ASHOK KUMAR DAMANI, MUMBAI v. ADDL.C.I.T.4(1), MUMBAI

ITA 6227/MUM/2008 | 2005-2006
Pronouncement Date: 03-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 622719914 RSA 2008
Assessee PAN AABPD1845K
Bench Mumbai
Appeal Number ITA 6227/MUM/2008
Duration Of Justice 2 year(s) 1 month(s) 14 day(s)
Appellant ASHOK KUMAR DAMANI, MUMBAI
Respondent ADDL.C.I.T.4(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-12-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 03-12-2010
Date Of Final Hearing 06-05-2010
Next Hearing Date 06-05-2010
Assessment Year 2005-2006
Appeal Filed On 20-10-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI V. DURGA RAO JUDICIAL MEMBER. I.T.A. NO. 6227/MUM/2008. ASSESSMENT YEAR : .2005-06 ASHOK KUMAR DAMANI ADDITIONAL COMMISSIONER 5 SURYA MAHAL VS. OF INCOME-TAX 4(1) BURJORI BHARUCHA MARG MUMBAI. FORT MUMBAI 400 023. PAN AABPD1845K APPELLANT. RESPONDENT. I.T.A. NO.7033/MUM/2008 ASSESSMEN T YEAR : 2005-06. ADDL. COMMISSIONER OF ASHOK KUMAR DAMANI INCOME-TAX 4(1) VS. MUMBAI. MUMBAI. APPELLANT RESPO NDENT. ASSESSEE BY : SHRI HIRO RAI. . DEPARTMENT BY : SHRI JITENDRA YAD AV. O R D E R PER J. SUDHAKAR REDDY A.M. : THESE ARE CROSS APPEALS AND ARE DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-IV MUMBAI DATED 28-09-2008 FOR THE AS SESSMENT YEAR 2005-06. 2 2. FACTS IN BRIEF: THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN T HE BUSINESS OF SHARE BROKING. HE IS A MEMBER OF NATIONAL STOCK EXCHANGE AS WELL AS THE BOMBAY STOCK EXCHANGE. THE ASSESSEE HAS ALSO MADE INVESTMENTS IN COMPANIES THROUGH PRIVATE PLACEMENTS. HE FILED HIS RETURN OF INCOME ON 31-10- 2005 DECLARING A TOTAL INCOME OF RS.7 81 87 195/-. THE AO COMPLETED THE ASSESSMEN T U/S 143(3) ON 17 TH DEC. 2007 INTER ALIA MAKING ADDITIONS/DISALLOWANCES ON ACCOUNT OF TRANSACTION AND V- SAT CHARGES PAID TO STOCK EXCHANGES U/S 40(IA) PEN ALTY PAID TO STOCK EXCHANGE DISALLOWANCE U/S 14A. THE AO ALSO MADE A DISALLOWA NCE U/S 94(7). HE ASSESSED THE TOTAL INCOME AT RS.8 94 16 743/-. THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. ON T HE ISSUES WHERE THE FIRST APPELLATE AUTHORITY CONFIRMED THE ACTION OF THE AO THE ASSES SEE HAS FILED THIS APPEAL AND ON CERTAIN ISSUES WHERE THE CIT(APPEALS) GRANTED RELIE F TO THE ASSESSEE THE REVENUE FILED AN APPEAL. 3. WE HAVE HEARD SHRI HIRO RAI LEARNED COUNSEL FOR THE ASSESSEE AND SHRI JITENDRA YADAV THE LEARNED DR. BOTH PARTIES HAVE ALSO FURNISHED WRITTEN SUBMISSIONS ON THE ISSUE OF DISALLOWANCE OF LOSS U/ S 194(7). WE HAVE CAREFULLY CONSIDERED THE DETAILED SUBMISSIONS MADE BY BOTH T HE PARTIES ON ALL THE ISSUES. 4. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRC UMSTANCES OF THE CASE A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF T HE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED WE HOLD AS FOLLOWS. 5. WE FIRST TAKE THE ASSESSEES APPEAL. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : 1.A) THE LD. C.I.T. (A) ERRED IN CONFIRMING THE ADD ITION MADE U/S 40(A)(IA) OF THE ACT BY LD. ADDL. C.I.T.-4(1) OF RS.37 11 088 /- FOR NON-DEDUCTION OF T.D.S. U/S 194J OF THE ACT. 3 B) THE LD. C.I.T.(A) ERRED IN CONFIRMING THE VIEW T AKEN BY THE LD. ADDL.C.I.T.-4(1) THAT PAYMENTS MADE TO STOCK EXCHAN GE FOR TRANSACTION CHARGES WERE IN THE NATURE OF TECHNICAL SERVICES AN D THEREFORE COVERED U/S 194J FOR DEDUCTION OF T.D.S. 2. THE LD. C.I.T.(A) ERRED IN CONFIRMING THE ADDITI ON AND DIRECTING TO RECOMPUTED THE DISALLOWANCE U/S 14A AS MADE BY THE LD. ADDL.C.I.T.-4(1) OF RS.1 15 077/-. 3. THE LD. C.I.T.(A) ERRED IN CONFIRMING THE ADDITI ON MADE U/S 94(7) BY LD. ADDL.C.I.T.-4(1) TO THE EXTENT OF RS.33 45 420/ - (ERRONEOUSLY STATED AS RS.37 95 000/- IN THE ORDER OF HONBLE C.I.T.(A)-IV ). 