2016 (4) TMI 1204 - HC - Income Tax

Stay of demand - Deduction of income under S.10A denied - Held that - The prayer made by learned counsel for petitioners appears to be justified and deserves acceptance. Though there was no interim stay granted by this Court against the proceedings and hearing of appeals pending before the Commissioner of Income Tax (Appeals) and he could have decided the pending appeals before him on merits by now but in view of the admitted position that these appeals having not been decided for the last more than one year or so it appears appropriate and expedient to dispose of these writ petitions with a direction to the Commissioner of Income Tax (Appeals) to decide the pending appeals expeditiously preferably within a period of six months from today. The assessee or its authorised representative may appear in the first instance before the Commissioner of Income Tax (Appeals) on 17th May 2016. The petitioner shall deposit 15% of the total disputed demand under the impugned assessment orders within a period of one month from today and the Commissioner of Income Tax (Appeals) may thereafter decide the appeals in accordance with law on merits within the aforesaid stipulated period. The assessee will be free to raise all contentions on merits before the Commissioner of Income Tax (Appeals).

Summary

Issues:
Challenge to interlocutory order rejecting stay application by Commissioner of Income Tax (Appeals) regarding deduction of income under S.10A of the Income Tax Act, 1961 for medical transcription business exported abroad.

Analysis:
The judgment involves a challenge to an interlocutory order passed by the Commissioner of Income Tax (Appeals) rejecting a stay application filed by the assessee. The impugned demand was raised against the assessee, denying it the deduction of income under S.10A of the Income Tax Act, 1961. The assessee, engaged in the business of rendering medical transcription of diagnostic images exported abroad, claimed deduction for the income generated, which was denied by the Assessing Authority. Subsequently, the assessee filed regular appeals before the Commissioner of Income Tax (Appeals) for the assessment years in question.

During the proceedings, it was highlighted that a recent Office Memorandum of the Central Board of Direct Taxes (CBDT) provided guidelines for the stay of demand at the first appellate stage. The CBDT directed that in cases where the outstanding demand is disputed before the Commissioner of Income Tax (Appeals), the Assessing Officer should grant a stay of demand till the disposal of the first appeal upon payment of 15% of the disputed demand, unless falling under specific exceptions.

The counsel for the assessee urged the Court to direct the Commissioner of Income Tax (Appeals) to expeditiously decide the pending appeals, considering the delay in the final decision despite more than a year passing since the impugned order. On the other hand, the Revenue's counsel argued that the assessee should comply with the conditions of the recent CBDT Instructions, requiring payment of at least 15% of the disputed demand.

After hearing both sides, the Court found the prayer made by the counsel for the petitioners justified. Despite no interim stay granted by the Court, the Commissioner of Income Tax (Appeals) was directed to decide the pending appeals expeditiously, preferably within six months. The Court ordered the assessee to deposit 15% of the total disputed demand within one month and allowed the assessee to present all contentions on merits before the Commissioner of Income Tax (Appeals).

In conclusion, the writ petitions were disposed of with the mentioned directions, emphasizing the need for a prompt resolution of the pending appeals. No costs were awarded, and the parties were to receive a copy of the order promptly.