Facts of the Case

The assessee, Oliver Wyman Ltd., is a foreign consulting and advisory services company engaged in providing professional consulting services globally, including services rendered in India.

During the relevant assessment year, the Income Tax Department initiated assessment proceedings under the Income-tax Act, 1961 and raised certain tax demands relating to the income earned by the assessee from India.

The Assessing Officer (AO) made additions to the income of the assessee, leading to a substantial tax demand. The assessee challenged the assessment order and filed an appeal before the Income Tax Appellate Tribunal (ITAT).

Pending disposal of the appeal, the assessee filed a Stay Application before the ITAT seeking a stay on the recovery of the outstanding tax demand.

Issues Involved

  1. Whether the assessee was entitled to stay of recovery of the tax demand pending disposal of the appeal before the ITAT.
  2. Whether the demand raised by the Assessing Officer required immediate recovery or deserved to be stayed considering the facts and circumstances of the case.
  3. Whether the balance of convenience justified granting interim protection to the assessee. 

Petitioner’s Arguments

The assessee submitted that:

  • The additions made by the Assessing Officer were legally unsustainable and were challenged before the Tribunal.
  • The assessee had a strong prima facie case on merits in the appeal filed before the ITAT.
  • Immediate recovery of the tax demand would cause irreparable financial hardship to the assessee.
  • The assessee was willing to comply with any reasonable conditions imposed by the Tribunal for granting stay. 

Respondent’s Arguments

The Revenue authorities argued that:

  • The tax demand was raised in accordance with the assessment order passed under the Income-tax Act, 1961.
  • The assessee was liable to pay the outstanding demand unless the same was stayed by a competent authority.
  • Therefore, recovery proceedings should not be completely stayed. 

Court Order / Findings

The Income Tax Appellate Tribunal (ITAT) considered the submissions made by both parties and examined the facts placed on record.

The Tribunal observed that:

  • While deciding a stay application, the Tribunal must examine the prima facie case, balance of convenience, and potential hardship to the assessee.
  • If the assessee demonstrates a reasonable case and financial hardship, the Tribunal may grant conditional stay on recovery of the demand.

Considering the facts of the case, the Tribunal granted appropriate relief in the form of stay of demand subject to conditions, and directed that the appeal be fixed for hearing on a priority basis.

Important Clarification

The Tribunal clarified that:

  • Grant of stay does not decide the merits of the appeal.
  • The stay order is only an interim protection granted to prevent hardship until the final disposal of the appeal.
  • The assessee must cooperate in the early disposal of the appeal before the Tribunal.

Link to download the order – https://itat.gov.in/public/files/upload/1703829368-3381%20&%20SA%20447%20Oliver%20Wyman%20Ltd..pdf

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