6. THE LEARNED COUNSEL FOR THE ASSESSEE MR. HIRO R AI FILED AN AMENDED GROUND OF APPEAL NO. 2 WHICH READS AS FOLLOWS : THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN DIRE CTING THAT THE DISALLOWANCE U/S 14A WAS TO BE COMPUTED AS PER RULE 8D. 7. GROUND NO. 1 IS AGAINST THE CONFIRMATION OF A DI SALLOWANCE MADE BY THE AO U/S 40(A)(IA) OF THE ACT. THE ASSESSEE HAD MADE CER TAIN PAYMENTS ON ACCOUNT OF TRANSACTION CHARGES AND V-SAT CHARGES TO STOCK EXCH ANGES. THE AO WAS OF THE OPINION THAT SECTION 194J IS ATTRACTED AND AS THE A SSESSEE HAS NOT DEDUCTED TAX AT SOURCE THE EXPENDITURE SHOULD BE DISALLOWED U/S 40 (A)(IA) OF THE ACT. BOTH THE PARTIES SUBMITTED THAT THE ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF MUMBAI A-BE NCH OF THE TRIBUNAL IN THE CASE OF KOTAK SECURITIES LTD. VS. ADDL.CIT 124 TTJ 241 WHEREIN IT IS HELD THAT THE TRANSACTION FEE PAID TO A STOCK EXCHANGE ON THE BA SIS OF VOLUME OF TRANSACTIONS IS PAYMENT FOR USE OF FACILITIES PROVIDED BY STOCK EXC HANGE AND NOT FOR ANY SERVICES EITHER TECHNICAL OR MANAGERIAL AND HENCE PROVISIONS OF SECTION 194J ARE NOT ATTRACTED AND NO DISALLOWANCE CAN BE MADE BY INVOKI NG SECTION 40(A)(IA) OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF DCI T VS. ANGLE BROKING LTD. 35 SOT 457 WHEREIN IT IS HELD THAT THE STOCK EXCHANGES PROVIDING INFRASTRUCTURE TO THEIR MEMBERS BY INSTALLING V-SAT AND LEASED LINE S YSTEM AND FEE COLLECTED IN THAT 4 REGARD IS NOTHING BUT FEE PAID FOR USE OF FACILITIE S PROVIDED BY THE STOCK EXCHANGE AND THE PAYMENT IN QUESTION CANNOT BE CONSIDERED AS FEE FOR RENDERING TECHNICAL SERVICES. RESPECTFULLY FOLLOWING THESE DECISIONS W E ALLOW GROUND NO. 1 OF THE ASSESSEE. 8. COMING TO GROUND NO.2 WHICH WAS AMENDED WE FIN D THAT THE AO AT PAGE 8 OF HIS ORDER ESTIMATED THE DISALLOWANCE U/S 14A AT 3% OF THE DIVIDEND INCOME. ON APPEAL THE FIRST APPELLATE AUTHORITY DIRECTED THE AO TO COMPUTE THE DISALLOWANCE IN TERMS OF RULE 8D. 9. IN VIEW OF THE DECISION OF THE JURISDICTIONAL HI GH COURT IN THE CASE OF GODREJ BOYCE MANUFACTURING CO. LTD. (2010) 234 CTR (BOM) 1 IT IS HELD THAT RULE 8D CAN BE APPLIED PROSPECTIVELY AND THAT PRIOR TO INTR ODUCTION OF RULE 8D THE DISALLOWANCE U/S 14A HAS TO BE WORKED OUT BY THE AO ON SOME REASONABLE BASIS. THE LEARNED COUNSEL FOR THE ASSESSEE DOES NOT DISPU TE THE QUANTIFICATION OF THE DISALLOWANCE MADE BY THE AO. UNDER THESE CIRCUMSTAN CES WE VACATE THE ORDER OF THE CIT(APPEALS) AND SUSTAIN THE DISALLOWANCE MADE BY THE AO. 10. THE LAST GROUND OF APPEAL IS ON THE DISALLOWANC E MADE U/ 94(7). THE LEARNED COUNSEL FOR THE ASSESSEE MR. HIRO RAI DREW THE ATTE NTION OF THE BENCH TO THE ISSUE AS DISCUSSED BY THE AO FROM PAGES 8 TO 10 OF HIS OR DER AND AS DISCUSSED BY THE CIT(APPEALS) AT PAGES 11 TO 15 OF HIS ORDER. HE REF ERRED TO THE TABLE AT PAGE 8 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE TABLE G IVES THE RELEVANT DETAILS PARTICULARLY THE PURCHASE DATES RECORD DATES AND R EDEMPTION DATES. HE POINTED OUT THAT THE PURCHASES WERE MADE SHORTLY BEFORE THE REC ORD DATES AND THAT THE REDEMPTION DATES WERE BEYOND THE PERIOD OF THREE MO NTHS AFTER THE RECORD DATES. ME. HIRO RAI SUBMITTED THAT AS PER THE PROVISIONS O F SECTION 94(7) AS THEY STOOD ON THE DATE OF THE TRANSACTION SINCE THE REDEMPTION D ATES WERE BEYOND THREE MONTHS 5 FROM THE RECORD DATES THE PROVISIONS OF SECTION 94 (7) WERE NOT APPLICABLE. HOWEVER HE POINTED OUT THAT SECTION 94(7) WAS AMEN DED BY THE FINANCE (NO.2) ACT 2004 WITH EFFECT FROM 1-4-2005 WHEREIN IN RE SPECT OF UNITS THE PERIOD OF REDEMPTION WAS EXTENDED TO NINE MONTHS FROM THE REC ORD DATES. THE FINANCE (NO.2) BILL 2004 WAS INTRODUCED IN PARLIAMENT ON 8- 7-2004 AND HAD RECEIVED THE PRESIDENTS ASSENT ON 10-9-2004. FROM THIS HE POIN TED OUT THAT IT IS CLEAR THAT THE ASSESSEE HAD REDEEMED THE UNITS EVEN PRIOR TO THE BILL BEING INTRODUCED IN PARLIAMENT. 