2019 (5) TMI 680 - AT - Income Tax

Stay of demand - Assessee has readily agreed to pay the amounts to the tune of 25% of the tax demand for the A.Y. 2012-13. And also submitted that for the A.Y. 2013-14 the tax already paid would be more than 25% - TDS us 194H - discount extended to the prepaid distributors - demand under section 201(1) and 201(1A) - assessee has submitted that they have paid substantial amounts towards the tax comprehensively and argued that the Company should be treated as a single entity as far as the financials are concerned - HELD THAT - As gone through and taken cue from the CBDT O.M. N0.404/72/93-ITCC dated 29.2.2016 wherein revised guidelines were issued in partial modification of instruction No 1914 regarding the stay of demand while the appeal is pending before the CIT(A). We have also gone through the nature of the additions and the amount of the taxes recovered by the Department and paid by the Assessee further assessment years before us. Accordingly where the Ld.AR has stated that in the eventuality of grant of stay and early hearing he is ready to argue the appeal on any date in the month of May itself. However it was his submission that there may be departmental appeal pending as the CIT(A) in these years as deleted the addition proposed by the A.O within the scope of Section 194J. Thus the factual position may be ascertained. Ld. CIT DR submitted that the A.O. has filed cross appeals today itself and it was for this specific reason that he was requesting that the appeal may be listed for hearing in July 2019 alongwith other appeals pending adjudication on a near similar issue right from 2005-06 A.Y. onwards Order - The assessee shall pay an amount of ₹ 60,00,000/- within seven working days from the date of this order. Subject to the payment being made within the stipulated date Early hearing is granted and the appeals are directed to be listed for hearing on 18/07/2019. The parties are directed to ensure there availability if need be on the next date i.e; 19/07/2019.

Summary

Issues:
Stay applications under Rule 35A of ITAT Rules 1963 for outstanding demand in respective years.

Analysis:
The assessee filed stay applications under Rule 35A of the ITAT Rules 1963 seeking a stay of the outstanding demand in the respective years. The primary issue revolved around the nature of additions made under section 201(1) and 201(1A) of the Income Tax Act, 1961, specifically concerning the discount extended to prepaid distributors and whether it falls within the scope of Section 194H of the Income Tax Act, 1961. The assessee relied on various judgments to support their arguments, including cases such as Bharti Airtel Ltd. Vs. DCIT, Tata Teleservices Limited Vs ACIT, and Vodafone Spacetel Limited Vs ACIT, among others. The assessee contended that the balance of convenience favored them, emphasizing that they had paid substantial amounts towards tax and should be treated as a single entity concerning financials.

Regarding the financial position of the Company and the hardship faced in tax payments, the Ld. AR could not provide a cash flow statement indicating financial hardship. The Ld. Departmental Representative argued for the Revenue, highlighting the sequence of events for each year and the existence of a prima facie case in favor of Revenue based on judicial pronouncements. It was noted that for the Assessment Years 2012-13 and 2013-14, the assessee had not paid even 25% of the tax demand. In response, the Counsel of the Assessee agreed to pay 25% of the tax demand for the A.Y. 2012-13 and stated that for A.Y. 2013-14, the tax already paid would exceed 25%.

After hearing both parties and considering the material presented, the Tribunal referred to CBDT guidelines on stay of demand during pending appeals before CIT(A). The Tribunal also assessed the nature of additions and the tax amounts recovered by the Department and paid by the Assessee in the years under review. Consequently, the Tribunal directed the assessee to make a payment of ?60,00,000 within seven working days. Subject to this payment, early hearing was granted, and the appeals were scheduled for a specific date. Stay was granted for a period of six months or until the passing of the order, whichever is earlier. The parties were instructed to exchange necessary documents in advance and avoid unnecessary adjournments during the hearing. The application of the assessee was thus disposed of in accordance with the directives provided by the Tribunal.