High Court grants relief restraining tax deduction during appeal

The High Court allowed the writ petition, granting relief to the petitioner by restraining the respondent from enforcing tax deduction for the assessment year 2007-08 during the appeal's pendency. The Court emphasized its authority under article 226 of the Constitution to ensure justice, despite the statutory provision limiting the extension of interim stay. Additionally, the Tribunal was directed to expedite the appeal's disposal within three months.

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Issues:
1. Extension of stay by the Tribunal citing section 254(2A) of the Income-tax Act, 1961.

Analysis:
The High Court addressed the issue of the Tribunal's refusal to extend the stay on the petitioner's appeal, citing section 254(2A) of the Income-tax Act, 1961. The petitioner had been the beneficiary of an interim order staying the demand in 2011, which the Tribunal continued to extend. However, the Tribunal rejected further extension on March 18, 2014, based on the provision that the interim relief granted should not exceed one year.

The Court considered the submissions and acknowledged the Tribunal's satisfaction with the overall interest of justice when granting the interim relief initially. While the statutory provision limiting the extension of interim stay was recognized, the Court emphasized its power under article 226 of the Constitution to pass appropriate orders in the interest of justice. Consequently, the respondent was restrained from enforcing the tax deduction for the assessment year 2007-08 during the pendency of the petitioner's appeal. The Court also directed the Tribunal to expedite the disposal of the appeal within three months.

In conclusion, the High Court allowed the writ petition, granting relief to the petitioner in the specified terms.

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