2018 (11) TMI 1435 - HC - Income Tax

Stay petitions - Deduction u/s 37(1) with regard to the services actually rendered by motorcar dealers to the assessee company - Held that - It is not disputed by the assessee that they had complied with the condition but only upto May 2018. It is not clear as to why the assessee abruptly failed to comply with the conditional order passed by the Tribunal. The explanation offered by the assessee is that the Tribunal commenced hearing of the appeals. This cannot be an answer since as long as the interim order continues to remain intact, the assessee is bound by it and has to comply with the order in its letter and spirit till the disposal of the main appeal by the Tribunal. Therefore, we do not appreciate the conduct of the assessee in abruptly failing to comply with the conditional stay order dated 12.01.2018 and filing fresh set of stay petitions, which are not maintainable and therefore that is one more reason to reject the stay petitions apart from the reasons assigned by the Tribunal. It is well open to the assessee to seek for other prayers before the Tribunal, if so advised. It is submitted by the learned Senior Counsel for the assessee that the application filed for modification of the order dated 12.01.2018 is pending. We refrain from making any observation at this juncture and it is well open to the assessee to pursue their claims before the Tribunal. W.P. dismissed.

Summary

Issues:
Challenge to common order passed by Income Tax Appellate Tribunal 'D' Bench, Chennai in stay petitions filed by assessee in pending appeals.

Analysis:
The writ petitions were filed by M/s.Royal Sundaram General Insurance Company Limited challenging the common order passed by the Income Tax Appellate Tribunal 'D' Bench, Chennai in stay petitions filed by the assessee in pending appeals. The Tribunal dismissed the stay petitions, stating that there were no convincing reasons to establish a prima facie case in favor of the assessee regarding the issues raised in the appeal.

In a similar case involving M/s.United India Insurance Company Limited, the Tribunal had passed a final order on two issues, one related to re-insurance and the other to deduction under Section 37(1) of the Income Tax Act, 1961. The petitioner's counsel argued that since the Tribunal had ruled in favor of M/s.United India Insurance Company Limited on the deduction issue, the Tribunal should have considered the petitioner's case for interim orders on that basis.

The respondents contended that the second set of stay petitions filed by the assessee was not maintainable as the Tribunal had already granted a conditional order in January 2018, which the assessee had stopped complying with and subsequently filed fresh stay petitions. The petitioner's counsel explained that the fresh stay petitions were filed due to fear of recovery proceedings after the appeals stood adjourned sine die.

After hearing both parties, the Court found no error in the Tribunal's decision to reject the stay petitions. The Court noted that the assessee had complied with the conditional order only until May 2018, after which they abruptly stopped complying. The Court emphasized that as long as the interim order remained valid, the assessee was bound to comply with it until the main appeal was disposed of. The Court criticized the assessee's conduct in failing to adhere to the conditional stay order and filing new stay petitions, which were deemed not maintainable.

The Court informed that the Tribunal had adjourned the matter and reminded the assessee of their obligation to comply with the interim order. The Court allowed the assessee to seek other reliefs before the Tribunal and mentioned that an application for modification of the order was pending. The Court dismissed the writ petitions without costs and closed the connected miscellaneous petitions.