11. MR. HIRO RAI ADVANCED THREE ALTERNATIVE SUBMISS IONS BASED ON WHICH HE CLAIMED THAT THE DISALLOWANCE MADE U/S 94(7) IS BAD IN LAW. 12. THE FIRST PROPOSITION CANVASSED BY MR. HIRO RAI WAS THAT SECTION 94(7) WAS INSERTED TO AVOID DIVIDEND STRIPING TRANSACTIONS WH ICH WERE APPROVED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. WALFOR T SHARES AND STOCK BROKERS P. LTD. 326 ITR 1. HE SUBMITTED THAT TO PLUG THIS LOOP HOLE SECTION 94(7) WAS INTRODUCED TO DISALLOW THE LOSS ONLY TO THE EXTEN T IT DOES NOT EXCEED THE AMOUNT OF DIVIDEND. HE POINTED OUT THAT LOSS INCURRED IN EXC ESS OF DIVIDEND IS TO BE ALLOWED. 13. REFERRING TO PAGE 8 OF THE ASSESSMENT ORDER HE SUBMITTED THAT THE RECORD DATES FELL WITHIN THE PREVIOUS YEAR 2004-05 WHEREI N THE ASSESSEE EARNED DIVIDEND OF RS.71 41 120/-. HE POINTED OUT THAT AS ON 31-3-2 004 THE LOSS INCURRED BY THE ASSESSEE ON ACCOUNT OF DEMINITION IN THE VALUE OF SHARES WAS RS.77 62 458/- WHICH IS NOT IN DISPUTE. THUS HE SUBMITS THAT THIS LOSS IS IN EXCESS OF THE DIVIDEND EARNED DURING THE ASSESSMENT YEAR 2004-05 AND IT AR OSE MAINLY DUE TO DECLARATION OF DIVIDEND AND HENCE THE ENTIRE DIVIDEND INCOME SH OULD BE SET OFF AGAINST THAT LOSS. HE SUBMITS THAT THE BALANCE LOSS OF RS. 6 21 388/- (I.E. 77 62 458 - 71 41 120) AND THE LOSS OF RS.33 45 420/- INCURRED IN THE IMPUGNED ASSESSMENT 6 YEAR 2005-06 WAS A LOSS OVER AND ABOVE THE LOSS ON ACCOUNT OF DIVIDEND TRANSACTION. THIS BALANCE LOSS AS ALSO THE CURRENT YEARS LOSS WAS A LOSS ON ACCOUNT OF MARKET FACTORS WHICH CAUSED A FALL IN THE VALUE OF INVESTMENTS HELD BY THE MUTUAL FUNDS. THESE LOSSES AS PER THE LEARNED COUN SEL HAD NOTHING TO DO WITH THE DIVIDEND DECLARED LAST YEAR AND HENCE NO DISALLOWA NCE IS CALLED FOR U/S 94(7) IN THIS YEAR. 14. THE SECOND PROPOSITION IS THAT THE AO HAS COMPA RED THE CURRENT YEARS LOSS OF RS.33 45 420/- WITH LAST YEARS DIVIDEND OF RS. 71 41 420/- AND MADE A DISALLOWANCE. HE CONTENDS THAT THE DIVIDEND OF THE PREVIOUS YEAR SHOULD FIRST BE SET OFF AGAINST THE LOSS INCURRED IN THE PREVIOUS YEAR FOR THE REASON THAT THE LOSS WAS INCURRED IN THE PREVIOUS YEAR BY WAY OF FALL IN VAL UE OF INVESTMENTS AS ON 31/3/2004 ONLY FOR THE REASON THAT DIVIDENDS WERE DECLARED. HE REITERATED HIS POINT THAT DURING THE CURRENT YEAR THE LOSS IN VALU E OF SHARES WAS NOT ON ACCOUNT OF DECLARATION OF DIVIDEND BUT ONLY ON ACCOUNT OF MARK ET FORCES. HE CONTENDED THAT EVEN IF THIS LOGICAL WAY IS NOT ACCEPTED THEN IF THERE IS MORE THAN ONE ALTERNATIVE THE ALTERNATIVE WHICH PLACES A LIGHTER BURDEN ON T HE ASSESSEE HAS TO BE ADOPTED. FOR THIS PROPOSITION HE PLACED RELIANCE ON THE DECI SION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF J.C. THAKKAR VS. CIT 27 ITR 65 8. HE EMPHASIZED THAT CLEAR LOGIC AND THE ACTUALITY OF THE SITUATION DEMANDS TH AT DIVIDEND OF LAST YEAR SHOULD BE COMPARED FIRST WITH THE LOSS OF THAT LAST YEAR. HE FURTHER SUBMITTED THAT WHEN THE STATUTE IS SILENT THE VIEW IN FAVOUR OF THE ASSESS EE SHOULD BE ADOPTED. FOR THIS PROPOSITION HE RELIED ON THE DECISION OF HONBLE CA LCUTTA HIGH COURT IN THE CASE OF MAGMA LEASING LTD. VS. CIT 260 ITR 36. 15. THE THIRD PROPOSITION IS THAT THE AMENDED PROVI SIONS OF SECTION 94(7) WOULD NOT APPLY TO THE TRANSACTION IN THE CASE OF THE ASS ESSEE SINCE THE TRANSACTION HAD ALREADY TAKEN PLACE EVEN PRIOR TO THE INTRODUCTION OF FINANCE (NO.2) BILL 2004. 7 16. THE LEARNED DR MR. JITENDRA YADAV ON THE OTHE R HAND OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT THE UNDISPUTED FACT IS THAT THE ASSESSEE GETS HIT BY THE PROVISIONS OF SECTION 94(7 )(B)(II) WHICH HAS BEEN AMENDED WITH EFFECT FROM 1-4-2005 FOR THE ASSESSMENTYEAR 20 05-06. HE PLACED RELIANCE ON THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF SURI & SONS VS. ACIT 124 TTJ (AST) 800 WHEREIN IT IS HELD THAT THE AMENDMENT WOULD COME INTO FORCE AT THE BEGINNING OF THE RELEVANT ASSESSMENT Y EAR AND THAT SUCH AMENDMENT WOULD GOVERN THE CASE THOUGH THE AMENDMENT ITSELF WAS MADE AFTER THE INCOME IN QUESTION WAS EARNED. 