TaxTMI 
TaxTMI 
2014 (4) TMI 1194
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....re the ITAT. 3. The petitioner filed its return of income on 30th September, 2009, declaring a total taxable income of Rs. 5,09,100/-. The petitioner filed a revised return on 31st March, 2011, deduction a total income of Rs. 8,44,31,495/- under the normal provisions of the Income Tax Act, 1961, while offering interest income from fixed deposit to tax under section 56 of the Act. The petitioner claimed a deduction under section 80-IA of Rs,1,88,77,47,249/-. The taxable book profits under section 115JB amounted to Rs. 1,37,76,21,509/- and the tax liability in respect thereof amounted to Rs. 15,60,84,517/-. The tax deducted at source was Rs. 39,49,14,458/-. From the payments made to the petitioner by various parties, advance tax of Rs. 17,75,00,000/- was deposited by the petitioner. A refund of Rs. 4,16,32,994/- was claimed in the revised return. 4. The petitioner's return was selected for scrutiny assessment. A reference was made to the Deputy Director of Income Tax - Transfer Pricing Officer (hereinafter referred to as "the TPO") who issued an order dated 11th March, 2013. Respondent No.3 - Deputy Director of Income Tax issued a draft assessment order under section144 dated 2....
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....ars." 6. The petitioner's case is this. The petitioner started business in the assessment year 1996-97. In other words, according to the petitioner, it's business started only after 1st April, 1995. The petitioner did not claim any deduction before the amendment to section 80-IA. Section 80-IA was amended in the year 2000. The petitioner claimed a deduction under section 80-IA for the first time only for the assessment year 2005-06. For the assessment year 2005-2006, the petitioner's claim for deduction under section 80-IA was accepted. The petitioner was, however, denied exemption from the assessment year 2006-07. The denial of the petitioner's claim for deduction under section 80-IA from assessment year 2006-07 was essentially on two grounds. Firstly, the Revenue contended that the petitioner had commenced business prior to 1st April, 1995 and, therefore, the petitioner was not entitled to the benefit of section 80-IA. The alternative stand of the Revenue was that even assuming section 80-IA is applicable, it would operate as it stood on 1st April, 1995, and not as amended in the year 2000. 7. As regards the first contention of the Revenue viz. that the petitio....
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....e. Also, in the statutory audit report prepared by PWC and filed under section 80-IA(7) for the year under consideration, the date of commencement of assessee's operations/activity was given as 29th November 1994. Similarly, in a letter dated 26 October 2009 filed before the Assessing Officer, it was mentioned that cellular and paging services were rendered in FY 1994-95. In the said letter which is reproduced in Para 12.40 of the draft order, the assessee has given specific and complete year wise details of the activities done by it. In the said letter, it is clearly mentioned that in the FY 1994-95, cellular services were started in local area served by Bombay, New Bombay and Kalyan telephone districts and paging services in local area served by Ahmedabad, Bangalore, Pune Vadodara, Chandigarh, Hyderabad and Ludhiana telephone districts. Further, perusal of the draft order reveals that 17 paging networks of the assessee company were commissioned in the year 1994. In fact, the assesee sold pagers in the financial year 1994-95, which itself establishes the fact that at least paging network was in place and the assessee started providing paging services since no one would buy pag....
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....f the petitioner's case. After examining the facts, the earlier assessment order noted that the petitioner had started providing paging services also only in May, 1995 and cellular services in November, 1995 and accordingly, the question of the petitioner commencing the provision of telecommunication services during the period prior to 1st April, 1995 does not arise. (c) Mr. Ahuja also invited our attention to the fact that an article published in the Indian Express news quoted the Associate Vice President of the petitioner having stated that the paging services were launched in the year 1994. The petitioner's explanation to the same is that he was not its authorized spokesperson and that the term "launch of services" does not imply the commencement of such services. There are also disputed facts which will require consideration by the ITAT. 10. The fact, therefore, remains that this is not an open and shut case. It is indeed a strong prima facie case, but not an open and shut case. There is much to be said in favour of and against both the parties. 11. This brings us to the Revenue's alternate contention viz. that even assuming that section 80-IA is applicable, it ....
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....95 in the assessment year in question itself. However, before the Tribunal, the issue would be debatable, including on the basis adopted by the directions of the DRP, New Delhi. As we mentioned earlier, on this issue the petitioner has made out a strong case, but not an open and shut case even as far as the Tribunal is concerned. 15. By the impugned order, the Tribunal has taken into consideration the financial hardship pleaded by the petitioner. In fact, the operative part of the order is prefaced with the observation that the Tribunal has taken into account the liquidity position as well as the continuous loss incurred by the petitioner. 16. The question, therefore, is whether in these facts and circumstances, the impugned order can be said to be unreasonable warranting an interference in exercise of our extraordinary jurisdiction under Article 226. As against a demand of what would now be about Rs. 400 crores, the petitioner has been directed to deposit a sum of only Rs. 80 crores i.e. about 20%. For the balance amount, the Revenue has merely directed the petitioner to furnish a corporate guarantee. 17. Mr. Pardiwala contended that the issue has been recurring from the year 2....
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....he fact that the order of the Special Bench has not been stayed and is still operative and has in fact been given effect to by the Tribunal itself in its order dated July 29, 2005. Consequently, we issue a writ of mandamus and stay the requirement of the petitioner having to deposit Rs. 4.86 crores till its appeal for the assessment year 2003-04 is heard by the Commissioner of Income-tax (Appeals). This would necessarily imply that the Commissioner of Income-tax (Appeals) should hear the appeal of the petitioner for the assessment year 2003-04 without insisting on any deposit. The writ petition is allowed. All pending interim applications are disposed of. No costs." Mr. Pardiwala attempted to apply the ratio of this judgment to the present case in view of the fact that for the period 2005-06 to 2009-10, the petitioner had paid 43.80% of the amount of tax demanded and had furnished bank guarantees and fixed deposits for another 22.20% of the entire demand. Accordingly, 66% of the total amount demanded was paid and/or secured. Mr. Pardiwala contended that if the decision of the Tribunal at Gujarat is followed and indeed it ought to be, the petitioner would, in fact, be entitled to....