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2016 (12) TMI 1286 - HC - Income TaxStay of demand - Held that - It was not disputed during the course of the arguments at bar that such a demand can be adjusted against the pending refund for the previous year, if any. The dispute is really about the extent of such adjustment. While it is claimed by the respondents that the entire amount of the refund shall be adjusted as against the impugned demand as a condition for stay, on behalf of the petitioner, it is contended that 15% of the impugned demand may be adjusted, out of the total amount due, which is in excess of ₹ 12 crores. Presently, we are only concerned with the issue of grant of stay of the impugned demand. Considering the overall circumstances and para 4(A) of the O.M., we find that the impugned order can be stayed, subject to an amount of ₹ 2,53,61,907/- (15% of the total demand of ₹ 16,90,79,380/-) being adjusted out of the refund, which is due for the Assessment Years 2006-07 and 2007- 08. Thus, the petition is partly allowed. The impugned communication/order, rejecting the application for stay, is set aside. There shall be interim stay of the impugned demand, pending disposal of the appeal before the CIT (A), on condition of an amount of ₹ 2,53,61,907/-, from out of the refund for the Assessment Years 2006-07 and 2007-08, being retained towards 15% of the amount as stipulated in O.M. Dated 29.02.2016.
Issues:
1. Stay of demand pending appeal before CIT (A). 2. Adjustment of refund against the demand amount. 3. Interpretation of O.M. dated 29.02.2016 regarding stay of demand. Stay of Demand Pending Appeal: The petitioner, a company engaged in manufacturing and trading, filed a return for the Assessment Year 2012-13 declaring a loss. The respondent raised a demand higher than the declared loss, leading to a pending appeal before the CIT (A). The petitioner sought stay of the demand, which was initially rejected by respondent no. 2 and later reconsidered based on CBDT instructions. Subsequent applications for stay were also rejected, prompting the petitioner to approach the High Court. The court considered the O.M. dated 29.02.2016, which mandates a 15% payment for stay of a disputed demand pending CIT (A) appeal. Despite the respondents' argument that the order was administrative, the court found the demand eligible for stay under para 4(A) of the O.M. Adjustment of Refund: The petitioner claimed a pending refund of over &8377; 12 crores for previous assessment years. The respondents insisted on adjusting the entire refund against the current demand, while the petitioner argued for a 15% adjustment as per the O.M. provisions. The court acknowledged the pending refund and allowed an adjustment of &8377; 2,53,61,907 (15% of the demand) from the refund due for the previous assessment years. This adjustment was deemed sufficient for granting a stay on the impugned demand pending the CIT (A) appeal. Interpretation of O.M. Dated 29.02.2016: The court analyzed the relevant provisions of the O.M. to determine the conditions for granting stay of a disputed demand. Para 4(A) specifies the requirement of a 15% payment for stay pending CIT (A) appeal, unless falling under a specific category. It was established that the present case did not fall under the exempted category and hence, was eligible for stay under para 4(A). The court also noted the provision under para 4(E) allowing for adjustments of refunds against the demand, subject to certain conditions. Based on these interpretations, the court partially allowed the petition, setting aside the rejection of the stay application and granting an interim stay on the demand subject to the specified adjustment from the pending refund. This detailed analysis of the judgment highlights the key issues of stay of demand pending appeal, adjustment of refund, and the interpretation of the relevant O.M. provisions. The court's decision to allow a partial stay based on the 15% adjustment from the pending refund demonstrates a balanced approach in resolving the dispute between the petitioner and the respondents.
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