2017 (11) TMI 852 - AT - Income Tax

Seeking extension of stay of demand - Non-deduction of tax in respect of payment made by the assessee to Google Ireland Ltd., as the same was in the nature of royalty - only ground on which learned counsel for the assessee is seeking extension of stay of demand is that he is proposing to appeal against the recent orders of the Tribunal for earlier years before the Hon ble High Court and also intends to file Misc. Application before this Tribunal - Held that - In our considered opinion, this cannot be a valid ground for stay of demand. Unless and until, the orders passed by an appellate authority are reversed by the higher appellate authority or reviewed by its own, the orders passed shall hold the field and shall be binding on both the parties. Even on the proposed action to file rectification application before this Tribunal, it is hypothetical situation since the appellant had not yet filed any Miscellaneous Petition before this Tribunal. Even assuming that any such petition is filed, scope and ambit of all such applications is very limited and having regard to the decision of the Hon ble jurisdictional High Court in the case of CIT v. McDowell & Co. Ltd. 2004 (3) TMI 41 - KARNATAKA High Court in proceeding u/s 254(2), the Tribunal is not empowered to change the final outcome of the appeal. Thus having regard to the above legal position, the assessee-company had not made out a case for stay of the demand. In the circumstances, the stay petition seeking extension of stay is not maintainable and is accordingly dismissed

Summary

Issues Involved:
Extension of stay of demand for assessment year 2013-14 due to non-deduction of tax on payment to Google Ireland Ltd. as royalty under domestic law and DTAA between India and Ireland.

Analysis:

1. Grounds for seeking stay of demand:
The assessee filed a stay petition seeking extension of stay of demand amounting to ?59,42,20,422 for the assessment year 2013-14. The demand arose from the TDS officer holding the assessee as "the assessee in default" for non-deduction of tax on payments to Google Ireland Ltd. The assessee's counsel argued for stay citing pending appeal hearing, awaiting orders from earlier years, and proposing a payment against previous demands. The Departmental Representative opposed the stay citing previous Tribunal orders against the assessee.

2. Evaluation of the request for extension:
The Tribunal noted that the issue of demand was previously covered against the assessee by recent Tribunal orders. The initial stay was granted subject to payment of ?70 crores, which was extended multiple times. However, with the disposal of the appeal involving the same issue for earlier years, the circumstances had changed. The Tribunal referred to the principles laid down by the Hon'ble Supreme Court regarding the grant of stay of demand, emphasizing the need for a prima facie case in favor of the assessee.

3. Legal considerations for stay of demand:
The Tribunal referred to the parameters set by the Supreme Court, including the existence of a prima facie case, financial hardship, irreparable injury, and balance of convenience. The Tribunal highlighted that the recent order in the assessee's case indicated that the issue was not in favor of the assessee. The assessee's proposal to appeal and file miscellaneous applications was deemed insufficient grounds for stay, as orders of appellate authorities hold unless reversed by higher authorities.

4. Judicial precedents and legal limitations:
The Tribunal cited the case law regarding the power of the Tribunal to rectify mistakes apparent from the record, emphasizing that rectification does not imply a review or substitution of the original order. The Tribunal concluded that the assessee had not established a case for the extension of stay of demand based on the legal position and precedents cited.

5. Decision and Dismissal of the stay petition:
Based on the analysis of the legal principles and the specific circumstances of the case, the Tribunal dismissed the stay petition, stating that the assessee had not made out a case for the extension of the stay of demand. The decision was grounded in the lack of a prima facie case in favor of the assessee and the legal limitations on the Tribunal's power to alter final outcomes of appeals.

In conclusion, the Tribunal dismissed the stay petition, emphasizing the importance of meeting the legal criteria for the grant of stay of demand and the binding nature of appellate orders unless overturned by higher authorities.