LACHHMI NARAIN GUPTA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This appeal has been preferred by the assessee under s. 260A of the IT Act, 1961 (in short, "the Act") against the order dt. 6th June, 2008, Annex. A3, passed by the Tribunal, Amritsar Bench, Amritsar in ITA No. 424/Asr/2007. for the asst. yr. 2004-05. It was admitted on 11th Nov., 2008 to consider following substantial questions of law:

(2.) Learned counsel for the assessee submitted that the Tribunal was wrong in declining the claim of the assessee on account of loss on sale of certain shares to the tune of Rs. 3,67,995 by treating the same to be speculative loss in view of the provisions of s. 43(5) of the Act. According to the assessee, the same was to be treated as short-term capital loss in view of s. 43(5)(d) of the Act. The other contention raised by learned counsel was that the assessee had purchased the units on 26th Dec, 2003 which was the record date and were sold on 26th March, 2004 just after the expiry of three months and one day. The period of three months after the said date as provided under s. 94(7)(b) of the Act, applied whereby the assessee was entitled to claim short-term capital loss of Rs. 3,11,934 on the sale of the units. He referred to sub-s. (35) of s. 3 of the General Clauses Act, 1897 to submit that the word 'month' shall mean a month reckoned according to the British calendar. Learned counsel further submitted that according to Halsbury's Laws of England, Third Edition Vol. 37, wherein calendar month running from arbitrary date has been defined, according to which when the period prescribed is a calendar month running from any arbitrary date, the period expires with the day in the succeeding month immediately preceding the day corresponding to the date upon which the period starts. It was urged that in the present case, the period of three months as envisaged under s. 94(7)(b) of the Act had expired on 25th March, 2004 and consequently the sale on 26th March, 2004 was not covered under the mischief of s. 94(7)(b). Reference was made to judgment of the apex Court in State of Himachal Pradesh & Anr. v. Himachal Techno Engineers & Anr., 2010 12 SCC 210.

(3.) On the other hand, learned counsel for the Revenue besides supporting the orders passed by the AO, CIT(A) and the Tribunal, submitted that the day 26th March, 2004, when the units were sold was to be counted, as three months from 26th Dec., 2003 would expire on that date and the said authorities were right in applying the provisions of s. 94(7)(b) of the Act and disallowing the claim of short-term capital loss made by the assessee.