2015 (12) TMI 1507 - HC - Income Tax

Tribunal's Power Upheld to Extend Stay in Income Tax Appeals: High Court Decision

Commissioner of Income Tax Versus Tata Teleservices (Maharashtra) Ltd.

The High Court upheld the Tribunal's authority to extend the stay of demand in income tax appeals beyond the 365-day limit set by Section 254(2A) of the ... Tribunal power under the Act to extend the stay of demand in the appeals pending before it beyond the period of 365 days - Held that:- This Court has consistently taken a view that the Tribunal has power to extend the stay even after the substituted third proviso to subsection 2A to Section 254 of the Act was introduced. This is evident from all the orders referred to in para 3 hereinabove. The Revenue has not filed appeal against the above orders of this Court in the context of the substituted third proviso to Section 254(2A) of the Act. Nothing has been shown to us as to why when the Revenue has accepted the above orders, a different stand is taken in this appeal. Apex Court in CCE vs. Kumar Cotton Mills (P) Ltd., (2005 (1) TMI 114 - SUPREME COURT OF INDIA) held that notwithstanding the presubstituted third proviso to Section 254(2A) of the Act the Tribunal continues to have powers to grant interim relief. In the above view, therefore, the ratio of the decision in “Narang Overseas (P) Ltd.” (2007 (7) TMI 5 - HIGH COURT, BOMBAY ) would apply even in case of substituted third proviso to Section 254(2A) of the Act. The only substantial difference in the presubstituted third proviso and substituted third proviso to Section 254(2A) of the Act is the addition of the words “even if delay in disposing of the appeal is not attributable to the assessee” These additional words added in the substituted third proviso to Section 254(2A) of the Act has been struck down by the Delhi High Court in Pepsi Foods (P) Ltd. Vs. Asstt. Commissioner of Income Tax, (2015 (5) TMI 655 - DELHI HIGH COURT). - Decided against revenue Issues:1. Extension of stay of demand in income tax appeals beyond 365 days under Section 254(2A) of the Income Tax Act, 1961.Analysis:Issue 1: Extension of Stay of DemandThe High Court dealt with the challenge to the Tribunal's order extending the stay of demand in income tax appeals beyond the 365-day limit set by the third proviso to Section 254(2A) of the Income Tax Act, 1961. The Court noted that the Tribunal had extended the stay in line with its earlier order and cited precedents like Narang Overseas (P) Ltd. Vs. ITAT and Commissioner of Income Tax Vs. Ronuk Industries Ltd., which had been consistently followed. The Court highlighted that similar decisions had been upheld in various cases like Director of Income Tax vs. M/s. Ingram Micro(India) Exports Pte.Ltd. and others, indicating a settled position against the Revenue's grievance. The Revenue argued for reconsideration based on the introduction of the substituted third proviso to Section 254(2A) post the cited decisions. However, the Court maintained that its previous rulings, even post the amendment, allowed the Tribunal to extend the stay. It emphasized that the Tribunal's power to grant interim relief was essential to ensure effective adjudication, aligning with Supreme Court precedents and the wider powers vested in the Tribunal akin to a judicial body.The Court further clarified that the rationale behind granting stay or interim relief was to ensure the efficacy of the final relief, preventing a mere 'barren success.' It referenced the Supreme Court's stance on the Tribunal's powers being similar to those of an appellate Court and the necessity of coextensive powers for interim and final relief. The Court reaffirmed that despite the amendment introducing the substituted third proviso to Section 254(2A), the Tribunal retained the authority to grant interim relief. Additionally, the Court highlighted a Delhi High Court decision striking down certain additional words in the substituted third proviso, emphasizing the ongoing debate on the interpretation and application of the amended provision. Ultimately, the Court dismissed the petitions, upholding the Tribunal's power to extend the stay of demand in income tax appeals even beyond the 365-day limit, in line with established legal principles and precedents.This detailed analysis of the judgment showcases the Court's thorough examination of the issues involved, the legal principles at play, and the precedents guiding the interpretation and application of the relevant provisions of the Income Tax Act, 1961.