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2017 (11) TMI 1614 - AT - Income TaxStay of recovery of outstanding demand - Held that - Applicant has prima facie case and balance of convenience for granting only partial stay of recovery of outstanding demand. We therefore, grant the stay of outstanding tax demand subject to the following conditions - a) The applicant is directed to deposit ₹ 18 crores in three installments i.e. ₹ 6 crores by 30.11.2017; ₹ 6 crores by 30.12.2017 and ₹ 6 crores by 15.01.2018. b) The applicant shall furnish the proof of payment of taxes on payment to the Registry; c) In case he fails to deposit the taxes as stated in (a) above, then the case would come for hearing in normal course and not be considered as stay granted matter. d) That out of turn hearing is granted on 18.01.2018 subject to payment of ₹ 18 crores; no separate notice of hearing would be issued by the Registry; e) That the applicant shall not seek frivolous adjournments. If Paper Book is desired to be filed by the applicant, then the same should be submitted well in advance as prescribed in ITAT Rules; f) In case of breach of any of the above conditions, the stay granted shall automatically get vacated and matter would be heard in ordinary course.
Issues Involved:
1. Stay of recovery of outstanding tax demand. 2. Denial of exemption under sections 11 and 12 of the Income Tax Act. 3. Allegation of accepting capitation fees/donations. 4. Violation of provisions under section 13(1)(c) of the Income Tax Act. 5. Financial position of the applicant. Detailed Analysis: 1. Stay of Recovery of Outstanding Tax Demand: The applicant, an educational institution, filed Stay Applications against the recovery of outstanding tax demands for assessment years 2009-10 to 2014-15, totaling ?142.98 crores. The applicant argued that the balance tax demand excluding interest under section 234B was ?97.44 crores. 2. Denial of Exemption Under Sections 11 and 12 of the Income Tax Act: The applicant's claim for exemption under sections 11 and 12 was denied by the Assessing Officer and upheld by the CIT(A) due to alleged violations. The CIT(A) opined that the applicant had dishonored its charitable purpose by accepting capitation fees and siphoning funds. 3. Allegation of Accepting Capitation Fees/Donations: The Revenue alleged that the applicant accepted capitation fees/donations from students for admissions, which were then siphoned off by the trustees for personal use. The applicant countered that the capitation fees were for educational purposes and should be exempt under section 11. 4. Violation of Provisions Under Section 13(1)(c) of the Income Tax Act: The Assessing Officer and CIT(A) found that the applicant violated section 13(1)(c) by siphoning funds and paying salaries to related parties. The applicant argued that the amount siphoned was already taxed in the hands of the trustee, Mr. M.N. Navale, and thus should not be taxed again in the hands of the applicant. 5. Financial Position of the Applicant: The applicant claimed financial difficulty in paying the outstanding demand, citing liabilities and recovery proceedings from banks. However, the Revenue pointed out that the applicant had substantial funds, including advances to other trusts and liquid funds from the State Government. Judgment: The Tribunal considered the prima facie case, balance of convenience, and financial position of the applicant. It found that the applicant had a prima facie case for partial stay of recovery. The Tribunal directed the applicant to deposit ?18 crores in three installments and granted stay of the balance outstanding demand for 180 days or until the disposal of the appeal, subject to conditions. Conditions for Stay: a) Deposit ?18 crores in three installments by specified dates. b) Furnish proof of payment to the Registry. c) No frivolous adjournments; Paper Book to be submitted in advance. d) Out of turn hearing on 18.01.2018, subject to payment of ?18 crores. e) Breach of conditions would vacate the stay, and the matter would be heard in the ordinary course. Conclusion: The Stay Applications were allowed with the specified conditions, providing partial relief to the applicant while ensuring compliance with the tax demand recovery process.
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