17. COMING TO THE FIRST PROPOSITION OF THE ASSESSEE THE LEARNED DR RELIED ON SECTION 94(7) AND SUBMITTED THAT THERE ARE THREE CR UCIAL LINKS I.E. DATE OF PURCHASE OF UNIT THE RECORD DATE OF DECLARING THE DIVIDEND AND THE DATE OF SALE OF UNITS. IN THE PRESENT CASE THE FIRST TWO INCIDENTS HAVE OCCURRED IN THE PREVIOUS ASSESSMENT YEAR 2004-05 AND WHEREAS THE THIRD INCIDENT HAS TAKEN PL ACE IN THE IMPUGNED ASSESSMENT YEAR 2005-06. HE EMPHASIZED THE FACT THA T THE PROVISIONS OF SECTION 94(7) WILL BE TRIGGERED ONLY ON THE HAPPENING OF TH E THIRD EVENT AND AS THE SAME HAS OCCURRED IN THIS YEAR THE ACTUAL LOSS IF ANY COULD BE DETERMINED ONLY IN THE IMPUGNED YEAR AND SECTION 94(7) HAS TO BE APPLIED. HE SUBMITTED THAT THE LOSS TO THE TUNE OF RS.71 41 120/- WHICH IS THE AMOUNT OF DIVIDEND EARNED HAS TO BE DISALLOWED BUT AS THE ASSESSEE HAS BOOKED A LOSS O F ONLY RS.33 45 420/- THE SAME WAS DISALLOWED. HE POINTED OUT THAT THE ASSESSEE H AD TREATED THE UNIT AS STOCK IN TRADE AND BY VALUING THE UNITS AT NET REALIZABLE V ALUE AS ON 31-03-2004 HAD BOOKED LOSSES IN THE EARLIER YEAR AND THE AO WAS F ORCED TO IGNORE THE LOSSES OF RS.37 95 700/- WHICH WAS BOOKED IN THE EARLIER YEA R. 18. ON THE CONTENTION THAT THE LOSS DURING THE YEAR HAS NOT OCCURRED DUE TO DECLARATION OF DIVIDEND BUT ONLY DUE TO OPERATION O F MARKET FORCES THE LEARNED DR 8 SUBMITTED THAT THE LOSS BOOKED IN THE PREVIOUS YEAR WAS ONLY A NOTIONAL LOSS ARRIVED AT BY VALUING THE STOCK AT NET REALIZABLE V ALUE. HE SUBMITTED THAT THE NOTIONAL LOSS CANNOT BE TAKEN INTO CONSIDERATION WH ILE COMING TO A CONCLUSION ON DISALLOWANCE U/S 94(7). 19. ON THE ISSUE OF ADOPTING A METHOD WHICH PLACES LIGHTER BURDEN ON THE ASSESSEE THE LEARNED DR POINTED OUT THAT THE SECTI ON IS TITLED AVOIDANCE OF TAX BY CERTAIN TRANSACTIONS IN SECURITIES AND SUBMITTED T HAT IT IS AN ANTI AVOIDANCE MEASURE AND SHOULD BE CONSTRUED STRICTLY. HE DISTIN GUISHED THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF J.C. THAKK AR ON THE GROUND THAT THE SAME DOES NOT RELATE TO INTERPRETATION OF ANTI-AVOIDANCE MEASURE. HE REITERATED THE CONTENTION THAT THE THREE STRAGES OF THE TRANSACTIO N HAVE TO BE COMPLETED TO GET HIT BY THE PROVISIONS OF SECTIONN94(7) AND THE PROFIT A ND LOSS IS TO BE ARRIVED AT ONLY AT THE POINT OF SELL. HE CONTENDED THAT IT WOULD BE FA CTUALLY INCORRECT TO SAY THAT THERE ARE TWO DIFFERENT LOSSES ARISING IN TWO DIFFERENT Y EARS ON A SINGLE TRANSACTION OF SALE OF UNITS OF MUTUAL FUNDS. HE SUBMITTED THAT THERE I S NO AMBIGUITY IN THE STATUTE AND HENCE INTERPRETING THE SAME IN THE MANNER BENEFICIA L TO THE ASSESSEE DOES NOT ARISE. HE RELIED ON THE ORDER OF THE CIT(APPEALS) 20. IN REPLY THE LEARNED COUNSEL FOR THE ASSESSEE DISTINGUISHED THE ORDER OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF SURI AND SONS BY SUBMITTING THAT THE SALES IN THAT CASE HAD BEEN EFFECTED EVEN AFTER T HE PRESIDENTIAL ASSENT TO THE FINANCE (NO.2) BILL 2004. HE FURTHER TRIED TO DISTI NGUISH THE JUDGMENT BY SUBMITTING THAT THE TRIBUNAL WAS DEALING IN CAPITAL GAIN AND NOT STOCK IN TRADE. 21. BOTH THE PARTIES SUBMITTED THAT GROUND NO. 13 O F THE DEPARTMENTAL APPEAL RELATES TO SAME ISSUE OF DISALLOWANCE U/S 94(7) AND THAT THE SUBMISSIONS THAT THEY HAVE MADE IN THE ASSESSEES APPEAL ARE RELEVANT IN THE REVENUES APPEAL ALSO. HE 9 SUBMITTED FURTHER SUBMISSIONS ON THE REVENUES GROU ND WOULD BE ADDRESSED AT THE TIME OF HEARING OF THE REVENUE APPEAL. 22. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPE RS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITE D WE HOLD AS FOLLOWS. 