IT : Pending appeal of earlier year having possibility of setting off current demand, partial stay may be granted on pre-deposit requirement
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[2013] 37 taxmann.com 341 (Bombay)
HIGH COURT OF BOMBAY
Sesa Goa Ltd.
v.
Joint Commissioner of Income-tax, Range -1*
V.M. KANADE AND U.V. BAKRE, JJ.
WRIT PETITION NOS. 122 & 123 OF 2013
FEBRUARY 27, 2013
Section 249 of the Income-tax Act, 1961 - Commissioner (Appeals) - Form and limitation [Pre-deposit of tax] - Assessment years 2010-11 and 2011-12 - Huge demand was raised - Assessee sought relief from pre-deposit requirement for filing appeal before Commissioner (Appeals) - It was found that assessee-company had filed appeal before Tribunal claiming deduction under section 10B for immediately preceding year and if assessee would succeed, entire demand for current years would be set off - Whether assessee was to be allowed to deposit a portion of 50 per cent of demand required to be paid for filing appeal - Held, yes [Para 8] [Partly in favour of assessee]
FACTS
| ■ | The assessment orders were passed directing the assessee to pay tax of over Rs. 1100 crores for impugned assessment years. | |
| ■ | For filing appeal before the Commissioner (Appeals), the assessee directed to pre-deposit 50 per cent of the demand. | |
| ■ | In the instant writ, the assessee company sought stay on pre-deposit requirement on ground that for the immediate preceding year, it had filed appeal before the Tribunal claiming exemption under section 10(B) and decision was likely to be given in near future. If such exemption was provided, same would offset the impugned demand. |
HELD
| ■ | In this case factual situation needs to be taken into consideration. It is an admitted position that petitioner company has filed appeal before the Tribunal claiming deduction under section 10(B) and hearing of the said appeal has already been concluded on 20-12-2012 and the decision in the said Tribunal is awaited and is likely to be given by end of March, 2013. [Para 7] | |
| ■ | If the petitioner succeeds in the said ITAT, it is not disputed that practically the entire demand for 2010-11 and 2011-12 would be offset as a result of said decision. However, at the same time it cannot be forgotten that these are the demands pertaining to assessment years 2010-11 and 2011-12 and as normal rule in such cases if any appeal is filed, the appellant has to effect 50 per cent of the said amount. [Para 8] | |
| ■ | Taking into consideration this peculiar fact, without going into the question of financial hardship which is disputed by the revenue, the assessee shall be directed to deposit Rs. 50 crores on or before 15-3-2013 and Rs. 100 crores on or before 31-3-2013. Rest of the demand with respect of 50 per cent as directed by Commissioner (Appeals) would be stayed till the decision of the Tribunal. | |
| ■ | In the event the appeal filed by the assessee is dismissed, the balance amount would be paid within four weeks thereafter. [Para 9] |
CASES REFERRED TO
CIT v. IBM India (P.) Ltd [2013] 216 Taxman 20 (Mag.)/32 taxmann.com 246 (Kar.) (para 6) and Coca Cola India (P.) Ltd. v. Addl. CIT [2006] 150 Taxman 359 (Bom.) (para 9).
Nishant Thakker and R.G. Ramani for the Petitioner. Ms. A. Dessai for the Respondent.
ORDER
1. Heard learned counsel appearing on behalf of the petitioner as well as learned counsel appearing on behalf of the respondent.
2. Both these petitions pertains to the Assessment year 2010-11 and 2011-12. The petitioner filed its return of income. An assessment order was passed directing them to pay tax of Rs. 448 crores in respect of the 2010-11 and for the year 2011-12 an amount of Rs. 675 crores. The petitioner company has challenged these orders by filing an appeal before Commissioner of Income Tax (Appeals) (hereinafter referred to as "CIT(Appeals) for short). In the said appeal application for stay was filed. CIT(Appeals) after hearing the appeal for stay by order dated 25.2.2013 has directed the petitioner to pay 50% of the demand for each order on or before 4.3.2013. Learned counsel appearing on behalf of the petitioner inter alia contended that the issue in respect of the deductions which are to be made available to the petitioner under Section 10(B) are pending before Income Tax Appellate Tribunal (hereinafter referred to as "ITAT" for short) for the assessment year 2009-10 and it is contended that if the said appeal is allowed by ITAT in that event it would offset the demand which is made for the year 2010-11 and 2011-12. It is submitted that the hearing of the said appeal was concluded on 20.12.2012. We are informed that members of ITAT have already started dictating the said order. However, the said order may not be available till the end of March, 2013.
3. Learned counsel appearing on behalf of the petitioner submitted that the financial condition of the petitioner is precarious and that the revenue has attached the account of the petitioner company and have withdrawn the entire amount which were there in its account as a result of which petitioner company is not in a position even to pay the salary of its employees.
4. Reliance has been placed on the number of decisions of this Court in support of the said submission.
5. It is submitted that the petitioner company is willing to pay an amount of Rs.50 crores by 15.3.2013 and another 100 crores by 31.3.2013 and that the order of CIT(Appeals) may accordingly be modified taking into consideration financial hardship which will cause to the petitioner company and balance of 350 crores in monthly instalments.
6. Learned counsel appearing on behalf of the revenue vehemently opposed the said submission and she has submitted that CIT (Appeals) while considering the appeal and application for stay has taken into consideration the guidelines given in the case of KEC and it was contended that he had also relied upon recent judgment of Karnataka High Court in the case of CIT v. IBM India (P.) Ltd [2013] 216 Taxman 20 (Mag.)/32 taxmann.com 246wherein Karnataka High Court has directed the assessee to pay 50% of demand. It is submitted that the question of financial hardship is also taken into consideration by CIT (Appeals). It is therefore, submitted that no case was made out for granting stay or modifying the order passed by ITAT.
