C.I.T.,Mumbai vs M/S.Walfort Share & Stock Brokers P.Ltd

The Supreme Court held that losses arising from dividend stripping transactions prior to 1.4.2002 are disallowable under Section 94(7) of the Income Tax Act, 1961, as such losses are deemed artificial and not arising from genuine business transactions. The Court clarified that the intention behind the transaction must be scrutinized to determine its legitimacy, emphasizing that tax avoidance schemes cannot be recognized as valid business activities. The appeals by the C.I.T. were allowed, affirming the disallowance of the claimed losses.