2013 (11) TMI 1378 - HC - Income Tax

Conditional stay for recovery of tax - Held that - The department had already recovered almost 23% of tax demand by adjusting the refund due in case of assessee - The appeal of the petitioner for the assessment year 2010-11 is already fixed for hearing before the CIT(Appeals) - The appeal of the petitioner challenging the order withdrawing the registration granted under Section 12A of the Act, has been heard by the Tribunal and the order is awaited - The decision of the Tribunal will have an impact on petitioner s submission that the income is exempted under Section 11 of the Act - It is directed that the CIT(Appeals) will take up the appeal for Assessment Year 2010-11 for expeditious hearing as soon as the Tribunal passes an order on the above - The petition is disposed off.

Summary

Issues:
1) Challenge to the order granting conditional stay against tax recovery.
2) Claim of being an agent of the State Government for tax exemption.
3) Denial of exemption under Section 2(15) of the Income Tax Act.
4) Collection of large sums for development and interest income.
5) Decision based on factual examination and pending appeal before CIT(Appeals).

Analysis:
1) The writ petition challenges the order granting conditional stay against tax recovery for the assessment year 2010-11. The petitioner, a statutory authority under the Mumbai Metropolitan Regional Development Authority Act, sought complete stay based on a Tribunal order favoring a similar entity. The petitioner also claimed denial of benefits under Section 11 of the Income Tax Act and adjustment of a significant sum against refunds from previous assessment years.

2) The petitioner argued being an agent of the State Government, citing a Tribunal order in a related case. The department opposed, asserting the petitioner's distinct legal entity status and ineligibility for exemption under Section 2(15) of the Act. The department highlighted the petitioner's revenue collection and interest income, distinguishing the case from the Tribunal's decision on a similar entity.

3) The Court noted the demand raised post-assessment order and the absence of the agent status issue in the assessment. While acknowledging the relevance of the Tribunal's decision, a detailed examination was deemed necessary. Conditional stay was granted, considering the amount already recovered by the department and pending appeal before the CIT(Appeals) for a comprehensive review of the petitioner's activities.

4) The petitioner clarified that interest income received is intended for the State Government, emphasizing the eventual transfer of properties and funds to the State post-project completion. The Court balanced the interests of justice by staying the balance tax demand, taking into account the partial payment made and the upcoming appeal hearing.

5) The Court directed expeditious hearing of the appeal before the CIT(Appeals) following a Tribunal decision awaited by the petitioner, ensuring timely resolution of the tax exemption and registration issues. The petition was disposed of with no order as to costs, maintaining a fair and just approach to the matter.