2017 (9) TMI 1158 - HC - Income Tax

Eligibility for the benefit of deduction under Section 80P denied - unconditional stay of recovery of the tax amount - income from other sources - Held that - 2nd respondent considered the tax liability of the petitioner under the other head that was confirmed against him, namely, the tax amount towards income that was classifiable under the head income from other sources . On the said issue, the 2nd respondent found that, inasmuch as the said income would not qualify for deduction under Section 80 P of the Income Tax Act, the petitioner could not claim exemption from the tax payable under the said head of income. The 2nd respondent, therefore, directed the petitioner to pay the demand confirmed against him under the said head in the assessment order, in six equal and successive monthly installments commencing from 18.07.2017, as a condition for the grant of stay of recovery of the balance amounts confirmed against the petitioner, in the assessment order. On a perusal of the reasoning in Ext.P10 conditional order, it is of the view that the said order, to the extent it directs the petitioner to make payment of the demand outstanding towards tax on income from other sources, does not call for any interference, save to the extent of the quantum that is demanded as a condition for the grant of stay. Taking note of the plea of financial hardship urged on behalf of the petitioner, as against the tax liability of ₹ 68,00,000/-, which the petitioner was directed to pay in six equal monthly installments starting from 18.07.2017, the petitioner ought to be directed to pay only an amount of ₹ 20,00,000/-, within a period of two months from the date of receipt of a copy of this judgment. Save for this limited modification to the directions in Ext.P10 order, the rest of the directions in the said order shall remain unaltered.

Summary

Issues:
Challenge against Ext.P10 conditional order of stay in an appeal against an order of assessment under the Income Tax Act for the assessment year 2014-15.

Analysis:
The petitioner challenged the conditional order of stay, Ext.P10, granted by the 2nd respondent in an appeal against an assessment order under the Income Tax Act. The main contention was that the 2nd respondent did not validly exercise discretion in granting only a conditional stay order, especially when there was a previous decision in favor of the assessee regarding eligibility for deduction under Section 80 P of the Income Tax Act. The court considered the facts and submissions and noted that the assessment confirmed tax liability under two different heads. One amount was disallowed as a deduction under Section 80 P, while another amount was confirmed as tax payable on income from other sources not qualifying for the deduction. The 2nd respondent granted an unconditional stay for the tax amount under Section 80 P but directed the petitioner to pay the tax amount under income from other sources in installments. The court found the order reasonable but modified the payment amount due to financial hardship, directing the petitioner to pay a reduced sum within two months. The rest of the directions in Ext.P10 remained unchanged, and the appeal was to be disposed of within four months from the judgment date.

This judgment addressed the issue of granting a conditional stay order in an appeal against an assessment order under the Income Tax Act. The court reviewed the assessment details, noting the confirmed tax liability under different heads and the previous decision regarding deduction eligibility under Section 80 P. The court found the 2nd respondent's decision reasonable but adjusted the payment amount due to financial hardship. The judgment emphasized the need for timely disposal of the appeal and instructed the petitioner to provide a copy of the judgment to the 2nd respondent for further action. The modification to Ext.P10 was limited to the payment amount, while the rest of the directions remained unchanged.