2014 (4) TMI 888

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....llowance of short term capital loss of Rs. 4,88,918/- on the sale of Mutual Funds, Units u/s 94(7) of Income Tax Act, 1961. 3. That the Learned Commissioner of Income Tax (Appeals), has erred in sustaining the interest charged u/s 234B of the Income Tax Act." 3. Apropos ground No. 2. Confirmation of the disallowance of short term capital loss of Rs. 4,88,918/- on the sale of Mutual Funds, Units u/s 94(7) of the Income Tax Act, 1961 (hereinafter „the Act‟). 4. Brief fact of the case is as follows. The appellant filed return of income for the Assessment Year 2007-08 on 31.07.2007, disclosing an income of Rs. 32,37,650/-. The appellant has earned income from capital gains and other sources during the year. The Assessing Officer ....

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....Amount of Dividend 4,29,038.40 3,99,281.00 Loss on transfer 3,43,269.47 1,45,649.44   6. The AR submitted that the record date has to be excluded because the language of the section uses the term "Prior to record date". Therefore according to him the date should be taken as on 20.01.2007, for the purpose of calculating three months and thereby he had purchased the securities prior to three months and thus does not fall within the ken of section 94 (7)(a) of the Act. On the other hand the ld DR submitted that even if such an interpretation is taken, then also the assessee falls within the provision of section 94(7)(b) of the Act, since, sale of the securities happened just after four days from the record date and therefore falls ....

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....ribed in clause (a)(b)(c) of Sub- section (7) of Section 94 and if a loss occasioned on purchase and sale of such securities or units then to the extent such loss does not exceed the amount of dividend or income received or receivable, it is to be ignored for the purpose of computing income by the assessee chargeable to tax. 10. The information pertaining to transaction in issue is set out in a tabular form as given below:- Sl Name of Mutual Fund Date of Purchase Record Dividend Date of no. purchase amount date of amount (in sale dividend Rs. 1. Birla Basic Indu. Sel. Sec. Fund 19.10.2006 15,00,000 19.01.2007 4,29,038.40 23.01.2007 2. Reliance Vision Fund 19.10.2006 25,00,000 19.01.2007 3,99,281 23.01.2007 11. A perusal of the table....