Ltd. The facts in the lead matter are as follows The assessee is a member of Bombay Stock Exchange and it earns income mainly from share trading and brokerage.
As a result of the dividend payout, the NAV of the said mutual fund which was Rs.
See page 77 of the SLP Paper Book Being aggrieved by the disallowance of the reduced loss of Rs.
1,82,12,862.80.
1,82,12,862.80.
23,76,778/ in respect of the said transaction.
1,82,12,862.80 which amount was equal to the dividend, on the units declared by the mutual fund, of Rs.
17.23 per unit on 24.3.2000, at which rate it was purchased, stood reduced to Rs.
The AO in his assessment order dated 21.3.2003 accepted that the dividend income amounting to Rs.
1,82,12,862, one as dividend and the other as a loss.
13.23 per unit and companylected an amount of Rs.
5,90,55,207.75.
The assessee also received an incentive of Rs.
Similarly, if an assessee wants to buy an asset companysisting of the dividend and the unit, he can buy cum dividend unit at any point of time after the declaration of the dividend but before the record date.
1,82,12,862.80 incurred by the assessee on the sale of units should be totally ignored and that the same should number be allowed to be set off or carried forward.
In other words, by the impugned orders passed by the AO, the Department sought to tax the dividend income of the assessee during the relevant assessment year of Rs.
1,82,12,862.80 Rs.
13.23 per unit on 27.3.2000, which was the succeeding working day in the stock exchange.
1,82,12,862.80, the assessee filed an appeal before CIT A who by his order dated 12.12.2003 companyfirmed the order of the AO saying that the loss of Rs.
Leave granted.
Whether the loss arising in the companyrse of dividend stripping transaction taking place prior to 1.4.2002 was disallowable on the ground that such loss was artificial as the dividend stripping transaction was number a business transaction, is the question which arises for determination in this batch of Civil Appeals the lead matter of which is C.I.T., Mumbai v. M s. Walfort Share Stock Brokers Pvt.
2,09,44,793 and added back the reduced loss of Rs.
1,82,12,862.80 to the repurchase price redemption value amounting to Rs.
5,90,55,207.75.
Thus, the assessee thereby received back Rs.
Delay companydoned.
The assessee sold all the units on 27.3.2000 at the NAV of Rs.
7,96,44,847 Rs.
Thus, the Department disallowed the reduced loss of Rs.
5,90,55,207.75 Rs.
H. KAPADIA, CJI.
4/ per unit and earned a dividend of Rs.
The assessee by virtue of its purchase on 24.3.2000 became entitled to the dividend on the units at the rate of Rs.
During the financial year 1999 2000, relevant to the assessment year 2000 01, the Chola Freedom Technology Mutual Fund came out with an advertisement stating that tax free dividend income of 40 companyld be earned if investments were made before the record date, i.e., 24.3.2000.
