Income Tax Appellate Tribunal - Ahmedabad
Ashish Navnitlal Shah, Ahmedabad vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD
AHMEDABAD "B" BENCH
(BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND
MAHAVIR SINGH, JUDICIAL MEMBER)
ITA.No.2843/Ahd/2007
Asstt.Year : 2004-2005
ITO, Ward-8(4) Vs. Shri Ashish Navnitlal Shah
Ahmedabad. Shital Chaya Apartments
Nr.Hirabaugh, Ambawadi
Ahmedabad.
(Appellant) (Respondent)
Revenue by : Smt. Neeta Shah
Assessee by : Shri Mukesh M. Patel
ORDER
PER G.D. AGARWAL, VICE-PRESIDENT: This is Revenue's appeal against order of the CIT(A)-XIV, Ahmedabad dated 27-4-2007 for A.Y.2004- 2005. The only ground raised in this appeal is as under:
"1. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.21,65,988/- on account of loss claimed in respect of Tata Mutual Fund (Tata Index Nifty Plan)
2. At the time of hearing before us, it is submitted by the learned DR that as per the provisions of Section 94(7) of the Income Tax Act, as it stood at the relevant time, if the assessee sold a unit within the period of three months after its purchase, the loss arising therefrom is to be disallowed; that the assessee purchased the unit on 25-11-2003 and sold the same on 25-2-2004. Thus, the sale was within the period of three months from the date of purchase; that the CIT(A) held that the sale was after 92 days from the date of purchase and therefore it was not within the three months, is not the correct view, because, section 94(7) does not provide time limit of 90 days and it provide time limit of three months. Therefore, if the units are sold before the three months from the date of purchase, the loss is to be disallowed. Therefore, she submitted that the order of the CIT(A) should be reversed and that of the AO should be restored. The learned counsel for the assessee, on the other hand, stated that under the ITA.No.2843/Ahd/2007 Income Tax Act the word "month" is not defined, but it is interpreted by several courts. The Hon'ble Allahabad High Court in the case of CIT Vs. Laxmi Rattan Cotton Mills Co. Ltd., 97 ITR 285 held that the word "month' is to be taken as a period of 30 days. Similarly, the Hon'ble Calcutta High Court has held that the term "month" denotes a period terminating with the day of succeeding month numerically corresponding to the day of its beginning less one; that the RBI has also clarified in respect of calculation of interest on the securities that each month is to be taken as the period of 30 days. He therefore submitted that if a month is taken as 30 days, three months would be 90 days. The assessee has sold the unit after 92 days from its purchase. If the definition of the month is taken as taken by the Hon'ble Calcutta High Court, then also three months would be completed on 24-2-2003 while the assessee has sold the unit on 25-2-2003. He therefore submitted that either way the conditions prescribed under Section 94(7) are not satisfied and the CIT(A) rightly deleted the disallowance of the loss.
3. We have carefully considered the arguments of both the sides and perused the material placed before us. The CIT(A) has discussed the facts and legal issues as under:
"The counsel of the appellant further relied on the following definition of "month" as interpreted in judicial pronouncements and law lexicon:
(i) The word 'month' occurring in Sec. 271(1)(a) must be taken to mean a period of 30 days (CIT Vs. Laxmi Rattan Cotton Mills Co. Ltd., 97 ITR 285 (All.)
(ii) The term 'month' refers to span of time between two dates of two continuous months and not a calendar month. (Bhikhalal Vs. Noormohammed Abdul Karim AIR 1978 (Guj) 149)
(iii) The 'month' whether employed in modern statute or contracts and not appearing to have been used in different sense, denotes a period terminating with th4e day of succeeding month numerically corresponding to the day of its beginning less one. If -2- ITA.No.2843/Ahd/2007 there be - no corresponding day of succeeding month, it terminates to the last day thereof (36 CAL 516)
(iv) The counsel also relied on FAQs on the Debt Markets as pr the clarification issued by the Bombay Stock Exchange Ltd. and the clarification as per the Reserve Bank of India's Bulletin, wherein it has been opened that 'month is to be taken as having 30 days".
25 Q. What are the contention followed for the calculation of accrued interest "
A. The Day Count Convention to be followed for the calculation of Accrued interest in case of transactions in G-Sec is 30/360 i.e. each month is to be taken as having 30 days an each year is to be taken as having 360 days, irrespective of the actual number of days in the month. So, months like February, March, January, may, July, August, October and December are to be taken as having 30 days." (FAQs on the Debt Markets - By BSE Debt. Segment, Bombay Stock Exchange Limited (BSE)] 2.3 I have gone through the observations of the AO as contained in the assessment order and also considered the submissions made on behalf of the appellant. On careful consideration of the same, I find favour with the contention of the appellant that the AO was not justified in invoking the provisions of Sec. 94(7) on the facts of the case and resultantly disallowing the loss of Rs.21,65,988/- claimed by the appellant in respect of redemption of Units of Tata Mutual Fund (Tata Index Fund Nifty Plan). It is not a matter of dispute that the period of holding of the units between the record date (the date of declaration of dividend) and the date of redemption is 92 days. The question for consideration is whether said period of 92 days should mean "the period of three months" as referred to in Sec.94(7). The learned AR has rightly pointed out that as the provisions of Sec.94(7) stood for A.Y.2004-05, the loss is required to be ignored only if the units are transferred with8n the period of three months from the record ate. The AO h8imself has allowed the loss in regard to the schemes of J.M. Balanced Fund - Growth Plan and IL & FS Index Fund - Nifty Plan, though the period of holding in these two cases is 94-92 days respectively.
4. After considering the arguments of both the sides and facts and circumstances of the case, we entirely agree with the finding of the CIT(A). The assessee purchased the unit on 25-11-2003 and the same was sold on 25-2- 2004, which was after 92 days from the date of purchase. Even if month to -3- ITA.No.2843/Ahd/2007 month basis is to be considered then the three months after the date of purchase would complete on 24-4-2004. The units were sold on 25-2-2004 which was not within the period of three months from the date of the purchase i.e. 25-11- 2003. In view of the above, we uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue.
5. In the result, the Revenue's appeal is dismissed.
Order pronounced in Open Court on 26th March, 2010.
Sd/- Sd/-
(MAHAVIR SINGH) (G.D. AGARWAL)
JUDICIAL MEMBER VICE-PRESIDENT
Place : Ahmedabad
Date : 26-03-2010
Vk*
Copy of the order forwarded to:
1) : Appellant
2) : Respondent
3) : CIT(A)
4) : CIT concerned
5) : DR, ITAT.
BY ORDER
DR, ITAT, AHMEDABAD
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