2012 (2) TMI 325 - AT - Income Tax

Stay Application - Demand raised 24,66,51,870 amount paid 16,31,14,700 - Hardship Term loan 200 Crores instalment of Rs 11.50 Lacs - Held That - Assessee already has paid more than 50% of demand, in the interest of revenue the assessee is required to pay Rs.50 lacs before 31.01.2012 and the balance demand is stayed till disposal of the appeal or six months, whichever is earlier .

Summary

Issues: Stay application due to disallowed expenditure for construction of an airport.

Analysis:
1. The assessee, a Local Authority, filed a Stay Application citing reasons for seeking stay, including the disallowed expenditure of Rs.60.00 crores for the construction of an International Airport at Mohali. The AO disallowed the expenditure, stating it was not for promoting the business of the assessee and lacked a connection with the business activities.

2. The appellant argued that the contribution towards the airport was made in line with the objects of the Greater Ludhiana Area Authority, constituted by the State Government for planning and development purposes. The expenditure was justified as being in the ordinary course of business, serving commercial expediency and public benefit, not for private profit. The appellant emphasized compliance with State Government directions for better planning and development.

3. An affidavit was filed by the appellant, detailing the pending appeal, outstanding demand of Rs.24,66,51,870, and payments made amounting to Rs.16,31,14,700. The appellant expressed hardships due to monthly loan instalments of Rs.11.50 lacs. The Departmental Representative (DR) argued for redemption of part of the outstanding liability due to the appellant's lost appeal before the CIT(A).

4. Upon reviewing the submissions and facts, the tribunal noted that the appellant had already paid over 50% of the demand raised by the AO. To protect the revenue's interest, the tribunal ordered the appellant to pay Rs.50 lacs before a specified date and stayed the balance demand until the appeal's disposal or six months, whichever is earlier.

5. Consequently, the tribunal allowed the Stay Application of the appellant, providing relief in the form of a partial stay on the outstanding demand. The order was pronounced in the Open Court on 6th Jan. 2012, granting temporary respite to the appellant in the ongoing legal proceedings.