matter of Shambhu Mercantile Ltd., which has been relied upon above, has been affirmed by the Division Bench of the Delhi High Court in the matter of CIT v. Shambhu Mercantile Ltd. [2010] 325 ITR 535/[2009] 183 Taxma....