2019 (2) TMI 454

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.... in the other appeals both relating to the same company for the year 1991-92, the Tribunal followed its earlier order. 2. The questions of law arising in the appeal of the Revenue, as re-framed by us, are as follows: i) Whether on the facts and circumstances of the case the Tribunal was correct in having found Section 94(4), not applicable to the specific transactions of the assessee, resulting in a loss which was not reckoned for computation of profits and gains as provided in sub-section (4) of Section 94, being allowed ? ii)Whether the Tribunal was correct in having found that the assessee does not have a business consisting wholly or partly in dealing in securities for reason only of the Assessing Officer having tre....

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....ard the Senior Standing Counsel for the Revenue and the learned Senior Counsel for the assessee. 5. The entire issue revolves on the interpretation of Section 94. We find that sub-sections (1) and (4) of Section 94 are interconnected, which are extracted hereunder: "94.Avoidance of tax by certain transactions in securities.-(1) Where the owner of any securities [in this sub-section and in sub-section (2) referred to as ―the owner] sells or transfers those securities, and buys back or reacquires the securities, then, if the result of the transaction is that any interest becoming payable in respect of the securities is receivable otherwise than by the owner, the interest payable as aforesaid shall, whether it would or would ....

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....y or partly in dealing in securities, buys or acquires any securities and sells back or retransfers the securities, then, if the result of the transaction is that interest becoming payable in respect of the securities is receivable by him but is not deemed to be his income by reason of the provisions contained in subsection (1), no account shall be taken of the transaction in computing for any of the purposes of this Act the profits arising from or loss sustained in the business." 6. The assessee as the owner of securities did not sell the shares owned by it and then repurchase it and hence there is no applicability of sub-section (1). The contention of the Revenue also is that the purchase and sale of the units carried out by the assess....

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....other person to earn the interest due on the record date; in the process avoids tax on the interest but obtains a gain in so far as the repurchase would be at a lesser price after the record date. Section 94(1) in that circumstances shifts the liability to income tax on such interest income to the seller-repurchaser. Consequently, the person who received the interest income, but is exempted from liability to income tax by virtue of sub-section (1) of Section 94, is disentitled from claiming the loss occassioned in the transaction, in his assessment. 8. Pertinently, it is to be seen that sub-section (4) does not speak of an exemption under Section 10(15), but speaks of the interest income received by the person, who buys and re-sells the ....

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.....No.59/2009 is filed by the Revenue and I.T.A.No.33/2014 is filed by the assessee, who is the respondent in the other appeal. Here, again the Assessing Officer disallowed the loss claimed on the purchase and sale of shares. The assessee on being issued with a notice under Section 148, produced the details of the sellers and purchasers, not fully, but partly. The transactions with those persons, who were identified were excluded by the Assessing Officer. However, the First Appellate Authority issued a notice and included those transactions also and disallowed the loss with respect to such transactions enhancing the tax payable, in appeal. The assessee filed a further appeal before the Tribunal raising contentions against both the issues; on ....