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2017 (5) TMI 489 - HC - Income TaxPercentage of pre-deposit for stay of the demand - Held that - AO should have, in the impugned order, discussed para 4(B)(b) of the aforementioned OM which provides that wherein AO is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted that is in a case where addition on the same issue has been deleted by appellate authorities in earlier years, the AO should refer the matter to the administrative Pr.CIT/CIT, who shall then decide the quantum/proportion of the demand to be paid. Instead of remanding the matter to the AO for the above exercise, the Court is of the view that the interests of justice will be met by requiring the Petitioner to deposit around 10% of the demand of ₹ 17,57,53,977 as a lump sum amount
Issues:
1. Justification of the Assessing Officer in declining the Petitioner's prayer for fixing the pre-deposit percentage for stay of demand. 2. Adoption of revenue recognition method for splitting tuition fees. 3. Interpretation of Office Memorandum (OM) regarding the percentage of demand to be paid. 4. Modification of AO's orders based on the Court's decision. Analysis: 1. The primary issue in this case revolves around the Assessing Officer's decision to decline the Petitioner's request for fixing the pre-deposit percentage for the stay of demand. The Court noted that the AO should have considered the specific provision in the Office Memorandum (OM) which allows for a lower pre-deposit percentage if the nature of the addition justifies it, especially if the same issue has been resolved favorably for the taxpayer in earlier years by appellate authorities. 2. Another key aspect of the case concerns the Petitioner's adoption of a revenue recognition method for splitting tuition fees. The Petitioner argued that the AO erred in not accepting their method of recognizing revenue as 60% in the first year and 40% in the second year. The Petitioner cited previous acceptance of this method by the Income Tax Appellate Tribunal (ITAT) for earlier assessment years. 3. The Court's interpretation of the OM led to a decision where, instead of remanding the matter back to the AO, the Court directed the Petitioner to deposit around 10% of the demand amount within a specified timeframe. By doing so, the Court stayed the demand during the pendency of the appeal against the assessment order for the relevant year, modifying the AO's previous orders accordingly. 4. The final issue addressed in the judgment pertains to the modification of the AO's orders based on the Court's decision regarding the percentage of the demand to be paid as a pre-deposit for the stay of demand. The Court's directive for the Petitioner to deposit a specific amount within a set timeframe ensured that the demand would remain stayed during the appeal process, subject to compliance with the Court's conditions. In conclusion, the Court's detailed analysis and interpretation of the relevant provisions, along with the specific directives provided to the Petitioner regarding the pre-deposit amount, ensured a fair resolution of the issues raised in the petition, ultimately leading to the disposal of the case in accordance with the Court's decision.
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