D. KARUNAKARA RAO, A.M. ORDER This is appeal by Revenue against order dt. 20th March, 2006 of learned CIT(A)-XI, New Delhi. Revenue has raised following grounds : "1. On facts and in circumstances of case, learned CIT(A) erred in deleting addition of Rs. 1,88,47,816 by disallowing exemption under s. 10(34) claimed by assessee. 2. On facts and in circumstances of case, learned CIT(A) erred in holding that all conditions prescribed in s. 94(7) (sic)." 2 . Briefly stated, facts are that assessee is public limited company engaged in business of sale, purchase and trading in stock, shares and units of mutual fund. During relevant assessment year, assessee purchased units of mutual funds, which include units of Tata Index Fund Nifty Plan Option-A and IL & FS Index Fund Nifty Plan. assessee sold said units during relevant assessment year and loss incurred on sale of such units was set off against profits on sale of other units of mutual funds. assessee also received dividend income on aforesaid units, which was claimed exempt under s. 10(34) of Act. relevant date of purchase, date of receipt of dividend and date of redemption are shown in following chart : Name Purchase Record Dividend Date of Date of of mutual amount date of amount purchase redemption fund (In Rs.) dividend (In Rs.) Tata 25.11.03 29,89,774 Index Fund (1st dividend) 25.11.03 1,00,00,000 & 9.3.04 Nifty Plan & 3.3.04 (next Option-A dividend) 9,96,591 Tata 25.11.03 44,84,662 Index Fund (1st dividend) 25.11.03 1,50,00,000 & 9.3.04 Nifty Plan & 3.3.04 (next Option-A dividend) 14,94,887 IL & FS Index 16.12.03 4,00,00,000 16.12.03 1,18,35,408 17.3.04 Fund Nifty Plan 3 . Assessee earned dividend income as shown in table above. However, effect of above transactions was capital loss of Rs. 1,88,47,816. AO has, however, not allowed said loss, which was incurred on sale of aforesaid units alleging said transactions are hit by provisions of s. 94(7) of Act. Sec. 94(7) of Act as it stood prior to its amendment w.e.f. 1st April, 2005 reads as follows : "Where (a) any person buys or acquires any securities or unit within period of three months prior to record date; (b) such person sells or transfers such securities or unit within period of three months after such date; (c) dividend or income on such securities or unit received or receivable by such person is exempt, then, loss, if any, arising to him on account of such purchase and sale of securities or unit, to extent such loss does not exceed amount of dividend or income received or receivable on such securities or unit, shall be ignored for purposes of computing his income chargeable to tax." 4. According to assessee, provisions of s. 94(7) are not applicable as following three conditions are cumulatively required to be satisfied by assessee in order to fall within purview of s. 94(7) of IT Act, which are as under : (i) shares/units must be purchased within period of three months prior to record date; and (ii) shares/units must be sold within period of three months after such date; and (iii) dividend income earned from such securities/units should be exempt from tax. 5. assessee explained that in case of purchase and sale of Tata Index Fund : date of purchase was 25th Nov., 2003 and record date for declaration of 1st dividend was 25th Nov., 2003. Therefore, 1st condition i.e., purchase of units within period of 3 months prior to record date for declaration of dividend was satisfied. These were sold on 9th March, 2004. second condition viz. that these units should be sold within period of 3 months from record date is not satisfied and therefore, provisions of s. 94(7) were not attracted. With regard to 2nd record date in respect of these units for declaration of dividend, same was 3rd March, 2004. date of purchase of these units was 25th Nov., 2003 and therefore, first condition viz. that units should have been purchased within 3 months prior to record date is not satisfied. second condition viz. that units should not be sold within 3 months from record date however is satisfied. As far as purchase and sale of IL & SF units are concerned date of purchase was 16th Dec., 2003 and record date for declaration of dividend was 16th Dec., 2003 and therefore, 1st condition, i.e., purchase of units within 3 months prior to record date is satisfied. These units were sold on 17th March, 2004 beyond 3 months from record date and therefore, second condition was not satisfied. Hence, provisions of s. 94(7) of IT Act are not applicable. Accordingly, capital loss incurred by assessee on redemption of units of mutual fund is not liable for disallowance under s. 94(7). 6 . AO in this regard has observed that in case of purchase and sale of units of Tata Index Fund, all three conditions were satisfied and in case of units of IL & SF, only two conditions were satisfied, because period of sale was more than three months from record date. AO was of view that provisions of s. 94(7) will apply even if any one of conditions is satisfied and that it was not necessary that all three conditions have to be satisfied. AO held that this is case of dividend stripping and managed for creation of short-term losses only for adjustment of losses against other taxable profit, which is sought to be prohibited by provisions of s. 94(7) of Act. 7. Aggrieved by order of AO dt. 30th Dec., 2005, assessee filed appeal before learned CIT(A). learned CIT(A) held that provisions of s. 94(7) will apply only when three conditions laid down therein are cumulatively satisfied. For this, learned CIT(A) relied on Circular No. 14 of 2001 [(2002) 172 CTR (St) 13] issued by CBDT explaining provisions of Finance Act, 2001 and reasons for incorporating s. 94(7) of Act. relevant part of said circular is reproduced hereunder for sake of ready reference : "56. Measures to curb creation of short-term losses by certain transactions in securities and units. 56.1 Under existing provisions contained in s. 94, where owner of any securities enters into transactions of sale and repurchase of those securities which result in interest or dividend in respect of such securities being received by person other than such owner, transactions are to be ignored and interest or dividend from such securities is required to be included in total income of owner. 56.2 existing provisions did not cover case where person buys securities (including units of mutual fund) shortly before record date fixed for declaration of dividends, and sells same shortly after record date. Since cum-dividend price at which securities are purchased would normally be higher than ex-dividend price at which they are sold, such transactions would result in loss which could be set off against other income of year. At same time, dividends received would be exempt from tax under s. 10(33). net result would be creation of tax loss, without any actual outgoings. 