Interim stay granted with 20% remittance requirement in appeal over disallowed demand. Cooperation urged for timely tribunal hearing.

The court granted an interim stay of recovery, conditioned upon the petitioner remitting 20% of the disputed demand arising from the disallowance under Section 80JJAA. Both parties were directed to cooperate for the expeditious disposal of the appeal before the Tribunal, listed for final hearing on 20.03.2019. The matter was adjourned to 02.04.2019 for filing a counter, emphasizing judicial discipline and adherence to precedent.

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Issues Involved:
1. Transfer Pricing Adjustment
2. Disallowance under Section 80JJAA of the Income Tax Act, 1961
3. Interim Injunction for Recovery of Demand
4. Judicial Discipline and Precedent

Detailed Analysis:

1. Transfer Pricing Adjustment:
The primary issue involves a transfer pricing adjustment where the Income Tax Appellate Tribunal (ITAT) had previously remanded similar adjustments for the assessment years 2009-10, 2012-13, and 2013-14 back to the Assessing Officer for re-evaluation. The Tribunal noted that the Assessing Officer had disallowed the commission paid to Associated Enterprises (AEs) due to a lack of evidence of services availed. However, the Tribunal found strength in the arguments of the assessee that the commission was paid for business purposes and was based on turnover. The Tribunal had directed the Assessing Officer to re-examine the issue de novo, providing the assessee an opportunity to substantiate its claim with adequate evidence.

2. Disallowance under Section 80JJAA:
The second issue pertains to the disallowance under Section 80JJAA of the Income Tax Act, 1961. The petitioner had sought a stay on the recovery of the disputed demand arising from this disallowance. The Assessing Officer had rejected the stay petition on the grounds that the disallowance was confirmed by the Dispute Resolution Panel (DRP), and the petitioner did not fulfill the conditions laid out in the CBDT circular for granting a stay of demand.

3. Interim Injunction for Recovery of Demand:
The petitioner sought an interim injunction to restrain the respondent from proceeding with the recovery of the demand pending the disposal of the writ petition. The court noted that the petitioner had filed an application for a stay of recovery, specifically bringing to the Assessing Officer's notice that the transfer pricing issue had been dealt with by the Tribunal for earlier years and remanded for re-examination. Despite this, the Assessing Officer rejected the stay petition without addressing the specific submission regarding the Tribunal's order.

4. Judicial Discipline and Precedent:
The court emphasized the importance of judicial discipline and adherence to precedent. Citing the Supreme Court's rulings in Union of India v. Kamlakshi Finance Corporation Ltd. and Commissioner of Income Tax, Bhopal v. Ralson Industries Ltd., the court highlighted that orders of higher appellate authorities should be followed unreservedly by subordinate authorities. The court found that the Assessing Officer's rejection of the stay petition, without considering the Tribunal's earlier orders, was contrary to the principles of judicial discipline.

Conclusion:
The court concluded that a prima facie case existed for granting interim orders. It directed an interim stay of recovery, conditioned upon the petitioner remitting 20% of the disputed demand arising from the disallowance under Section 80JJAA. The court also directed both parties to cooperate in the expeditious disposal of the appeal before the Tribunal, which was listed for final hearing on 20.03.2019. The matter was adjourned to 02.04.2019 for filing a counter.

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