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[2007] 294 ITR 432 [2007] 158 TAXMAN 410 (PUNJ. & HAR.) HIGH COURT OF PUNJAB AND HARYANA Vaneet Jain* v. Commissioner of Income-tax, Panchkula ADARSH KUMAR GOEL AND RAJESH BINDAL, JJ. IT REFERENCE NO. 558 OF 2005 JULY 7, 2006 Section 28(i), read with section 10(33), of the Income-tax Act, 1961 - Business loss/deductions - Allowable as - Assessee purchased units of mutual fund along with right to receive dividend - After two days of purchase of said units, assessee received dividend and subsequently on next day sold such units at loss and claimed deduction of such loss - Tribunal disallowed assessee's claim holding that investment in units of mutual fund was merely to get benefit of tax-free income by way of dividend income under section 10(33) and assessee was not otherwise engaged in said business - Whether findings recorded by Tribunal were perverse - Held, no FACTS The assessee purchased the units of mutual fund along with the right to receive dividends on 7-2-2001. The investment of the assessee was only Rs. 5 lakhs whereas the units were purchased to the extent of Rs. 1 crore by having the same financed by the company 'K'. On 10-2-2001, the assessee received dividend of Rs. 29,03,225 and sold the units on 11-2-2001 for Rs. 68,25,806. The assessee claimed deduction of said loss. The Assessing Officer, the appellate authority and the Tribunal held that the investment in the units of mutual fund was merely to get the benefit of the dividend income under section 10(33) and the assessee was not otherwise engaged in the said business and, therefore, disallowed the assessee's claim. On appeal : HELD Result of the single transaction in question was that the assessee by investing merely a sum of Rs. 5 lakhs for five days wanted to enjoy tax-free income of Rs. 29,02,226 (by way of dividend declared by mutual fund) and further claimed a sum of Rs. 31,94,194 as business loss on account of loss on sale of units. Such manipulations are not permissible under the law. [Para 5] Findings recorded by the Tribunal were not perverse. Once the said findings were affirmed, no substantial question of law arose in instant appeals. Akshay Bhan for the Applicant. ORDER 1. This…

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