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

This petition is filed under Article 226 of the Constitution of India assails the order dated 8 December 2014 passed by the Commissioner of Income Tax. The impugned order dated 8 December 2014 refuses to grant stay of an outstanding demand of Rs.21.70 Crores till the final disposal of the petitioner''s appeal by the Commissioner of Income Tax (Appeals) from the reassessment order dated 24 March 2014 passed for the Assessment Year 2008-2009. The demand to the extent of Rs.7.26 Crores was stayed as it emanated from an assessment order dated 30 November 2010 passed in regular assessment proceedings which had been set aside by order dated 27 August 2014 of the ITAT.

The petitioner''s grievance is that the impugned order dated 8 December 2014 is without considering the petitioner''s prima facie case on merits. Moreover it has without any reasons varied the stay order dated 10 October 2014 passed by the Joint Commissioner of Income Tax which directed the petitioner to pay 50% of the demand till the disposal of the petitioner''s appeal by the Commissioner of Income Tax (Appeals). The impugned order dated 8 December 2014 has directed the petitioner to pay the amount of Rs.21.70 Crores out of the outstanding demand raised of Rs.28.97 Crores.

Mr. Salil Kapoor, learned counsel for the petitioner states that the prima-facie case which arises for consideration is whether the grant-in-aid received by the petitioner from the State Government of Rs.40 Crores is at all chargeable to tax. It is the petitioner''s submission that the aforesaid amount was in the nature of a capital receipt and therefore, not chargeable to tax. This specific contention was raised before the Assessing Officer and the same was not accepted. The petitioner had, in the application for stay filed before the Commissioner of Income Tax, requested for a stay on the basis that the amount of Rs.40 Crores is a capital receipt and not chargeable to tax. However, no mention of the above contention is found in the impugned order, leave alone consideration of the same. Further fact, which Mr. Salil Kapoor draws our attention to, is that the order dated 24 March 2014 in respect of Assessment Year 2008-09 of which stay is sought has been passed in reopening proceedings. This very amount of Rs.40 Crores was accepted as a capital receipt during the original assessment proceedings. Further it is submitted that the Commissioner of Income Tax while varying the stay granted by the Dy. Commissioner of Income Tax to the prejudice of the petitioner had not indicated any reason justifying the variation.

Mr. Suresh Kumar, learned counsel for the respondents revenue states that the impugned order calls for no interference. This is for the reason that not every grant-in-aid received by an Assessee would necessarily be on capital account. This is for the reason that the same would depend upon the terms and conditions of the grant. In view of the above, he submits no interference is called.

This Court, in Clarence Brandenburg Vs. State of Ohio, 395 U.S. 444 (1969) , has laid down the following guidelines to be kept in mind by the Authorities while disposing of the stay applications :

"(a) While considering the stay application, the authority concerned will at least briefly set out the case of the assessee. (b) In cases where the assessed income under the impugned order far exceeds returned income, the authority will consider whether the assessee has made out a case for unconditional stay. If not, whether looking to the questions involved in appeal, a part of the amount should be ordered to be deposited for which purpose, some short prima facie reasons could be given by the authority in its order. (c) In cases where the assessee relies upon financial difficulties, the authority concerned can briefly indicate whether the assessee is financially sound and viable to deposit the amount if the authority wants the assessee to so deposit. (d) The authority concerned will also examine whether the time to prefer an appeal has expired. Generally, coercive measures may not be adopted during the period provided by the statute to go in appeal. However, if the authority concerned comes to the conclusion that the assessee is likely to defeat the demand, it may take recourse to coercive action for which brief reasons may be indicated in the order. (e) We clarify that if the authority concerned complies with the above parameters while passing orders on the stay application, then the authorities on the administrative side of the Department like respondent No. 2 herein need not once again give reasoned order.

The above parameters are not exhaustive. They are only recommendatory in nature".

From the above, it is clear that one of the factors to be considered while granting stay is to examine the question in appeal before directing the petitioner to deposit the full amount or pay the amount partially till the disposal of the appeal by the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax while passing the impugned order has clearly ignored the decision of this Court laying down the parameters to be kept in mind while disposing of the stay applications in KEC International (supra).

In the above view, we set aside the impugned order dated 8 December 2014. The petitioner is at liberty to file a fresh representation before the Commissioner of Income Tax on or before 30 December 2014. The Commissioner of Income Tax, thereafter shall pass a fresh order keeping in view of the guidelines laid down by this Court in KEC International (supra) and specifically considering the petitioner''s submission that the grant-in-aid received by them is not chargeable to tax under the Act. Till such time as the Commissioner of Income Tax decides the petitioner''s application for stay and for a period of two weeks thereafter there shall be a stay of demand made by the Revenue for A.Y. 2008-09.

The petition is, accordingly, disposed of. No order as to costs.