ITAT Hyderabad Grants Stay on Tax Recovery, Requires Monthly Payments

The Appellate Tribunal ITAT Hyderabad granted the Stay Application of the assessee, allowing a halt on the recovery of the outstanding tax amount of Rs.2,64,54,812. The Tribunal acknowledged the validity of the assessee's arguments regarding computation of tax liability under section 92C and deduction u/s. 10A, requiring monthly payments of Rs.20 lakhs to maintain the stay, with failure to make any monthly instalment resulting in automatic vacation of the stay. The Tribunal emphasized specific deadlines for payment of instalments until the appeal's disposal.

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Issues: Stay of recovery of outstanding tax amount, computation of tax liability under section 92C, deduction u/s. 10A, instalment payment for outstanding amount.

The judgment by the Appellate Tribunal ITAT Hyderabad, delivered by Shri N.R.S. Ganesan and Shri Akber Basha, considered a Stay Application filed by the assessee seeking to halt the recovery of an outstanding amount of Rs.2,64,54,812. The assessee argued that under section 92C of the Income-tax Act, 1961, an arithmetic adjustment would significantly reduce the tax liability. The representative highlighted the necessity of +/- 5% adjustments and contended that certain expenses deducted from export turnover should also be deducted from total turnover for computing deduction u/s. 10A. The Tribunal acknowledged the merit in the assessee's contentions, granting a stay on the recovery subject to the condition that the assessee pays Rs.20 lakhs monthly towards the outstanding amount, with the first instalment due by a specified date and subsequent instalments by the 7th day of each month. Failure to deposit any monthly instalment would automatically vacate the stay without further reference to the Tribunal.

The learned DR suggested the assessee could deposit the outstanding amount in instalments, which was considered by the Tribunal. The Tribunal found the assessee's argument regarding the necessity of arithmetic adjustments under statutory provisions and the requirement to deduct certain expenses from both export and total turnover for calculating deduction u/s. 10A to be valid. Consequently, the Tribunal granted the stay on recovery of the outstanding amount of Rs.2,64,54,812, with the assessee required to make monthly payments of Rs.20 lakhs, failing which the stay would be automatically vacated. The Tribunal emphasized the need for the first instalment to be paid by a specified date and subsequent instalments by the 7th day of each month until the appeal's disposal.

In conclusion, the Appellate Tribunal ITAT Hyderabad, through the judgment delivered by Shri N.R.S. Ganesan and Shri Akber Basha, allowed the Stay Application of the assessee, providing detailed instructions for the payment of the outstanding amount in monthly instalments to maintain the stay on recovery.

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