2019 (4) TMI 1125 - HC - Income Tax

Stay of demand - demand arise due to non set of past losses - appeal of earlier year pending before tribunal in which stay was granted by ITAT - petitioner must deposit 20% of such amount within a short time - whether petitioner company is in financial hardship? - HELD THAT - We also note that by virtue of the deposit made by the petitioner towards disputed taxes demand for the said assessment year 2009 10 to 2014 15 so far and which may be further made pursuant to the interim directions of the Tribunal, the petitioner would have discharged approximately 15% disputed tax and interest liability. We are informed that the petitioner company is in financial hardship. Considering totality of facts and circumstances of the case, we require the petitioner to deposit 5% of the disputed tax of the present year in two equal installments latest by 31st May 2019 and 30th June, 2019. Subject to this condition being fulfilled, there should be no further recovery of tax and interest from the petitioner till the disposal of the appeal by the Appellate Commissioner. Petition disposed of accordingly.

Summary

Issues:
Challenge to condition imposed by revenue authorities for staying disputed tax and interest demand pending appeal before Commissioner (Appeals).

Analysis:
The petitioner challenged the condition imposed by revenue authorities, requiring a deposit of 20% of the disputed tax and interest demand arising from the assessment order pending appeal before the Commissioner (Appeals). The assessment order for the present case is linked with assessments from the years 2009-10 to 2014-15, involving transfer pricing adjustments. The Tribunal previously heard the appeals but could not dispose of them. An interim formula was provided by the Tribunal, granting a stay of 90% of the balance demand with specific deposit conditions. The Tribunal suggested that the appeals are likely to proceed for final hearing on a set date. The petitioner argued that the outcome of the appeal before the Tribunal would impact the appeals before the Appellate Commissioner for the assessment year 2016-17, as the additions made by the Assessing Officer were due to the inability to carry forward past losses.

Financial Hardship and Deposit Requirements:
The petitioner, facing financial hardship, had already made deposits towards disputed tax demands for the years 2009-10 to 2014-15. The High Court considered the financial circumstances and required the petitioner to deposit 5% of the disputed tax of the current year in two equal installments by specific dates. Upon fulfilling this condition, there would be no further recovery of tax and interest until the appeal is disposed of by the Appellate Commissioner. The High Court disposed of the petition, stating that the impugned order by the Principal Commissioner of Income Tax would not survive under these conditions.