7. We have heard both the counsel at length. In this case factual situation needs to be taken into consideration. It is an admitted position that petitioner company has filed appeal before ITAT claiming deduction under Section 10(B) and hearing of the said appeal has already been concluded on 20.12.2012 and the decision in the said ITAT is awaited and is likely to be given by end of March, 2013.
8. If the petitioner succeeds in the said ITAT , it is not disputed that practically the entire demand for 2010-11 and 2011-12 would be offset as a result of said decision. However, at the same time it cannot be forgotten that these are the demands pertaining to assessment year 2010-11 and 2011-12 and as normal rule in such cases if any appeal is filed , the appellant has to effect 50% of the said amount.
9. The Division Bench of this Court in case of Coca Cola India (P.) Ltd. v. Addl. CIT [2006] 150 Taxman 359 in similar circumstances has observed in para 9 as under:—
"9. In the present case, the dispute regarding the allowability of the marketing expenses and service charges incurred by the assessee relate back to the assessment year 1999-2000. In all the assessment years commencing from 1999-2000, the assessing officer has disallowed the above expenses and after adding the same to the income, demand has been raised against the assessee and the appeals filed by the assessee against the said assessment orders are pending before the Income Tax Appellate Tribunal. It is an admitted fact that the appeals filed by the assessee for assessment years 1999-2000, 2000-2001 and 2001-2002 are all fixed for hearing before the Income Tax Appellate Tribunal on November 9, 2005. It may be noted that the demand of Rs.27.31 crores for assessment year 1999-2000 has been stayed by the Income Tax Appellate Tribunal subject to the assessee paying Rs.2 crores to the Income-tax Department. Similarly, demand for Rs.55.15 crore in assessment year 2000-2001 has been stayed by the Income Tax Appellate Tribunal subject to the petitioner paying Rs.9 crores in instalment an furnishing adequate security to the satisfaction of the assessing officer. For the assessment year 2001-2002, this Court on a writ filed by the petitioner bearing Writ Petition No.311 of 2005, by its order dated February 16, 2005 had stayed the demand of Rs.73 crores subject to the petitioners depositing with the Income-tax Department Rs.10 crores in instalments as more particularly stated therein. In this view of the matter, without going into the merits of the case, looking to the stay orders passed in the earlier years and in view of the facts that the appeals for earlier years are fixed for hearing before the Income Tax Appellate Tribunal on November 9, 2005, and in view of the fact that the Revenue has already recovered Rs.30 lakhs by attaching the bank accounts of the petitioner, we are of the opinion that till the disposal of the appeal pending before the Commissioner of Income Tax (Appeals), in the interest of justice the demand should be stayed subject to the following order :
| (a) | On the petitioner paying to the revenue Rs.3 crore on or before November 15, 2005, further sum of Rs.3 crores on or before December 15, 2005 and further sum of Rs.3.70 crores on or before January 31, 2006 towards the demand raised for assessment year 2002-2003, the recovery of the demand for assessment year 2002-2003 shall remain stayed. | |
| (b) | It is made clear that the above stay of recovery of demand for assessment year 2002-2003 shall be operative till the disposal and communication of the order that may be passed by the Commissioner of Income Tax (Appeals) and for a further period of four weeks thereafter. | |
| (c) | If the petitioner fails to pay the amounts specified in clause (a) above on or before the due date, then the stay on recovery shall automatically stand vacated and the Revenue will be at liberty to enforce the demand in accordance with law. | |
| (d) | Impugned orders dated August 11, 2005 (Exhibit 'H') and September 19, 2005 (Exhibit 'Z') passed by the Assistant Commissioner of Income Tax and the Commissioner of Income Tax, Pune as well as the six notices all dated September 30, 2005 (Exhibit 'Q' and 'V') are quashed and set aside. The Revenue shall forthwith lift the attachment levied on the bank accounts of the petitioner by six notices all dated September 30, 2005." |
10. In the said case appeal before ITAT was pending however in the present case hearing of the appeal is already over and decision is awaited and in fact we are told that hon'ble members have already started dictating order.
11. Taking into consideration this peculiar fact, in our view without going into the question of financial hardship which is disputed by the revenue, we propose to pass following order:—
| i. | The petitioner shall deposit Rs.50 crores on or before 15.3.2013 and Rs.100 crores on or before 31.3.2013. Rest of the demand with respect of 50% as directed by CIT(Appeals) would be stayed till the decision of ITAT bearing No. 72(PNJ)/2012. | |
| ii. | In the event the appeal filed by the petitioner is dismissed, the balance amount would be paid within four weeks thereafter. |
12. The request made by learned counsel for the petitioner that the balance amount would be paid in instalments is not accepted.
13. In the event ITAT passes an order in favour of the petitioner in that event the order directing the balance amount to be paid, would be stayed in view of the favourable order passed by ITAT.
14. It is also made clear that if the petitioner fails to pay 150 crores on or before 31.3.2013, the revenue would be entitled to recover the entire amount.
15. So far as the attachment of the bank accounts is concerned, the said attachment is lifted on the condition that the petitioner shall furnish an undertaking in the usual form to strictly abide by the conditions laid down in para 11 above.
16. With these directions, both the petitions are disposed of accordingly.
SBRegards
Prarthana Jalan
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