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TMI Blog2012 (4) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appellate Tribunal was right in holding that the assessee had not held the shares/mutual fund instruments for not more than 12 months preceding the date of transfer?" 2. The facts are undisputed. The appellant is an individual and had income from salary and other sources. The appellant had made investments and had also earned income as long term and short term capital gains on mutual fund instruments and securities. 3. During the financial year 2005-06, the appellant had sold two mutual fund instruments on 29th September, 2005 and 14th October, 2005 and had shown the income earned as long term capital gains of Rs.18,31,241/- and Rs.2,72,386/- respectively. The aforesaid mutual fund instruments/units were purchased by the appellant asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of a share held in a company or any other security listed in a recognised stock exchange in India or a unit of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or a unit of a Mutual Fund specified under clause (23D) of section 10 or a zero coupon bond, the provisions of this clause shall have effect as if for the words "thirty-six months", the words "twelve months" had been substituted:" 7. The contention of the Revenue, which has been accepted and forms edifice of the reasoning given by the tribunal, is that the asset must be held for a period of more than 36 months or 12 months plus one day i.e. the date when the transfer is made. The date on which the transfer is made has to be excluded. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete on 1st January, next year and not on 2nd January. This position is true and will apply to all cases, except when an asset is transferred/purchased on 1st January. In such cases, the period of one year or 12 months would expire and would be complete on 31st December in the same year. The expression used in Section 2(42A) is "for not more than 12 months". In other words, to qualify as a short term capital asset, the capital asset should be held by the assessee for 12 or 36 months, but the moment the said time limit is crossed or is exceeded and the assessee continues to be the holder/owner of the said asset, the same is to be treated as a long term capital asset. 10. We are conscious that in some decisions the expression "not less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it was held that the provision referred to complete or entire days intervening between the two terminal days. Accordingly, fraction of day should not be taken into consideration. 12. However, in English language many words have different meanings and a word can be used in more than one sense. Every dictionary gives several meanings to each word. We cannot mechanically apply every meaning given in the dictionary and have to choose an appropriate meaning that the word may carry in the context in which it is used in the legislation. It is the context which determines the meaning of the word (See P.V. Indiresan (2) versus Union of India, (2011) 8 SCC 441). 13. It is appropriate to refer to the decision of the Supreme Court in Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to on August 1, 1964. The last instalment was to be paid on July 31, 1971. The seven years were to complete at 12 p.m. (between the night of July 31, 1971, and August 1, 1971). Even if the loan was paid back at 11.59 p.m. on July 31, 1971, the period would be less than seven years by one minute. It is, therefore, obvious that the period of "not less than seven years" can only mean till after the completion of seven years. We, therefore, hold that the repayment of the borrowed amount during the period of seven years does not mean repayment "during a period of not less than seven years". To claim the benefit under rule 1(v) of the Second Schedule to the Act the repayment of the borrowed money must be during a period which is more than seven y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is that the requirement prescribed is that the assessee should not hold the asset for more than 36 or 12 months. The moment an asessee exceeds this period and the holding continues beyond 36/12 months, the asset is treated as a long term asset and according the gains are computed. The clause, therefore, refers to the holding period. We do not think it will be appropriate to exclude or include any day of the holding for computing the said period. The date on which the asset is acquired is not to be excluded because the holding starts from the said date. Neither is the date of sale/transfer to be excluded. The period of 12/36 months accordingly will have to be computed. Thus, if an asset is held for 12 months/36 months and is sold the ver ..... X X X X Extracts X X X X X X X X Extracts X X X X
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