2008 (12) TMI 670 - AT - Income Tax

Summary

Issues Involved:
1. Determination of the assessment year for the transfer of shares.
2. Classification of income from the transfer of shares as "Capital gains" or "Income from business or profession".
3. Legality of the Assessing Officer's order giving effect to the Tribunal's order.
4. Levy of interest under section 234B.
5. Levy of interest under section 220(2).

Issue-wise Detailed Analysis:

1. Determination of the assessment year for the transfer of shares:
The Tribunal held that the transfer of shares took place in the assessment year 1998-99 and not in the assessment year 1997-98. This conclusion was based on the Tribunal's previous order, which clarified that the profits resulting from the share transfer are assessable in the assessment year 1998-99.

2. Classification of income from the transfer of shares as "Capital gains" or "Income from business or profession":
The Tribunal did not adjudicate whether the income from the transfer of shares should be classified under "Capital gains" or "Income from business or profession". The issue was deemed academic for the assessment year 1998-99 because the first appellate authority had deleted the addition, rendering the determination of the nature of income unnecessary.

3. Legality of the Assessing Officer's order giving effect to the Tribunal's order:
The Tribunal found that the Assessing Officer erred in passing the order dated March 15, 2004, for the assessment year 1998-99 under the title "Order giving effect to the Income-tax Appellate Tribunal's order". The Tribunal had not issued any direction to revise the income for the assessment year 1998-99 or to treat the income as "Income from business or profession". The Tribunal upheld the contention that the order passed by the Assessing Officer was bad in law and cancelled it.

4. Levy of interest under section 234B:
The Tribunal noted that the levy of interest under section 234B is consequential in nature. Since the primary issue of the addition was resolved in favor of the assessee, the interest under section 234B would also be affected accordingly.

5. Levy of interest under section 220(2):
The Tribunal upheld the first appellate authority's decision to entertain the appeal against the levy of interest under section 220(2), citing the Supreme Court's ruling in Central Provinces Manganese Ore Co. Ltd. v. CIT, which allows an appeal when the assessee denies liability to pay interest. Consequently, the Tribunal dismissed the Revenue's appeal on this issue.

Conclusion:
The appeal filed by the assessee was partly allowed, and the appeal filed by the Revenue was dismissed. The Tribunal pronounced the order on December 19, 2008.