Recovery stay pending appeal was conditional on phased payment of disputed tax demand under the statutory stay provision.

Recovery of an outstanding income-tax demand may be stayed pending appeal only on compliance with the payment condition under the proviso to section 254(2A). As no amount had been deposited, the stay was made conditional on payment of 20% of the disputed demand in three instalments. Recovery was stayed for 180 days or until disposal of the appeal, whichever occurred earlier, subject to fulfilment of that condition.

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Issues: Whether recovery of the outstanding income-tax demand should be stayed pending disposal of the appeal.

Analysis: The proviso to section 254(2A) required payment of 20% of the disputed demand for grant of stay. As no amount had been deposited, a stay was made conditional upon payment of 20% of the outstanding demand in three instalments.

Conclusion: Stay of recovery was granted in favour of the assessee for 180 days or until disposal of the appeal, whichever was earlier, conditional upon payment of 20% of the demand as directed.

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