23. WE FIND THAT THE AO HAS GIVEN THE FACTS ON PAGE 8 PARA 8.2 OF HIS ORDER WHICH READ AS UNDER : 8.2 BUT IT IS SEEN THAT IN THE CASE OF UNITS OF PR INCIPAL MUTUAL FUNDS THE ASSESSEE HAS INCURRED LOSSES ON ACCOUNT OF REDEMPTI ON MADE DURING THE FINANCIAL YEAR 04-05. ALL SUCH UNITS HAVE BEEN PURC HASED WITHIN 3 MONTHS OF THE RECORD DATE OF DIVIDEND AND HAVE BEEN REDEEMED WITHIN 9 MONTHS OF SUCH RECORD DATES. THE DETAILS ARE AS FOLLOWS : SR NO NAME OF THE SCRIP PURCHASE DATE PURCHASE AMOUNT DIVIDEND RECORD DATE OF DIVIDEND REDEM PTION DATE REDEM PTION AMOUNT LOSS 1 PRINCIPAL BALANCE FUND 26/12/03 1 00 000 34659.44 29.12.03 12.04.04 65099. 46 (-)34900.54 2. PRINCIPAL INDEX FUND 11/03/04 16500000 3938260.8 12.03.04 15.06.04 10333 160.95 (-) 6166839.05 3. PRINCIPAL INDEX FUND 11/03/04 13216532.81 3168200.09 12.03.04 15.06.04 8 312684.99 (-) 4903847.82 24. SECTION 94(7) READS AS FOLLOWS : WHERE - (A) ANY PERSON BUYS OR ACQUIRES ANY SECURITIES OR UNIT WITHIN A PERIOD OF THREE MONTHS PRIOR TO THE RECORD DATE; 10 (B) SUCH PERSON SELLS OR TRANSFERS- (I) SUCH SECURITIES WITHIN A PERIOD OF THREE MONTHS AFT ER SUCH DATE; OR (II) SUCH UNIT WITHIN A PERIOD OF NINE MONTHS AFTER SUCH DATE;] (C) THE DIVIDEND OR INCOME ON SUCH SECURITIES OR UNIT R ECEIVED OR RECEIVABLE BY SUCH PERSON IS EXEMPT THEN THE LOSS IF ANY ARISING TO HIM ON ACCOUNT OF SUCH PURCHASE AND SA LE OF SECURITIES OR UNIT TO THE EXTENT SUCH LOSS DOES NOT EXCEED THE AMOUNT OF DIVIDEND OR INCOME RECEIVED OR RECEIVABLE ON SUCH S ECURITIES OR UNIT SHALL BE IGNORED FOR THE PURPOSES OF COMPUTING HIS INCOME CHARGEABLE TO TAX.] (EMPHASIS OURS) THE SECTION WAS INSERTED BY THE FINANCE ACT 2001 W ITH EFFECT FROM 1-4-2002. THE FURTHER AMENDMENT WAS MADE BY FINANCE (NO.2) ACT 2 004 WITH EFFECT FROM 1-4- 2005. PRIOR TO THE SUBSTITUTION SUB-CLAUSE (B) REA D AS FOLLOWS : SUCH PERSON SELLS OR TRANSFERS SUCH SECURITIES OR UNITS WITHIN A PERIOD OF THREE MONTHS AFTER SUCH DATE. 25. FROM A READING OF SECTION 94(7) IT IS CLEAR THA T IT COMES INTO PLAY ONLY WHEN ALL THE THREE CON DITIONS ARE FULFILLED I.E. A) TH E ASSESSEE SHOULD BUY SECURITIES OR UNITS WITHIN A PERIOD OF THREE MONTHS PRIOR TO THE RECORD DATE; B) SHOULD SELL OR TRANSFER SUCH SECURITIES WITHIN A PERIOD OF THREE M ONTHS FROM THE RECORD DATE OR IN CASES OF UNITS WITHIN A PERIOD OF NINE MONTHS FROM THE RECORD DATE AND C) THE DIVIDEND OR INCOME ON SUCH SECURITIES OR UNITS IS E XEMPT FROM TAX. THE WORDING THEN OCCURRING IN THE SECTION MAKES IT CLEAR. 26. WHEN ALL THESE THREE CONDITIONS ARE FULFILLED THEN ONLY THE LOSS IF ANY ARISING ON ACCOUNT OF SUCH PURCHASE AND SALE OF SE CURITIES/UNITS WOULD NOT BE 11 ALLOWED TO THE EXTENT OF DIVIDEND INCOME. IN THE CA SE ON HAND ALL THE THREE CONDITIONS ARE FULFILLED ONLY IN THIS YEAR. THUS I N OUR OPINION THE LOSS HAS TO BE DISALLOWED ONLY IN THE CURRENT YEAR. THE OTHER ASPE CT THAT IS CLEAR FROM THE SECTION IS THAT THE LOSS IS DEFINED AND MEANS LOSS ON ACC OUNT OF PURCHASE AND SALE OF SECURITIES/UNIT. DECREASE IN VALUE OF INVESTMENT IS NOT HIT BY THIS SECTION. THE COST OF PURCHASE MUST BE REDUCED FROM THE SALE PROCEEDS AND LOSS DETERMINED. WHEN SUCH AN EXERCISE IS DONE THEN THE LOSS WOULD BE RS. 1 11 70.686.62 AGAINST THE DIVIDEND RECEIVED OR RECEIVABLE OF RS.71 41 420/- 27. COMING TO THE ARGUMENT OF THE LEARNED COUNSEL F OR THE ASSESSEE THAT THE CURRENT YEARS LOSS IS ON ACCOUNT OF MARKET FLUCTUA TIONS AND THAT THE PREVIOUS YEARS LOSS IS ON ACCOUNT OF DIVIDEND DECLARATION AND LOGI CALLY THE DISALLOWANCE SHOULD HAVE BEEN MADE FIRST IN THE PREVIOUS YEAR WE FIND THAT THIS IS DEVOID OF MERIT FOR THE REASON THAT SECTION 94(7) DEALS WITH ONLY LOS S ON ACCOUNT OF PURCHASE AND SALE OF UNITS AND IS NOT CONCERNED WITH THE ENTRIES OR T REATMENT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IF THE AO HAD INVOKED SECTION 94(7 ) FOR THE ASSESSMENT YEAR 2004- 05 THE ASSESSEE WOULD HAVE OBJECTED BY SAYING THAT THE SALE HAS NOT TAKEN PLACE IN THAT YEAR AND HENCE THE LOSS HAS NOT CRYSTALLIZED I N THAT YEAR. THERE IS NO LOSS ON ACCOUNT OF PURCHASE AND SALE OF UNITS IN A.Y. 2004- 05. A PLAIN READING OF SECTION 94(7) DOES NOT PERMIT SEGREGATION OF LOSS INTO LOSS ON ACCOUNT OF DECLARATION OF DIVIDEND AND LOSS ON ACCOUNT OF FALL IN MARKET COND ITIONS ETC. BUT ONLY CONSIDERS LOSS ON ACCOUNT OF PURCHASE AND SALE OF SECURITIES/ UNIT. IT IS NOT PERMISSIBLE TO INTERPRET THE CLEAR PROVISIONS OF THE SECTION BY ACCEPTING THE ARGUMENTS OF THE ASSESSEE THAT LOSS ON ACCOUNT OF MARKET FACTORS N AMELY THE FALL IN VALUE OF INVESTMENT HELD BY THE MUTUAL FUNDS CANNOT BE DISA LLOWED U/S 94(7). 