|COURT:||Bombay High Court|
|CORAM:||G. S. Kulkarni J, M. S. Sanklecha J|
|CATCH WORDS:||stay of demand|
|COUNSEL:||Jas Sanghvi, Megha Sharma, Nishant Thakkar|
|DATE:||December 16, 2015 (Date of pronouncement)|
|DATE:||January 15, 2016 (Date of publication)|
|AY:||2009-10 to 2012-13|
|FILE:||Click here to download the file in pdf format|
|S. 254(2A): As the Third Proviso which restricts the power of the ITAT to grant stay beyond 365 days “even if the delay in disposing of the appeal is not attributable to the assessee” has been struck down in Pepsi Foods 376 ITR 87 (Del) as being arbitrary, unreasonable and discriminatory, the law laid down in Narang Overseas 295 ITR 22 (Bom) & Ronuk Industries 333 ITR 99 (Bom) that the ITAT has power to grant stay beyond 365 days has to be followed|
The Department filed an appeal in which it contended that the judgements of the Bombay High Court in Narang Overseas (P) Ltd. Vs. ITAT, (2007) 295 ITR 22 and Commissioner of Income Tax Vs. Ronuk Industries Ltd., (2011) 333 ITR 99(Bom) with regard to the power of the Tribunal to grant stay beyond 365 days u/s 245(2A) of the Act is not good law in view of the substituted third proviso to Section 254(2A) of the Act. HELD by the High Court dismissing the appeal:
(i) The Court has consistently taken a view that the Tribunal has power to extend the stay even after the substituted third proviso to subsection 2A to Section 254 of the Act was introduced. This is evident from all the orders in Ingram Micro (India) Exports Pte.Ltd (Income Tax Appeal (L) No.137 of 2013 rendered on 6 March 2013), Director of Income Tax (IT) Vs. M/s. St.Jude Medical Inc (Income Tax Appeal (L) No.2121 of 2012 rendered on 1 March 2013), The Commissioner of Income Tax, Pune Vs. PTC Software (I) Private Limited (Tax Appeal (L) No.1927 of 2012 rendered on 28 February 2013). The Revenue has not filed appeal against the above orders of this Court in the context of the substituted third proviso to Section 254(2A) of the Act. Nothing has been shown to us as to why when the Revenue has accepted the above orders, a different stand is taken in this appeal.
(ii) In any case the ratio of the decision of this Court in “Narang Overseas (P) Ltd.” (supra) would apply even to the substituted third proviso to Section 254(2A) of the Act. The basis of the decision in “Narang Overseas (P) Ltd.” (supra) was that the power to grant stay or interim relief has to be read as coextensive with the power to grant final relief. The object being that in the absence of the power to grant interim relief the final relief itself may be defeated. This Court thereafter followed the decision of the Apex Court in “CCE vs. Kumar Cotton Mills(P) Ltd., (2005(180) ELT 434 (SC)) and held that notwithstanding the pre-substituted third proviso to Section 254(2A) of the Act the Tribunal continues to have powers to grant interim relief. In the above view, therefore, the ratio of the decision in “Narang Overseas (P) Ltd.” (supra) would apply even in case of substituted third proviso to Section 254(2A) of the Act.
(iii) It may be pointed out that the only substantial difference in the pre-substituted third proviso and substituted third proviso to Section 254(2A) of the Act is the addition of the words “even if delay in disposing of the appeal is not attributable to the assessee” These additional words added in the substituted third proviso to Section 254(2A) of the Act has been struck down by the Delhi High Court in “Pepsi Foods (P) Ltd. Vs. Asstt. Commissioner of Income Tax, (232 Taxmann 78.)”.
In cases with demand outstanding and pending before the ITATs where request has been made for the stay,there is an additional responsibility to adjudicate quickly.The period of 365 days is quite enough in the normal circumstances to address to this problem by taking up cases for hearings on priority.The clubbing of such cases for priority hearing by the registrars of the ITATs and cataloguing the progress of hearings,should not be an issue in these times of digital data and record management.