2007 (3) TMI 312 - AT - Income Tax

Tribunal Grants Conditional Stay on Recovery of Tax Demand

The Tribunal granted a conditional stay of recovery of the outstanding demand for assessment year 2003-04, amounting to Rs. 5,09,35,197. The demand arose ... Stay Of Recovery Issues:1. Stay petition for recovery of outstanding demand for assessment year 2003-04.2. Calculation of tax demand after relief by CIT(A) order.3. Adjustments in international transactions leading to demand.4. Arguments for and against granting stay of recovery.5. Decision on granting conditional stay of recovery.Analysis:1. The petitioner sought a stay of recovery of outstanding demand for assessment year 2003-04. The tax demand after considering relief by the CIT(A) order was Rs. 5,09,35,197.2. The demand arose due to adjustments made in international transactions, resulting in an addition to the declared income by Rs. 56.70 crores.3. The petitioner's counsel argued for stay based on a prima facie case, highlighting that correct comparables and margin adjustments under s. 92C of the IT Act were not applied, which could significantly reduce the demand.4. The Revenue's representative opposed granting absolute stay, emphasizing the confirmed demand and public interest over the assessee's interest, as no financial hardship was pleaded.5. After considering the facts and arguments, the Tribunal found that the petitioner had a prima facie case for stay of outstanding demand. A conditional stay was granted, requiring the assessee to pay Rs. 100 lakhs in two equal monthly installments, furnish a necessary guarantee, and await the decision of a Special Bench before fixing a hearing date.Overall, the Tribunal granted a conditional stay of recovery of the outstanding demand, taking into account the arguments presented by both parties and the complexities of the case involving international transactions and tax adjustments.