After the Accountant Member passed the order formulating the questions for reference to the Third Member, he became functus officio. The opinion expressed by the Third Member was very much binding on the AM and he was bound to follow the opinion of the Third Member in its true letter and spirit. It was necessary for judicial propriety and discipline that the Member who is in minority must accept as binding opinion of the Third Member. The AM had no power to formulate new questions at the stage of giving effect to the opinion of the majority and his action was not sustainable in law

In Bharati Shipyard Ltd the Special Bench held that the amendment to s. 40(a)(ia) by the FA 2010 w.e.f. 1.4.2010 could not be held to be retrospective from AY 2005-2006 on the ground that the amendment was not remedial and curative in nature. However, the Kolkata Bench had taken a contrary view in Virgin Creations vs. ITO and held that amendment by the FA 2010 was retrospective w.e.f. 1.4.2005. The view of the Kolkata Bench has been approved by the Calcutta High Court in CIT vs. Virgin Creations. The question as to whether a verdict of the Special Bench should be followed or that of a non-jurisdictional High Court should be followed is answered in Tej International (P) Ltd 69 TTJ (Del) 650 wherein it was held that in the hierarchical judicial system that we have in India, the wisdom of the court below has to yield to the higher wisdom of the Court above, and therefore, once an authority higher than this Tribunal has expressed its esteemed views on a an issue, normally, the decision of the higher judicial authority is to be followed. It was also held that the fact that the judgment of the higher judicial forum is from a non-jurisdictional High court does not alter this position. Consequently, Virgin Creations is followed and it is held that the amendment to s. 40(a)(ia) is retrospective from 1.4.2005 and any payment of TDS on or before the due date for filing the ROI is sufficient

In Virgin Creations the Calcutta High Court has passed a reasoned order and held that the amendment to s. 40(a)(ia) is retrospective in nature. The binding nature of the decision of the Special Bench when a lone decision of non-jurisdictional High Court is available on the very same issue was examined in the Third Member decision in Kanel Oil & Export Ltd 121 ITD 596 where it was held that where there is only a judgement of the non-jurisdictional High Court prevails over an order of the Special Bench even though it is from the jurisdictional Bench (of the Tribunal). As the Calcutta High Court’s decision is the lone one on the issue whether s. 40(a)(ia) is retrospective, it has to be followed in preference to the decision of the Special Bench of the Tribunal in Bharti Shipyard Ltd. Consequently, amounts in respect of which TDS is paid on or before the due date of filing the ROI is eligible for deduction

In AY 1999-2000, before expiry of the original time limit of five consecutive assessment years for which deduction was available as per then applicable law, the amended law became applicable and the assessee was accordingly eligible for deduction for the extended period of 10 years, as against 5 years allowed under the preamended law (DSL Software Ltd followed)

S. 153C authorises the AO to exercise jurisdiction over any person in whose case incriminating material has been found during the course of search conducted on another person. S. 153D provides that no order of assessment shall be passed by an AO below the rank of Joint Commissioner except with the prior approval of the Joint Commissioner. The fact that the heading to s. 153D refers to a “prior approval” and that it uses negative wording and the word “shall” makes the intention of the Legislature clear that compliance of s. 153D is mandatory. As the provision is mandatory, an act done in breach thereof will be invalid. Also, as the condition has been imposed in public interest, it cannot be waived by the assessee. Clause 9 of the Manual of Office Procedure also makes it clear that an assessment order under Chapter XIV-B can be passed only with the previous approval of the JCIT and that the approval must be in writing and stated to have been obtained in the body of the assessment order. Accordingly, in the absence of the JCIT’s approval, the AO had no jurisdiction to pass the s. 153C order and it was null and void (Ratnabai Dubhash 230 ITR 495 (Bom) & SPL’s Siddharth followed)

For applicability of s. 50C, it is essential that an asset should be a “capital asset”. The question whether an asset is a “capital asset” or “stock-in-trade” is one of fact and has to be determined as per the guidelines laid down. On facts, the assessee was a builder and the investment in purchase and sale of plots was ancillary and incidental to the business activity. The assessee had treated the land as stock in trade in the balance sheet. Consequently, s. 50C had no application