28. COMING TO THE SECOND ARGUMENT THAT THE LOSS OF THE PREVIOUS YEAR SHOULD BE FIRST SET OFF AND THEN ONLY THE LOSS OF THE CURRENT YEAR SHOULD BE CONSIDERED WE 12 REITERATE THAT AS THE EVENT OF SALE/REDEMPTION HAS OCCURRED IN THIS YEAR AND AS THE LOSS ON PURCHASE AND SALE CANNOT BE SET-OFF DURING THE A.Y. 2004-05 AS SECTION 94(7) IS NOT TRIGGED. THE WORD THEN IN THE SECTIO N IS IMPORTANT. THE ENTIRE ARGUMENT IS BASED ON THE ASSUMPTION THAT A CERTAIN DISALLOWANCE COULD HAVE BEEN MADE IN THE PREVIOUS YEAR AND SUBSEQUENTLY ONLY THE UNABSORBED AMOUNT SHOULD BE ADJUSTED IN THIS YEAR. SUCH ARGUMENT CANNOT BE ACCE PTED FOR THE REASON ALREADY STATED. IN SUCH A SITUATION THE QUESTION OF THEIR B EING AN ALTERNATIVE WHICH PLACES A LESSER BURDEN ON THE ASSESSEE AND THE REQUIREMENT T HAT SUCH ALTERNATIVE SHOULD BE ADOPTED DOES NOT ARISE. IN THIS CASE THE WORDINGS IN THE STATUTE ARE UNAMBIGUOUS AND CLEAR AND HAVE TO BE APPLIED AS SUCH. 29. COMING TO THE LAST ARGUMENT THAT THE AMENDMENT TO THE PROVISIONS OF SECTION 94(7) BROUGHT ABOUT BY THE FINANCE (NO.2) BILL 2004 SHOULD BE APPLIED PROSPECTIVELY WE FIND THAT THE ISSUE IS COVERED AG AINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE DECISION OF THE AMRITSAR BEN CH OF THE TRIBUNAL IN THE CASE OF SURI SONS VS. ADDL. CIT 124 TTJ (ASR) 800. THE H ONBLE TRIBUNAL HELD AS FOLLOWS : THERE WAS AN AMENDMENT TO CL.(B) TO S. 94(7) W.E. F. 1 ST APRIL 2005. UNDER THE IT ACT THOUGH THE SUBJECT OF THE CHARGE IS THE INCOME OF THE PREVIOUS YEAR THE LAW TO BE APPLIED IS THAT IN FOR CE IN THE ASSESSMENT YEAR UNLESS OTHERWISE STATED OR IMPLIED. ANY AMENDMENT W HICH IS IN FORCE AT THE BEGINNING OF THE RELEVANT ASSESSMENT YEAR MUST GOVE RN THE CASE THOUGH THE AMENDMENT IS MADE AFTER THE INCOME UNDER ASSESSMENT YEAR UNDER CONSIDERATION IS EARNED. IN OTHER WORDS THE IT ACT AS IT STANDS AMENDED ON 1 ST APRIL OF A FINANCE YEAR MUST APPLY TO THE ASSESSME NT FOR THAT YEAR. IT IS A CARDINAL PRINCIPLE OF THE TAX LAW THAT THE LAW TO B E APPLIED IS THAT IN FORCE IN THE ASSESSMENT YEAR UNLESS OTHERWISE PROVIDED EXPRE SSLY OR BY NECESSARY IMPLICATION. THE SUBJECT OF CHARGE IS NOT THE INCOM E OF THE YEAR OF ASSESSMENT BUT THE INCOME OF THE PREVIOUS YEAR. AS THE FINANCE ACTS COME INTO FORCE ON THE FIRST DAY OF APRIL EACH YEAR THE REFORE THE LAW TO APPLY IS THE LAW IN EACH YEAR. FOR A CHARGE ON THE INCOME OF THE PREVIOUS YEAR THE SUBSTANTIVE LAW OF THAT YEAR MUST BE APPLIED. REL IANCE JUTE & INDUSTRIS LTD. 13 VS. CIT (1979) 13 CTR (SC) 186 : (1979) 120 ITR 921 (SC) CIT VS. ISTHMIAN STEAMSHIP LINES (1951) 20 ITR 572 (SC) AND M.K. VENKATACHALAM ITO & ANR. VS. BOMBAY DYEING & MANUF ACTURING CO. LTD. (1958) 34 ITR 143 (SC) APPLIED ON GOING THROUGH THE CONTEXT USED IN S. 94(7)(B) T HE OBJECT OF THE LEGISLATURE CIRCUMSTANCES UNDER WHICH THE STATUTE WAS AMENDED THE CONCLUSION IS THAT THE AMENDED PROVISION IS APPLICA BLE TO THE ASSTT. YR. 2005- 06. THE ARGUMENT OF THE ASSESSEE THAT FINANCE (NO.2 ) ACT 2004 RECEIVED ASSENT OF THE PRESIDENT ON 10 TH SEPT. 2004 AND IT IS NOT APPLICABLE TO THE FINANCIAL YEAR 2004-05 SINCE THE AMENDMENT CAME AF TER THE CLOSE OF THE SIX MONTH OF THE FINANCIAL YEAR HAS NO MERIT SINCE THE LEGISLATURE CLEARLY MENTIONED IN THE ACT THE DATE FROM WHICH THE ACT IS EFFECTIVE I.E. 1 ST APRIL 2004 AND AS SUCH THE PRESIDENTS ASSENT WILL RECKON BACK TO THE DATE FROM 1 ST APRIL 2004 AND AS SUCH AMENDMENT IS APPLICABLE FOR THE FINANCIAL YEAR 2004- 05 