2016 (7) TMI 1470 - HC - Income Tax

Stay of the recovery proceedings - whether the petitioner is entitled for the grant of exemption under Section 10(21)? - Held that - Whether the Appeals have been preferred as against the order passed by the Income Tax Appellate Tribunal, but today, the learned counsel has got instructions that authorization has been given by the Department to file Appeals. Be that as it may, as on date, the orders passed by the Income Tax Appellate Tribunal has not been reversed/modified/altered/stayed by this Court, and an Appeal has only been authorized to be filed. Writ Petition in respect of the same assessee, for the previous assessment year, 2012-13, this Court is of the view that the recovery proceedings initiated against the petitioner shall remain stayed till the Appeals are heard and disposed of by the second respondent.

Summary

Issues involved:
Challenge to order denying absolute stay of recovery proceedings pending disposal of appeal petition before Commissioner of Income Tax (Appeals), entitlement for exemption under Section 10(21) of the Income Tax Act, consideration of previous assessment orders by Income Tax Appellate Tribunal, denial of exemption by Assessing Officer, discretion of first respondent in granting stay, relevance of previous Tribunal orders, pending appeals before the Court, authorization to file appeals by the Department.

Issue 1: Challenge to order denying absolute stay of recovery proceedings:
The petitioner challenged the order denying absolute stay of recovery proceedings pending disposal of appeal petition before Commissioner of Income Tax (Appeals). The Assessing Officer imposed a condition requiring the petitioner to pay a percentage of the demand. The Court considered whether the exercise of discretion by the first respondent was proper and if the impugned order warranted interference. The core issue was the petitioner's entitlement for exemption under Section 10(21) of the Income Tax Act.

Issue 2: Entitlement for exemption under Section 10(21) of the Income Tax Act:
The petitioner claimed entitlement for exemption under Section 10(21) based on previous orders by the Income Tax Appellate Tribunal. The Tribunal held the petitioner was entitled to exemption as it was engaged in research work in agriculture-related activities. The Assessing Officer denied exemption, stating the petitioner was classified as an institution, not an association. The petitioner argued that the Tribunal's decisions for previous assessment years supported their claim for exemption under Section 10(21).

Issue 3: Discretion of first respondent in granting stay:
The Court emphasized that the first respondent had the discretion to grant stay but should exercise it properly with reasons. The petitioner demonstrated that the core issue raised before the first respondent was the same as in previous assessment years, concerning exemption under Section 10(21). The Court refrained from assessing the correctness of the assessment order but noted that the petitioner had a prima facie case supported by Tribunal orders. The recovery proceedings were stayed until the appeals were heard and disposed of by the second respondent.

Issue 4: Pending appeals before the Court and Department's authorization to file appeals:
The Court noted that as of the judgment date, the Tribunal's orders had not been reversed, modified, or stayed by the Court. The Department had authorized filing appeals, but the Tribunal's decisions remained unchanged. Considering the previous judgment for the same assessee in a different assessment year, the Court ordered the recovery proceedings against the petitioner to remain stayed until the appeals were heard and disposed of by the second respondent.

This detailed analysis of the judgment covers the issues involved comprehensively, addressing the legal aspects and decisions made by the Court regarding each issue raised in the case.