It is not in dispute that the Central Government has not issued any notification in terms of section 2(14)(iii)(b). An agricultural land is not a capital asset; it becomes a capital asset if it is the land located under section 2(14)(iii)(a) & (b). Section 2(14)(iii)(a) covers a situation when the subject agricultural land is located within the limits of municipal corporation, notified area committee, town area committee town committee of cantonment committee and which has a population of not less than 10,000.
Supreme Court has held that the provisions of the Special Court Act, wherever they are applicable shall prevail over the provisions of the Income Tax Act, 1961. The words wherever they are applicable are crucial. The Special Court Act makes no provision in regard to the determination of the liability to pay interest under the Income Tax Act, 1961.
The validity of the notice reopening the assessment under Section 148 has to be determined on the basis of the reasons which are disclosed to the assessee. Those reasons constitute the foundation of the action initiated by the Assessing Officer of reopening the assessment. Those reasons cannot be supplemented or improved upon subsequently.
Supreme Court makes it very clear that a colourable device cannot be a part of tax planning. Therefore where a transaction is sham and not genuine as in the present case then it cannot be considered to be a part of tax planning or legitimate avoidance of tax liability. The Supreme Court in fact concluded that there is no conflict between its decisions in the matter of McDowell (supra), Azadi Bachao (supra) and Mathuram Agarwal (supra). In the present case the purchase and sale of shares, so as to take long term and short term capital loss was found as a matter of fact by all the three authorities to be a sham.
The Tribunal in the present case has come to the conclusion that where a running business is transferred lock, stock and barrel by one assessee to another assessee the principle of reconstruction, splitting up and transfer of plant and machinery cannot be applied. According to the Tribunal the benefit of Section 10A attaches to the undertaking and not to the assessee which owns the undertaking.
In KEC International Ltd. v. B.R. Balakrishnan (2001) 251 ITR 158., the Division Bench emphasised the importance of reasoned orders being passed on the applications for stay. The Assessing Officers consistently refuse to follow the law laid down in the judgment of the Division Bench of this Court. The Assessing Officers and the Appellate Authorities are duty bound to act in accordance with binding precedent and there is no reason or justification to act in the manner in which the applications for stay have been disposed of in this case.
Nishith Madanlal Desai vs. CIT (Bombay High Court) It was held that The power which is vested in the Assessing Officer under Section 220(6) and for that matter that which is conferred upon the CIT (Appeals) to grant a stay of demand is a judicial power. It is necessary for both the Assessing Officer as well as the Appellate Authorities constituted under the Income Tax Act, 1961, to have due regard to the fact that their function is not merely to act as tax gatherers, but equally as quasi judicial authorities, they owe a duty of fairness to the assessee.
No recovery of tax should be made pending (a) Expiry of the time limit for filing an appeal; (b) Disposal of a stay application, if any, moved by the assessee and for a reasonable period thereafter to enable the assessee to move a higher forum, if so advised. Coercive steps may, however, be adopted where the authority has reason to believe that the assessee may defeat the demand, in which case brief reasons may be indicated.
In view of various decision of Supreme Court it cannot be accepted that Union of India has no authority or power to levy service tax on renting of immovable property. The imposition of service tax on renting of immovable property was within the legislative competence of the Parliament and it does not fall within the legislative competence of the State under entry 49 of List II of the Seventh Schedule to the Constitution.
Lld. counsel for the assessee, has submitted that there is no need to remit the matter to the Assessing Officer as the Assessing Officer had not made any disallowance under Section 14A, except in respect of interest expenditure. He further says that the contention now raised by the revenue does not emanate from the order of the Tribunal. We are not inclined to accept the said contention.
