Tribunal Grants Stay on Tax Demands to Haryana Cooperative Society

The Tribunal granted stay of demands for three assessment years to a cooperative society in Haryana, totaling Rs. 3,20,19,995 for 1992-93, Rs. 28,00,175 for 1998-99, and Rs. 1,32,57,752 for 1999-2000. The demands arose from the CIT(A) disallowing deductions under s. 80P(2)(e) for rental income from godowns, considering it a commercial activity. Despite Departmental objections, the Tribunal found the assessee's arguments valid, allowing the stay until appeal decisions without requiring security, emphasizing expedited hearings for timely resolution.

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Issues involved:
Stay of demands for three assessment years due to enhancement of income by CIT(A)

Analysis:
Issue 1: Enhancement of income leading to demands
The assessee, a cooperative society in Haryana, requested stay of demands totaling Rs. 3,20,19,995 for 1992-93, Rs. 28,00,175 for 1998-99, and Rs. 1,32,57,752 for 1999-2000, resulting from CIT(A) disallowing deduction under s. 80P(2)(e) for rental income from godowns. The CIT(A) considered letting out godowns as a commercial activity, withdrawing the deduction and creating demands.

Issue 2: Legality of CIT(A)'s action
The counsel argued that the CIT(A)'s action was incorrect as no show-cause notice was given before enhancement. Citing relevant case laws, including Supreme Court judgments, the counsel contended that income from letting out godowns qualifies for exemption under s. 80P(2)(e). The counsel emphasized that the assessee's claim was limited to income from letting out godowns, as supported by government orders and legal precedents.

Issue 3: Exhaustion of remedies and stay of demands
The Departmental Representative contended that the assessee should exhaust remedies before lower authorities before approaching the Tribunal. Referring to a Supreme Court judgment, the Representative argued against granting stay of demands. However, subsequent to filing stay applications, the Addl. CIT rejected the stay request, leading to pressure on the assessee to make payments.

Conclusion:
After hearing both parties, the Tribunal found the assessee's case arguable and granted stay of demands until the appeals' decision, considering it fair due to the circumstances. Not requiring security from the Government organization, the Tribunal directed expedited appeal hearings to ensure timely resolution. Consequently, all three stay applications were allowed.

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