S. 170 provides that where there is a “succession of business”, the predecessor has to be assessed in respect of the income upto the date of succession and the successor has to be assessed thereafter. 100% of the assessee’s shares were sold by the existing shareholders to another person. The CIT in revision took the view that the result of the said transfer of shares was that there was a “succession” and that the loss incurred prior to the date of succession could not be allowed to the “successor” assessee. The assessee’s appeal was allowed by the Tribunal. On appeal by the Revenue, HELD dismissing the appeal even if it is accepted that by a transfer of shares u/s 2(47), there is a transfer in the right to use the capital assets of the company, still s. 170 is not attracted because there is no “transfer of business”. A company is a juristic person and owns the business. The share holders are not the owners of the company. By a transfer of the shares, there is no transfer so far as the company is concerned.

S. 54 provides that if an assessee has LTCG on transfer of a residential house and he purchases or constructs a residential house within the specified period then the amount appropriated towards the new house shall be deducted from the LTCG. The assessee sold a house and used the sale proceeds to buy commercial property. Subsequently (but within the specified period) he borrowed funds and purchased a new house. The AO denied deduction u/s 54 on the ground that the new house had been purchased out of borrowed funds and not out of the consideration received for the old house. On appeal, the Tribunal and High Court upheld the claim on the ground that s. 54 merely required the purchase of the new house to be within the specified period. The source of funds for the purchase was irrelevant.

(i) The writ petition against the MA order was maintainable because the assessee has no alternative remedy. An appeal u/s 260A can be filed only against an order passed u/s 254 (1) and not against one passed u/s 254 (2);

(ii) On merits, even though it was true that in the original order the Tribunal had not referred to the order of co-ordinate Bench of the Kolkata Tribunal and the subsequent decision of the Calcutta High Court, the substance of the same has been discussed in detail. The assessee had a right of appeal and therefore the application for rectification u/s 254(2) was misconceived;

(iii) A decision of the High Court of different jurisdiction is not binding on the Tribunal. Non-consideration of the same is not a “mistake” u/s 254 (2).

The assessee, engaged in shipping business, owned a barge which was included in the block of assets. The barge met with an accident and sank on 6.3.2000 (AY 2000-01). As efforts to retrieve the barge were uneconomical, the barge was sold on as-is-where-is in May 2001 (AY 2002-03). As the barge was non-operational and not used for business at all in AY 2001-02, the AO denied depreciation. The CIT (A) upheld the stand of the AO. On appeal by the assessee, the Tribunal took the view that after the insertion of the concept of “block of assets” by the T. L. (A) Act, 1988 w.e.f 1.4.1988 individual assets had lost their identity and only the “block of assets” had to be considered. It was held that the test of “user” had to be applied upon the block of assets as a whole and not on individual assets. On the appeal by the Revenue, the High Court dismissed the appeal holding that the issue was squarely covered by its earlier judgements in Whittle Anderson 79 ITR 613 and G. N. Agrawal 217 ITR 250.

The judgement of the Full Bench of the Delhi High Court in CIT vs. Kelvinator of India Ltd. 256 ITR 1 where it was held that when an order u/s 143 (3) is passed, a presumption is raised that it has been passed on application of mind and that the Revenue cannot support reopening on the ground of non-application of mind because that would amount to giving a premium to an authority to take benefit of its own wrong cannot be followed as it is contrary to the law laid down by the Supreme Court in Kalyanji Mavji 102 ITR 286, Indian Eastern Newspaper Society 119 ITR 996 and A. L. A. Firm 189 ITR 285 where it was held that if the AO had not considered the material on record and subsequently came across it, the case fell within the scope of s. 147(b) and could be reopened. The Full Bench also did not consider the effect of Explanations 1 & 2 to s. 147.

The assessee, a Third party Administrator (“TPA”) licensed by IRDA, engaged in providing “cashless” health insurance claim services is required to deduct tax at source under section 194J of the Act when making payment to hospitals out of funds provided by the insurance company.