2015 (7) TMI 573 - HC - Income Tax

Disallowance of depreciation - Absolute stay on the recovery proceedings - Held that - Keeping in mind the ratio of case of Commissioner of Income Tax v. Rao Bahadur Calawala Cunnan Chetty Charities 1979 (8) TMI 17 - MADRAS High Court read with the aforesaid circular of the Central Board of Direct Taxes in F.No.404/10/2009-ITC dated 1.12.2009 affirming Instruction No.1914 dated 2.12.1993, is of the considered view that when the issue whether the assessee is entitled to the depreciation claim for the assessment year 2009-10 has been decided by this Court, as have already held by order in M/s Kalapet Primary Agricultural Credit Cooperative Society, Pondicherry v. The Income Tax Officer (2015 (7) TMI 556 - MADRAS HIGH COURT) that all authorities, civil, criminal and judicial, coming within the territory of the High Court, shall act in the aid of the High Court, hence, the assessing officer is bound by the order passed by the jurisdictional High Court without taking any stand that the High Courts of other States are taking a different view, thus no other option except to set aside the impugned order, for the simple reason that the appeal is pending for consideration. Accordingly, the impugned order is set aside. It is open to the second respondent-Commissioner of Income Tax (Appeals)-17, Chennai, the appellate authority to expedite the hearing of the pending appeal and dispose of the same on merits and in accordance with law at the earliest possible time.

Summary

Issues involved:
Challenge to order denying absolute stay on recovery proceedings initiated by assessing officer under Section 220(6) of the Income Tax Act.

Analysis:

Issue 1: Denial of absolute stay on recovery proceedings
The petitioner, a charitable trust, contested an assessment order before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal regarding corpus donations and depreciation on fixed assets. The assessing officer rejected the claims, leading to recovery proceedings. The petitioner sought absolute stay under Section 220(6) of the Income Tax Act, citing High Court judgments and CBDT circulars in support. The assessing officer declined the request, directing partial payment in installments. The petitioner challenged this decision, emphasizing the assessing officer's failure to consider relevant guidelines and precedents.

Issue 2: Compliance with CBDT guidelines
The petitioner argued that the assessing officer overlooked Instruction No.1914 dated 2.12.1993 issued by the CBDT, which mandates staying demand only under specific circumstances, such as issues decided in favor of the assessee by appellate authorities or conflicting interpretations of the law. The petitioner contended that the assessing officer's refusal to grant absolute stay disregarded clear guidelines and relevant judicial decisions, causing undue hardship. In contrast, the respondent asserted that the assessing officer's decision was reasonable, considering the unresolved dispute over the depreciation claim for the assessment year 2009-10.

Issue 3: Judicial intervention and setting aside the impugned order
The Court, after considering arguments from both sides and referencing relevant precedents and the CBDT circular, held that the assessing officer must abide by the jurisdictional High Court's order on the depreciation claim issue. The Court emphasized the need for all authorities to act in aid of the High Court's decisions. Consequently, the impugned order denying absolute stay was set aside, allowing the appellate authority to expedite the pending appeal's hearing and disposal. The Court clarified that its observations should not influence the appellate authority's decision on the appeal's merits. The writ petition was allowed, and the related motion was closed without costs.