Facts of the Case

  1. The Income Tax Appellate Tribunal had earlier adjudicated cross appeals filed by both the Revenue and the assessee by order dated 22 November 2016.
  2. Both parties challenged the Tribunal’s order before the Delhi High Court through separate appeals.
  3. By order dated 19 July 2017, the High Court remanded the matter back to the Tribunal for fresh adjudication.
  4. Upon remand, the assessee filed an application seeking stay of demand before the Tribunal.
  5. The Tribunal passed the impugned order dated 6 March 2018 granting stay in favour of the assessee.
  6. Aggrieved by the grant of stay, the Revenue preferred the present appeal before the Delhi High Court.

Issues Involved

  1. Whether the Revenue’s appeal against the ITAT’s first stay order was maintainable?
  2. Whether the Tribunal was justified in granting stay after remand of the appeal?
  3. Whether the impugned stay order amounted to continuation of stay beyond 360 days under Section 254(2A) of the Income Tax Act?

Petitioner’s Arguments (Revenue’s Arguments)

  • The Revenue contended that the Tribunal erred in granting stay to the assessee.
  • It was argued that the stay order was contrary to the statutory limitations governing stay of tax demand.
  • The Revenue sought interference by the High Court against the Tribunal’s exercise of discretion.

 

Respondent’s Arguments (Assessee’s Arguments)

  • The assessee submitted that the matter had been remanded by the High Court for fresh adjudication and therefore the Tribunal was competent to grant interim protection.
  • It was contended that the impugned order was an independent first stay order and not an extension of any earlier stay.
  • The assessee relied upon settled law governing Tribunal’s powers to grant stay pending disposal of appeal.

Court Order / Findings

The Delhi High Court dismissed the Revenue’s appeal and refused to entertain the same. The Court relied upon its earlier judgment in Pepsi Foods Pvt. Ltd. vs Assistant Commissioner of Income Tax & Anr. (2015) 376 ITR 87 (Delhi) and held that the present appeal was not maintainable.

The Court further clarified that:

  • The impugned stay order was a fresh order passed after remand.
  • It could not be treated as continuation of stay beyond 360 days.
  • Therefore, the Revenue’s challenge was misconceived.

Accordingly, the appeal was dismissed.

Important Clarification

The judgment clarifies that where appellate proceedings are remanded and the Tribunal grants stay afresh, such order constitutes a fresh stay order and cannot be equated with an extension or continuation of earlier stay for the purpose of statutory limitation under Section 254(2A). This distinction is important in tax litigation concerning stay of demand.

Sections Involved

  • Section 254(2A), Income Tax Act, 1961 – Power of Appellate Tribunal to grant stay
  • Section 260A, Income Tax Act, 1961 – Appeal to High Court


Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:8331-DB/SKN20082018ITA8972018_163243.pdf

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