Maharashtra Airport Development Co. Ltd. vs Deputy Commissioner of Income Tax and Others

The challenge in this petition is to the order dated February 18, 2015, passed by the Commissioner of Income-tax. By the impugned order dated February 18, 2015, the Commissioner of Income-tax refused to stay the balance demand of tax amounting to Rs. 19.46 crores (along with interest) pending the disposal of the petitioner''s appeal by the Commissioner of Income-tax (Appeals) ("the CIT (Appeals)") from the order dated March 24, 2014, passed by the Assessing Officer. The genesis of the present proceedings is the assessment order dated March 24, 2014, passed by the Assessing Officer on reopening the assessment for the assessment year 2008-09. The petitioner had in terms of section 220(6) of the Act sought a stay of demand of tax consequent to the assessment order pending the disposal of its appeal before the Commissioner of Income-tax (Appeals). The Assessing Officer by an order dated October 10, 2014, granted a stay of the demand to the extent of 50 per cent of the tax payable till the disposal of the petitioner''s appeal before the Commissioner of Income-tax (Appeals). Not satisfied, the petitioner carried the matter to the Commissioner of Income-tax who by the impugned order dated February 18, 2015, has refused to stay the demand till the disposal of the appeal by the Commissioner of Income-tax (Appeals).

The issue for consideration is "whether a grant of Rs. 40 crores received from the State of Maharashtra under the State Government Resolution dated August 9, 2007, is to be treated as revenue receipt or capital receipt. These funds were made available to the petitioner for the purpose of acquisition of land to carry out its project for development of airports and the special economic zones within the State of Maharashtra. The State Resolution also requires the petitioner to file monthly reports in respect of the utilisation of the funds received for land acquisition from the State Government.

The impugned order refusing to grant stay has proceeded on the following basis:

(a) that the deposit of the amounts would cause no financial hardship to the assessee; and

(b) that out of total amount of Rs. 155 crores received, land valued at Rs. 40.54 crores only has been acquired. Thus, as the funds were not utilised for acquisition of the land, the same cannot be treated to be receipts on capital account.

So far as the rejection of the application for stay on the ground that no financial difficulty is caused by the deposit, is contrary to the decision of this court in UTI Mutual Fund Vs. Income Tax Officer and Others, , wherein the court in its order dated March 6, 2013, has observed that where a strong prima facie case has been made out in its favour by the assessee, the requirement of pre-deposit would by itself be a matter of hardship. As held by this court in the judgment in the case Mumbai Metropolitan Region Development Authority v. Deputy DIT (Exemption) in Writ Petition (Lodg) No. 2348 of 2014, dated October 29, 2014, financial hardship is a factor which may have some bearing, if the authorities concerned are not convinced on a strong prima facie case in favour of the applicant. To illustrate a strong prima facie case would be where, the issue is covered by the decision of a superior forum or by a consistent practice to the contrary being followed by the Revenue in the case of the assessee in the earlier years. In this case, Mr. Salil Kapoor, learned counsel appearing on behalf of the petitioner, points out that in the earlier years commencing from the assessment year 2005-06 the petitioner has been receiving funds from the State Government being grants for acquisition of land. At no point of time the Revenue has sought to consider it as revenue. Besides, he filed a statement indicating that out of Rs. 155 crores which have been received commencing from the financial year 2004-05 up to 2007-08, an amount of Rs. 153.55 cores has been utilised for acquisition of land. Mr. Kapoor further points out that the Commissioner of Income-tax did not at any point of time before disposal of the application, give them any chance to explain regarding the receipt and utilisation of the funds. The assessment order being appealed against does not rely upon the aforesaid fact of receipt and utilisation of funds. Therefore, the petitioner had no occasion to point out these figures on its own. All the aforesaid factors would indicate that due consideration has not been received at the hands of the Commissioner of Income-tax.

However, be that as it may, we are informed that the Commissioner of Income-tax (Appeals) has already commenced the hearing of petitioner''s appeal filed from the assessment order dated March 24, 2014, for the assessment year 2008-09 with effect from August 18, 2015. The appeal has now been adjourned to October 29, 2015, as the concerned Commissioner of Income-tax (Appeals) is on leave. Mr. Kapoor states, on instructions, he is on leave for a period of two months. In view of the fact that the Commissioner of Income-tax (Appeals) is seized of the matter and hearing it, it would be appropriate that in the peculiar facts of the present case the Revenue does not adopt any coercive proceedings till such time as the Commissioner of Income-tax (Appeals) disposes of the petitioner''s appeal arising out of assessment order dated March 24, 2014, and for the period of two weeks thereafter. However, as the hearing has already commenced, we would direct the Commissioner of Income-tax (Appeals) to dispose of the appeal as expeditiously as possible and preferably on or before December 15, 2015.

It is made clear that the observations made herein are for limited purpose for considering the application for stay. These directions should not in any manner influence the Commissioner of Income-tax (Appeals) in disposing of the petitioner''s appeal on the merits in accordance with law. The writ petition is disposed of in the above terms. No order as to costs.