RELEVANT TO THE ASSTT. YR. 2005-06. HENCE IN VI EW OF THE EXPRESS IMPLICATION BY THE ACT IN ITSELF THE SAME IS TO BE CONSTRUED AS APPLICABLE FOR THE ASSTT. YR. 2005-06. THE CIT(A) WAS THEREFORE JU STIFIED IN SUSTAINING DISALLOWANCE UNDER S. 94(7)- L. REJESHWAR PERSHAD V S. CIT (1986) 52 CTR (P & H) 305 APPLIED; KRISHNA MOHAN AGARWAL VS. CIT (2007) 295 ITR 190 (ALL) AND KARIMTHARUVI TEA ESTATE LTD. VS. STATE OF KERALA (1966) 60 ITR 262 (SC) DISTINGUISHED. IN THE LIGHT OF THE ABOVE DECISION THE STAND TAKEN BY THE ASSESSEE CAN NOT BE ACCEPTED. RESPECTFULLY FOLLOWING THE SAME WE DISMISS THIS AR GUMENT OF THE ASSESSEE. 30. THE SUBMISSIONS OF THE ASSESSEE TRYING TO DISTI NGUISH THE PROPOSITIONS LAID DOWN IN THE DECISION OF SURI SONS (SUPRA) IS DEVOID OF MERIT. 31. IN THE RESULT WE UPHOLD THIS FINDING OF THE CI T(APPEALS) AND DISMISS GROUND NO. 3 FILED BY THE ASSESSEE. 32. WE NOW TAKE UP THE REVENUE APPEAL. 14 33. GROUND NO. 1 TO 7 ARE ON THE ISSUE OF DISALLOWA NCE U/S 40(A)(IA) OF THE ACT ON THE GROUND THAT THE ASSESSEE FAILED TO DEDUCT TD S ON V-SAT CHARGES AND LEASELINE CHARGES. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION IN THE CASE OF KOTAK SECURITIES LTD. AND ANGLE BROKING LTD. (SUPRA). RESPECTFULLY FOLLOWING THE SAME WE DISMISS GROUND NOS. 1 TO 7. 34. GROUND NOS. 8 TO `12 ARE ON THE ISSUE OF ALLOWA BILITY OF PENALTY PAID TO STOCK EXCHANGE FOR VIOLATION OF BYE-LAWS OF THE STOCK EXC HANGE. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY T HE DECISION OF THE TRIBUNAL IN THE CASE OF ACIT VS. RAMESH M. DAMANI ITA NO. 5143/ MUM/2006 WHERE AT PARA 3.1 IT IS HELD AS FOLLOWS : 3.1 AFTER HEARING BOTH THE PARTIES WE FIND THAT T HE PAYMENT HAD BEEN MADE TO THE STOCK EXCHANGE ON ACCOUNT OF SHORT PAYM ENT OF MARGIN MONEY. THIS IS ONLY A COMPENSATORY PAYMENT UNDER THE RULES OF THE STOCK EXCHANGE WHICH IS ALLOWABLE AS REVENUE EXPENDITURE AS THE SA ME IS NOT FOR INFRACTION OF LAW. THE ISSUE IS COVERED BY THE DECISION OF MUM BAI BENCH OF TRIBUNAL IN CASE OF CLASSIC SHARES AND STOCK TRADING SERVICES L TD. (11 SOT 377) IN WHICH SIMILAR PAYMENT HAVE BEEN HELD TO BE OF COMPE NSATORY NATURE AND ALLOWABLE AS REVENUE EXPENDITURE. RESPECTFULLY FOLL OWING THE SAME WE UPHELD THE ORDER OF THE CIT(A). RESPECTFULLY FOLLOWING THE SAME WE DISMISS THESE G ROUNDS. 35. GROUND NO. 13 READS AS FOLLOWS : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF PROTECTIVE ADDITION AM OUNTING TO RS.37 95 700 INSPITE OF THE FACT THAT THE CAUSE OF ACTION AROSE IN A.Y. 2005-06 ONLY AS SUCH LOSS WAS REQUIRED TO BE WRITTEN BACK TO THE ACCOUNT S OF THE ASSESSEE AS INCOME OF NEXT YEAR. 36. THE AO AT PARA 8.6 TO 8.8 HELD AS FOLLOWS : 15 8.6 SO FAR AS BALANCE LOSSES TO BE IGNORED AS PER SEC. 94(7) AMOUNTING TO RS.37 95 700/- ARE CONCERNED THESE LOSSES HAVE ALR EADY BEEN TAKEN INTO ACCOUNT BY THE ASSESSEE IN THE A.Y. 2004-05 AT THE TIME OF VALUATION OF THE UNITS AT MARKET PRICE FOR THE PURPOSES OF VALUATION OF THE CLOSING STOCK AS ON 31.03.2004. HENCE THESE ARE TO BE DISALLOWED IN TH E A.Y. 2004-05. FOR THIS PURPOSE NOTICE U/S 148 R.W.S. 147 OF THE I.T. ACT 1961 IS BEING ISSUED SEPARATELY. 8.7 ANOTHER POSSIBLE VIEW IN THIS ISSUE CAN BE THAT THE PROVISIONS OF SEC. 94(7) ARE CONTINGENT UPON THE REDEMPTION OF UNITS. UNTIL AND UNLESS SUCH REDEMPTION IS MADE WITHIN THE TIME STIPULATED IN TH IS SECTION I.E. WITHIN 9 MONTHS OF RECORD DATE OF DIVIDEND THESE PROVISIONS ARE NOT ATTRACTED. HENCE THE LOSSES MENTIONED IN SEC. 94(7) TO THE EXTENT OF DIVIDEND RECEIVED HAVING CRYSTALLIZED DURING THE F.Y. 2004-05 SHOULD BE ENTI RELY CONSIDERED IN THE COMPUTATION OF INCOME FOR THE A.Y. 2005-06 THE VALU ATION OF CLOSING STOCK AT MARKET PRICE WHICH IS LOWER THAN THE COST PRICE MEANS A PROVISION FOR CONTINGENT ANTICIPATED LOSS IS BEING MADE IN THE AC COUNTS BECAUSE THIS LOSS IS CONTINGENT UPON SALE OF THE STOCK DURING THE NEXT Y EAR