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Issues involved: Stay of demand pertaining to assessment years 1999-2000, 2000-01, and 2001-02.
Summary: The Appellate Tribunal considered a Stay Petition seeking stay of demand for three assessment years. The Departmental Representative argued that separate applications should be filed for stay of demand for different years, citing section 253(7) and Rule 35A(1)(b) of the Income-tax (Appellate Tribunal) Rules, 1963. The Tribunal noted that while separate applications are required for different enactments, the Act and rules do not explicitly allow a common application for various years under the same enactment. As per section 255(5), the Tribunal has the power to regulate its own procedure, and since separate returns, assessments, and appeals are required for each year, separate stay petitions should be filed. The Tribunal treated the petition as pertaining to the first assessment year and advised the assessee to file separate applications for the other two years. The assessee sought stay of demand for the first assessment year, arguing that the income-generating activities and transactions occurred outside India, thus not falling under the purview of the Income-tax Act in India. The counsel referenced a decision by the Madras High Court to support the argument that certain provisions were not applicable in this case. The counsel also highlighted the Double Taxation Avoidance Agreement (DTAA) between India and the USA, stating that in the absence of relevant provisions in the Act, the DTAA clause cannot be enforced. The counsel emphasized that the assessee had paid a significant portion of the demand and requested a stay until the appeal was resolved. After considering the submissions, the Tribunal found a prima facie case in favor of the assessee, noting the bona fide belief in not deducting tax under section 195 and the partial payment made. The Tribunal held that the balance of convenience favored the assessee and stayed the recovery of demand for the first assessment year pending appeal. Due to the substantial demand, the Tribunal directed the case to be expedited for hearing. In conclusion, the Tribunal granted a stay of recovery of demand for the first assessment year and scheduled the pending appeals for an expedited hearing.
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