2011 (4) TMI 881 - AT - Income Tax

Deduction u/s 80IA - additions/disallowance made by the AO vide order passed u/s 143(3) r.w.s. 144C - Held that - The issue has already been argued before the Tribunal in the appeal relating to assessment year 2005-06 the decision in which case is awaited. In case the said deduction u/s 80IA is held to be allowable to the assessee the demand in the case shall be substantially reduced. The applicant shall not withdraw any amount up to Rs.80 crores lying in its bank accounts as attached by the Assessing Officer till the disposal of appeal except Rs.10 crores to be paid by 10th April 2011 and further Rs.10 crores to be paid by 30 April 2011.

Summary

Issues Involved:
1. Stay of demand raised consequent to an assessment framed u/s 143(3) read with section 144C(13) of the Income Tax Act, 1961.
2. Disallowance of deduction claimed u/s 80IA of the Income Tax Act.
3. Various additions and disallowances made by the Assessing Officer.
4. Attachment of bank accounts by the Assessing Officer.
5. Proceedings and decisions by the CCIT and Assessing Officer regarding stay applications.
6. Appeal before the Tribunal and the request for stay of the demand till the disposal of the appeal.

Issue-wise Detailed Analysis:

1. Stay of Demand Raised:
The applicant sought a stay on the demand raised following an assessment framed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 for the assessment year 2006-07. The assessee had declared 'nil' income, but the assessment was completed on a total income of Rs. 6,31,95,51,513/-, leading to a total tax and interest payable of Rs. 297,26,54,239.

2. Disallowance of Deduction Claimed u/s 80IA:
The Ld. AR for the assessee pointed out that the demand arose due to the disallowance of the deduction claimed under section 80IA of the Act. The AR argued that if the deduction under section 80IA was allowed, the income would be significantly reduced, even if no deduction was allowed on certain miscellaneous income. The AR further argued that the tax should be computed under the MAT provisions, as the book profits declared by the assessee would be higher than the income computed under the normal provisions of the Act.

3. Various Additions and Disallowances:
The demand also included various additions and disallowances made by the Assessing Officer, such as disallowance under section 40(a)(ia) for roaming charges, disallowance on depreciation claimed on ARO, disallowance under section 14A, disallowance on account of interest diversion to sister concerns, and others. The Ld. AR argued that the main issue was the disallowance of the deduction under section 80IA.

4. Attachment of Bank Accounts:
The Assessing Officer issued attachment notices under section 226(3) of the Income Tax Act for the bank accounts held by the assessee, leading to the attachment of all the bank accounts on 28.3.2011. The assessee claimed to have received the rejection letter on 28.3.2011 and subsequently moved a Writ Petition before the Hon'ble Punjab and Haryana High Court.

5. Proceedings and Decisions by CCIT and Assessing Officer:
The CCIT rejected the stay application moved by the assessee, observing that the case was not covered within the ambit of guidelines issued for staying the demand. The Assessing Officer issued a notice to the assessee to appear for a hearing, and upon the assessee's request, allowed the deposit of Rs. 30 crores immediately under protest. The Assessing Officer directed the assessee to deposit the demand in ten equal installments.

6. Appeal Before the Tribunal and Request for Stay:
The assessee appealed before the Tribunal and requested a stay on the demand till the disposal of the appeal. The Ld. DR for the Revenue did not contest the factual matrix but opposed the stay of recovery of the outstanding demand. The Tribunal considered the submissions and directed the applicant to pay Rs. 10 crores by 10th April 2011 and another Rs. 10 crores by 30th April 2011. The applicant was also directed to pledge investments with its subsidiaries as security and not withdraw any amount up to Rs. 80 crores from the attached bank accounts. The attachment notices were to be lifted, and the recovery of the balance demand was stayed till the disposal of the appeal or 30.9.2011, whichever was earlier. The appeal was fixed for hearing on 21.6.2011, and the parties were directed to assist in the expeditious disposal of the appeal.

Conclusion:
The Tribunal disposed of the stay application by directing the applicant to make specific payments and pledges, lifting the attachment notices, and staying the recovery of the balance demand till the disposal of the appeal or 30.9.2011. The appeal was scheduled for hearing on 21.6.2011, and both parties were urged to assist in its expeditious disposal.