TaxTMI 
TaxTMI 
2016 (1) TMI 122
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....the order in the manner passed by him and the learned Commissioner of Income Tax (Appeals)-III has erred in confirming the same. The order being bad in law is liable to be quashed 2. The learned Assistant Commissioner of Income Tax has erred in disallowing the short- term capital loss incurred and concluding that the loss would have been allowed if the sale were made after nine months as against the applicable law of three months in the month of June 2004 and the learned Commissioner of Income Tax (Appeals)-III has concurred the same view. 3. The learned Assistant Commissioner of Income Tax has failed to appreciate that the amendment to the section 94 (7) was made after the redemption of units and the Commissioner of Incom....
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....1 [the 'Act' for short]. The AO found that out of the above investments in mutual funds, investment in HSBC and Templeton Growth Fund is not covered under the provisions of 94(7)of the Act as no dividend was declared. Therefore, the AO excluded these two transactions from the purview of sec.94(7) and proceeded for dividend scripting in respect of three remaining transactions viz., Birla Yield Plus, Chola triple ace and Templeton India Growth. The AO held that as per sec.94(7) when the units were sold within 9 months of the record date and the assessee received dividend then to the extent of dividend so received short-term capital loss on these transactions is to be disallowed. The AO has given details of the dividend received by the asse....
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....ified her view by the judgment of the Hon'ble Supreme Court in the case of Karimthanavi Tea Estates Ltd. vs. State of Kerala 60 ITR 262. 6. Before us, learned AR of the assessee submitted that the liability of the tax was not foreseeable at the time of transaction carried out by the assessee because the amendment in the provisions of sec.94(7) was brought into statute subsequently and therefore, the assessee cannot be held liable for tax when it was not possible for the assessee, to foresee any such provision in the Act. He has further submitted that any amendment which imposes obligation or imposes new liabilities has to be treated as prospective and cannot be retrospective. In support of his contention, he has relied upon the decision ....
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.... as well as the relevant material on record. There is no dispute that prior to amendment by Finance Act 2004 in the provisions of sec.94(7) of the Act, loss if any, arising from the purchase and sale of securities or units acquired within a period of three months prior to record date and unsold within 3 months after such record date, then the loss on sale of units shall be ignored to the extent of the amount of the dividend or income received which is exempt as per the provisions of the Act. Post amendment the requirement of holding the units has been enhanced to a period of 9 months from the recorded date and therefore, as per amended provisions of sec.94(7), if any person buys or requires any unit within a period of 3 months prior to reco....
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.... and gains of business which accrued at the end of the previous year in paras.11 to 14 as under: "11. We may refer to well established canons of interpreting the taxation statute. There are three stages in imposition of a tax. There is the declaration of liability,that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment, that ex hypothesi has already been fixed. But the assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery if the person taxed does not voluntarily pay. The dictum of Lord Dunedin in Whitney vs. IRC (1926) Appeal Cases 37 has been quoted time and a....
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....transfer is of long-term capital assets or short-term capital assets is to be determined as per law in force on the 1st of April, 1975, or, as the case may be, 1974 when the assessment year commenced or in accordance with law on the date of the taxable event. " The transaction in question was completed prior to the bill proposing the said amendment to be introduced then it is not disputed that the assessee could not visualize the subsequent amendment in the provisions of sec.94(7) and enhancement of tax liability as per the subsequent amendment. When the incident of tax being sale of units occurred prior to the introduction of the bill proposing the amendment in section 94(7) then the additional tax liability cannot be fastened on the tr....