Walfort Share & Stock Brokers
Facts
Loss on sale of units of mutual funds where the assessee had received dividend before sale (dividend stripping).
Issue
Whether such loss can be disallowed as artificial when arising from a legitimate business activity?
Held
The SC held the loss was allowable. Section 94(7) was specifically inserted to disallow such losses prospectively.
Ratio
Existing transactions cannot be retrospectively recharacterised as colourable.
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