2019 (8) TMI 300 - HC - Income Tax

Stay of demand - interim stay were granted in all the cases by insisting upon payment of 20% of the disputed amount, pending disposal of the appeals - as contended that the insistence for payment of 20% of the disputed amount of tax, for granting stay pending disposal of the appeal, was improper and becomes unreasonable - Deductions allowable u/s 80P admissibility - HELD THAT - Ultimate finding with respect to the question of allowability of deductions under Section 80P is yet to be rendered by the Appellate Authority. Therefore a uniform insistence for payment of 20% of the amount, pending disposal of the appeals, cannot be held as justified. Further, we take note of the fact that all the appellants are registered Co-operative societies functioning with remarkable capital assets. Therefore it cannot be said that there will be any difficulty for realising the liabilities, if the ultimate decision goes against the appellants. Hence we are inclined to direct the Appellate Authority for an early disposal of the appeals and till then to grant an absolute stay without insisting upon payment of any portion of any disputed amounts. Under the above mentioned circumstances, all the above appeals are hereby allowed. The impugned judgments of the Single Judge are hereby set aside. Ext-P4 interim order impugned in all these cases are modified to the extent of granting absolute stay with respect to realisation of the disputed amount of tax in the respective appeals, pending disposal of such appeals. The Commissioner of Income Tax (Appeals) is hereby directed to dispose of the appeals itself, at the earliest possible, after affording opportunity to the appellants.

Summary

Issues:
1. Challenge to orders of the Commissioner of Income Tax (Appeals) regarding deductions under Section 80P of the Income Tax Act.
2. Change in law post assessments completion.
3. Validity of insistence for payment of 20% of disputed tax amount for stay during appeal.
4. Discretionary jurisdiction of Appellate Authorities.
5. Interference with interim orders.
6. Need for re-look at assessments in light of Full Bench ruling.
7. Appellate Authority's role in determining deductions under Section 80P.

Analysis:

1. The writ appeals challenged the orders of the Commissioner of Income Tax (Appeals) regarding deductions under Section 80P of the Income Tax Act. The appellants, Co-operative Societies, contested the assessments of income tax claiming deductions under Section 80P. The Single Judge's identical judgments were collectively considered and disposed of through a common judgment.

2. Post finalization of assessments, a change in the law occurred regarding deductions under Section 80P. A Full Bench decision stated that the Assessing Officer must conduct an inquiry into the activities of the Assessee society to determine if benefits can be extended. This necessitated a re-look at the assessments completed against the appellants.

3. The contention was raised against the insistence for payment of 20% of the disputed tax amount for granting stay during the appeal. It was argued that this insistence was improper and unreasonable due to the reversal of the settled principle in a previous case.

4. The standing counsel for the Government of India contended that the Assessing Authority had specific findings regarding the nature of activities conducted by the Co-operative societies. It was argued that there were no legal grounds for the court to interfere with the interim orders passed by the Appellate Authority.

5. The court emphasized that interference with interim orders passed by statutory Appellate Authorities should be restrained under normal circumstances. The court highlighted the importance of considering the prima facie merit in appeals while granting interim stay.

6. Due to the Full Bench ruling necessitating a re-look at the factual aspects of the appellant Co-operative societies' activities, the court directed the Appellate Authority to re-examine the allowability of deductions under Section 80P.

7. The court allowed the appeals, set aside the Single Judge's judgments, and modified the interim orders to grant absolute stay on the realisation of the disputed tax amount pending disposal of the appeals. The Appellate Authority was directed to expedite the disposal of the appeals after affording an opportunity to the appellants.