Facts of the Case

The petitioner, the Principal Commissioner of Income Tax-8, challenged the orders of the Income Tax Appellate Tribunal (ITAT), wherein the Tribunal had extended interim stay orders granted in favor of the respondent, M/s Samsung India Electronics Pvt. Ltd., beyond a period of 365 days.

The Revenue contended that such extension was impermissible under Section 254(2A) of the Income Tax Act, which prescribes a maximum period of 365 days for operation of stay orders.

Issues Involved

  1. Whether the ITAT has the authority to extend interim stay orders beyond 365 days under Section 254(2A) of the Income Tax Act, 1961?
  2. Whether such extension is valid when the delay in disposal of appeal is not attributable to the assessee?

Petitioner’s Arguments (Revenue)

  • The Revenue argued that Section 254(2A) clearly restricts the operation of stay orders to a maximum period of 365 days.
  • It was contended that the ITAT exceeded its jurisdiction by extending the stay beyond this statutory limit.

Respondent’s Arguments (Assessee)

  • The respondent relied on judicial precedents to argue that the ITAT has the power to extend stay beyond 365 days where the delay in disposal of appeal is not attributable to the assessee.
  • It was submitted that denying such extension would cause undue hardship and injustice.

Court’s Findings / Order

  • The Delhi High Court observed that the issue is already settled by its earlier judgment in Pepsico Foods Pvt. Ltd. vs ACIT (376 ITR 87).
  • Relying on the said precedent, the Court held that extension of stay beyond 365 days is permissible in appropriate cases.
  • Consequently, the writ petitions filed by the Revenue were dismissed, along with pending applications.

Important Clarification

  • The Court reaffirmed that Section 254(2A) does not bar extension of stay beyond 365 days if the delay is not attributable to the assessee.
  • Judicial precedents continue to govern such situations, ensuring fairness in tax litigation.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2019:DHC:7906-DB/SRB26032019CW29152019_161100.pdf

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