56.3. With view to curb creation of such short-term losses, Act has inserted new sub-s. (7) in section to provide that where any person buys or acquires securities or units within period of three months prior to record date fixed for declaration of dividend or distribution of income in respect of securities or units, and (emphasis, italicised in print, supplied) sells or transfers same within period of three months after such record date, and (emphasis, italicised in print, supplied) dividend or income received or receivable is exempt, then loss, if any, arising from such purchase or sale shall be ignored to extent such loss does not exceed amount of such dividend or interest, in computation of income chargeable to tax of such person." 8. According to CIT(A) aforesaid circular uses word and and not or . In view of same, intention of Board was very clear that all conditions prescribed in s. 94(7) of Act are to be cumulatively satisfied. Aggrieved by order of CIT(A), Revenue is in appeal before Tribunal. 9 . Before us, learned Departmental Representative relied on assessment order. Whereas learned Authorised Representative of assessee argued explaining how transaction described in table above did not satisfy all three conditions as specified in provisions of s. 94(7). In this regard, he has taken us through portions mentioned in pp. 12 and 13 of CIT(A) s order. At end of his arguments, he has submitted that none of transactions vis-a-vis five record dates, conditions mentioned in cls. (a), (b) and (c) of s. 94(7) of Act are cumulatively satisfied. 1 0 . We have heard rival submissions, perused orders of lower authorities and documents filed before us. Table contains three transactions of purchases on 25th Nov., 2003, 25th Nov., 2003 and 16th Dec., 2003. We find that conditions of three months before and after record date for purchase and sale respectively have not been satisfied in all of transactions cumulatively. 11. Order of CIT(A) details facts of transactions showing as to how conditions in s. 94(7) are not fulfilled. Relevant parts from pp. 15 and 16 are as under : "Now coming to case of appellant it is noticed that mutual funds of Tata Index Fund Nifty Plan Option A, were purchased on 25th Nov., 2003 for Rs. 1,00,00,000. On same date dividend of Rs. 29,89,774 was received b y appellant. next dividend on said mutual funds was received on 3rd March, 2004 of Rs. 9,96,591. aforesaid mutual funds were redeemed thereafter on 9th March, 2004. It is noticed that in case of first dividend received, time gap between record date and date of redemption is more than three months and in case of second dividend, time gap between date of purchase and record date is more than three months. another mutual funds of Tata Index Fund Nifty Plan Option were purchased by appellant on 25th Nov., 2003 for Rs. 1,50,00,000. On said mutual funds, first dividend was received on very same date, i.e. 25th Nov., 2003 and second dividend was received on 3rd March, 2004. said mutual funds were redeemed on 9th March, 2004. Like in first case also time gap between record date of first dividend and date of redemption is more than three months and time gap between date of purchase and record date of second dividend is more than three months. mutual funds of IL & FS Index Fund of Rs. 4,00,00,000 were purchased on 16th Dec., 2003 and on very same date, dividend of Rs. 1,18,35,408 was received by appellant. said mutual funds were redeemed on 17th March, 2004. In aforesaid case time gap between record date of dividend and date of redemption is more than three months." 12. question that now arises for consideration is as to whether cls. (a), (b) and (c) of s. 94(7) need to be satisfied cumulatively or not. We may take look at language used in other portions of IT Act, 1961, where such requirement for satisfying one of many conditions or all conditions cumulatively is laid down. case where only one condition is needed to be satisfied as laid down in proviso to s. 139(1) relating to one by six scheme, may be taken for instance. language of such provision uses expression or at end of each condition. Apart from above, provision uses expression "any one of following conditions". For example where legislature when it desired that all conditions are to be satisfied cumulatively, we may take language used in provisions of s. 80-O, where conditions of receipt of income in convertible foreign exchange and such income should be for services rendered outside India are cumulatively required to be satisfied. 13. We find that plain reading of provision of s. 94(7) of Act shows that it has neither used expression "or" nor expression "and". Revenue wants to say that each of conditions laid down in s. 94(7) is independent and if assessee satisfies any one of conditions, then he should be held to be covered within mischief of law. provisions are ambiguous and obscure, as we have already noticed above. In circumstances, we would place construction on provisions of s. 94(7) so as to place least restriction on individual s (assessee) rights. We would therefore, hold that claim of assessee that all conditions laid down in cls. (a), (b) and (c) have to be satisfied before said provisions can be applied in given case, should be accepted. 14. Therefore, absence of word or at end of cls. (a) and (b) does not provide for interpretation that sub-s. (7) of s. 94 applies, where transactions satisfy at least one condition. Rather, simple reading of clauses even without expression and can lead only to one condition that all three conditions cumulatively are required to be satisfied before invoking s. 94(7). use of words as such person , such unit , such date , such securities or units in cls. (b) and (c) of s. 94(7), also indicates that three clauses have to be read together. Thus they advocate for cumulative application of conditions and not otherwise. In support of this interpretation, we find that Circular No. 14 of 2001, which explains Finance Act, 2001 issued by CBDT provides necessary stamp of approval to such interpretation. In said circular, it is noticeable that in para 56.3, it uses word and at couple of places thereby providing for cumulative application of all three conditions. Thus, view of CBDT is that all conditions prescribed in s. 94(7) are to be cumulatively satisfied and not otherwise. Therefore, we find no reason to interfere with order of learned CIT(A) and grounds raised by Revenue in appeal, being devoid of merit, are rejected. 15. In result, appeal by Revenue is dismissed. *** INCOME TAX OFFICER v. SHAMBHU MERCANTILE LTD.