Qualcomm Incorporated vs. ADIT (ITAT Delhi)

Judicial conflict whether Tribunal has power to extend stay beyond 365 days has to be resolved in favour of the assessee

The Third Proviso to s. 254(2A), as amended w.e.f. 1.10.2008, provides that if the appeal filed by the assessee is not disposed off within the period of stay granted by the Tribunal (which cannot exceed 365 days), the order of stay shall stand vacated even if the delay in disposing of the appeal is not attributable to the assessee. In Tata Communications Ltd vs. ACIT 138 TTJ (Mum) 257, the Special Bench held, following Ronuk Industries 333 ITR 99 (Bom), that even after the amendment to the Third proviso to s. 254(2A) w.e.f. 1.10.2008, the Tribunal had jurisdiction to extend stay beyond 365 days. However, the Karnataka High Court took the view in CIT vs. Ecom Gill Coffee Trading Pvt. Ltd that after the aforesaid amendment, the Tribunal had no power to extend stay beyond 365 days even if the delay was not attributable to the assessee. The Tribunal had to now consider whether the view of the Bombay High Court & Special Bench had to be followed or that of the Karnataka High Court. HELD by the Tribunal:

In Narang Overseas (P) Ltd vs. ACIT 114 TTJ 433 (SB), it was held by the Special Bench that if there is a cleavage of opinion amongst different High Courts and there is no decision of the jurisdictional High Court on the issue, then the view favourable to the assessee has to be followed. As the view of the Bombay High Court in Ronuk Industries 333 ITR 99 (Bom) & that of the Special Bench in Tata Communications Ltd vs. ACIT 138 TTJ (Mum) 257 is favourable to the assessee, that has to be followed and it has to be held that the assessee is entitled to a stay of the demand even after the expiry of the period of 365 days if the delay in disposal of the appeal is not exclusively attributable to it.