AT THE SAME PRICE. IF STOCK IS NOT SOLD IN THE NEXT YEAR AND AT THE YEAR END ITS VALUE BECOMES EQUAL TO OR MORE THAN ITS ORIGINAL COST THEN AGAIN IN TH E COMPUTATION OF CLOSING STOCK FOR THE NEXT YEAR ITS VALUE HAS TO BE TAKEN AT COST ONLY. THIS IS THE ONLY EXCEPTION WHERE THE PROVISION OF CONTINGENT ANTICIP ATED LOSS IS ALLOWED IN THE COMPUTATION OF TOTAL INCOME. MOREOVER IF THE S TOCK IS SOLD IN THE NEXT YEAR AT A PRICE HIGHER THAN THE PRICE TAKEN FOR THE PURPOSE OF VALUATION OF CLOSING STOCK THE DIFFERENCE BETWEEN THE TWO PRIC ES ARE TAKEN AS INCOME OF THE NEXT YEAR IN THE FORM OF HIGHER PROFIT REALIZED . IT MEANS INDIRECTLY THE LOSSES BOOKED IN THE CLOSING STOCK TO THE EXTENT OF HIGHER PROFITS REALIZED ARE WRITTEN BACK IN THE PROFIT & LOSS ACCOUNT. 8.8 HENCE AS PER THIS VIEW ONCE A PROVISION FOR L OSS IS BOOKED BY THE ASSESSEE IN THE EARLIER YEAR IN ITS VALUATION OF CL OSING STOCK AND SUCH LOSS BECOMES DISALLOWABLE BECAUSE OF THE PROVISIONS OF S EC. 94(7) ON ACCOUNT OF REDEMPTION OF UNITS IN THE NEXT YEAR THEN THE LOS S ON ACCOUNT OF VALUATION OF CLOSING STOCK TO THE EXTENT OF LOSS TO BE DISALLOWE D AS PER THE PROVISIONS OF SEC. 94(7) IS REQUIRED TO BE WRITTEN BACK TO THE AC COUNTS OF THE ASSESSEE AS INCOME OF THE NEXT YEAR. THIS IS AS PER THE ACCOUNT ING POLICIES FOLLOWED REGULARLY BY ALL THE ASSESSES. HENCE AS PER THIS VI EW THE LOSS OF RS.37 95 700/- SHOULD BE CONSIDERED AS INCOME OF TH E A.Y. 2005-06 ITSELF. ON PROTECTIVE BASIS THIS AMOUNT IS ADDED TO THE T OTAL INCOME OF THE ASSESSEE FOR THE A.Y. 2005-06. ADDITION ON THIS ACCOUNT COME S TO RS.37 95 700/- AND 16 TOTAL ADDITION ON ACCOUNT OF SALE AND PURCHASE OF U NITS OF MUTUAL FUNDS AS PER THE PROVISIONS OF SEC. 94(7) COMES TO RS 71 41 120/ -. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEA L. THE FIRST APPELLATE AUTHORITY AT PARA 4.3 PAGE 12 OF HIS ORDER HELD AS FOLLOWS : 4.3 I HAVE GONE THROUGH THE ORDER OF THE A.O. AND SUBMISSION OF THE APPELLANT. SO FAR AS THE DISALLOWANCE OF LOSS OF RS .37 95 700/- MADE ON PROTECTIVE BASIS IS CONCERNED THERE DOES NOT APPEA R TO BE ANY JUSTIFICATION IN MAKING SUCH PROTECTIVE ASSESSMENT AS THE SAME PERT AINS TO A.Y. 2004-05 AND THE A.O. HAS CLEARLY MENTIONED AT PARA 8.6 PAG E 10 OF HIS ORDER THAT FOR THE SAME NOTICE U/S 148 R.W.S. 147 OF THE I.T. ACT IS BEING ISSUED SEPARATELY. PROTECTIVE ADDITION OF RS.37 95 700/- IS THEREFORE DELETED. 37. AFTER HEARING RIVAL CONTENTIONS WE ARE UNABLE TO AGREE WITH THE VIEW OF THE LEARNED CIT(APPEALS) THAT THE BALANCE LOSS OF RS.37 95 700/- SHOULD BE CONSIDERED IN THE ASSESSMENT YEAR 2004-05 AND THA T THERE CANNOT BE A PROTECTIVE ADDITION AS THE STATUTE HAS NOT PROVIDED FOR ANY S UCH ADDITION. IN OUR VIEW THE ENTIRE LOSS ON PURCHASE AND SALE IS TO BE CONSIDERE D ONLY IN THIS YEAR. AS ALREADY STATED AT PARA 24 TO 26 OF THIS ORDER IN THE CASE O F THE ASSESSEE APPEAL THE LOSS TO BE DISALLOWED IS ONLY THE LOSS WHICH ARISES ON THE PURCHASE AND SALE OF SUCH SECURITIES OR UNITS. LOSS ON ACCOUNT OF VALUATION H AS NO PLACE IN THE SECTION. SECTION 94(7) COMES INTO OPERATION ONLY IN THE EVEN T OF SALE OF SECURITIES OR UNITS WHICH IS TAKEN PLACE IN THIS YEAR. AS THE LOSS ON S ALE AND PURCHASE OF UNIT IS ABOVE THE DIVIDEND DECLARED THE LOSS TO THE EXTENT OF RS .71 41 420/- HAS TO BE DISALLOWED IN THIS YEAR. THUS THIS GROUND OF REVENU E IS TO BE ALLOWED THOUGH FOR DIFFERENT REASONS. 38. GROUND NOS. 14 AND 15 ARE GENERAL IN NATURE. 17 39. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART AND THE APPEAL FILED BY THE REVENUE IS ALSO ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DEC.. 2010. SD/- SD/- (V. DURGA RAO) (J. SUDHAKA R REDDY) JUDICIAL MEMBER. AC COUNTANT MEMBER MUMBAI DATED: 3 RD DEC. 2010. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR A-BENCH (TRUE COPY) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI B ENCHES M UMBAI.