TaxTMI 
TaxTMI 
2026 (1) TMI 622
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....order refuses to follow the decision of the Special Bench of the ITAT in the case of SKF India Ltd. Vs. Deputy Commissioner of Income Tax [2024] 168 taxmann.com 328 (Mumbai- Trib.) (SB). 3. The reasons given by the 1st Respondent for not following by the decision of the Special Bench [in SKF (India)] can be found in paragraph 3.2.3, 3.2.4 and 3.2.5 of the impugned order. For the sake of convenience, the said paragraphs are reproduced here under : 3.2.3 It is apparent that although the decision in the case of SKF India Ltd was by the Special Bench of ITAT Mumbai there was dissenting view of the 3rd member the Special Bench of ITAT Mumbai. Further in the assessee's own case for A.Y. 2001- 02, co-ordinate division Bench of ITAT Mumbai vide order dated 29.12.2011 in ITA no.720 of 2006 had rejected the contention of the assessee for taxing the capital gain u/s.50 of the Act as per section 112 of the Act. This has been noted by the Hon'ble third member of the Special Bench. The department has not accepted this decision of the ITAT Mumbai in SKF India(supra) and the issue is being contested before the Hon'ble Bombay High Court. Thus, there is no finality on the iss....
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....hase of properties in the same block of assets during the relevant Financial year and therefore, there could not have been any intention of the Legislature to allow double benefits of deductions as enumerated under S.54/54E of the Act as held in the case of Ace Builders. Thus, there is need to revisit the decision in the case of Ace builders as the same is leading to incorrect interpretation of law by lower judicial authorities. (ii). The provision of S.50 of the Act is reproduced hereunder for the sake of convenience: "Special provision for computation of capital gains in case of depreciable assets. 50. Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922,the provisions of sections 48 and 49 shall be subject to the following modifications:- (1) where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asse....
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....ciable assets as capital gain derived from short term capital assets, by virtue of S.2(42B) of the Act (defining the short term capital gain), the said capital gain becomes short term capital gain. This again fortifies the interpretation that the deeming section 50 of the Act is as regards the change in nature of capital assets whereby the depreciable assets have been deemed as short term capital assets. (iv). In the provisions of of s.45 onwards, regarding the taxable income under head Capital gain, there is no mention of the words short term capital gain or long term capital gain as all these provisions speaks of capital gain on transfer capital assets whether short term capital assets or long term capital assets. Therefore, by no stretch of imagination, it can be stated that the deeming fiction of S.50 of the Act was deeming fiction for the capital gain. Thus, the provision of S.50 of the Act deemed the depreciable assets as short term capital assets so as to compute capital gain under this section as short term capital gain. (v). In view of the discussion at s.no.(i) to (iv) above, it is apparent that there is need to review the findings given by the Hon'b....
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....ion or otherwise. Even though in his personal opinion, he may be of the view that the decision has wrongly decided the law, he is bound to follow the same. If the lower authorities are permitted not to follow binding decisions because in their personal view they feel that the decision is wrong, the same would lead to complete chaos in the administration of tax laws. 7. In the view that we take, we are supported by several decisions, not only of the Hon'ble Supreme Court, but also of this Court. The Hon'ble Supreme Court in Union of India and Others Vs. Kamlakshi Finance Corporation Ltd [1992 supp (1) SCC 443] has criticized this kind of conduct by the Revenue Authorities. Paragraph 6 of this decision reads thus : "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclu....
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....ach of the revenue to disregard a judicial precedent on the ground of it being challenged before a superior Court is unacceptable. Merely because the order of the appellate authority is "not acceptable" to the department, and is the subject matter of an appeal, can furnish no ground for not following a judicial precedent, unless its operation has been suspended by a competent Court. If this healthy rule is not followed, it would lead to undue harassment to assessees and result in chaos in the administration of tax laws. 16. In this regard, the reliance placed by the Petitioner to the decision rendered by this Court in the case of Samp Furniture Pvt. Ltd. Vs. ITO [WP NO.: 3290/2024; order dated 05.08.2024], is well founded. In this decision it was held as under: "11. This apart we also find that quite absurd and unwarranted statements are made by the JAO in paragraph 12 of the reply affidavit, when he says that the department does not agree with the judgment of this Court in Hexaware Technologies Limited (Supra). It may be that the Revenue has not "accepted" the judgment but it would not mean that till the same is set aside in a manner known to law, the same has lo....
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....es vs. ITO (supra) from that of the Petitioner. The Petitioner has categorically stated that its grievance about the levy of tax pursuant to the provisions of Section 115JC was a decided issue by the jurisdictional Tribunal in the case of S.K. Ventures us. ITO (supra). If the assessee is pleading that its interpretation of the applicability of Section 115JC has already been decided by the jurisdictional Tribunal, then in such a case, Respondent No.2 ought to have considered the facts and law of the said case. If the facts are identical, then it ought to have been followed. Instead, Respondent No.2 states that the doctrine of binding judicial precedents would apply only when the decision of the superior authority/Court is rendered in respect of the same party. It is the claim of Respondent No.2 that because the Petitioner was not a party to the decision in the case of S.K. Ventures vs. ITO (supra), the ratio laid down therein would not apply to the Petitioner. We are of the view that if in the facts and circumstances of the case and in law, the case of the Petitioner is in consonance with the facts in the decision rendered by the jurisdictional Tribunal, then it ought to be....