TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 775
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....stment Managers Ltd., Mauritius (for short 'KCIML') for providing non-binding investment advisory services. It is stated that KCIML is the investment manager for various funds/investors based in Mauritius. It is licensed by the Financial Services Commission, Mauritius. The Petitioner provides non-binding investment advisory services to KCIML on a principal-to-principal basis. KCIML, based on the Petitioner's recommendations and subsequent independent evaluation, provides investment management services to the investors/funds. Apart from the above services, the Petitioner is also appointed as an investment manager and sponsor of Kedaara Capital Alternative Investment Fund I, a Category II Alternate Investment Fund (for short 'KCAIF'). It is categorically averred that KCIML is not the parent/partner of the Petitioner. Likewise, the Petitioner is also not the parent/shareholder of KCIML. 4. In A.Y.2023-24, the Petitioner earned the following business income: (i) advisory fee income from KCIML of Rs. 336,62,13,988/- and (ii) management fee income from KCAIF - Rs. 45,81,515/-. The Petitioner filed its return of income for A.Y.2023-24 on 31st October 2023 declaring....
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.... proving the identity, genuineness and creditworthiness of KCIML. 8. On 24th March 2025, the Assessing Officer however passed the assessment order under section 143(3) of the IT Act rejecting the Petitioner' contentions. In this order, the Assessing Officer treated the entire advisory fees received from KCIML of Rs. 338.95 Crores as 'unexplained credit' under Section 68 of the IT Act. While doing so, the Assessing Officer did not reduce this income from the head 'Profit and Gains from Business and Profession'. Further, a perusal of the assessment order at least prima facie reveals that the Assessing Officer has not considered/dealt with the Petitioner's primary objection that no addition under section 68 is called for as the Petitioner has already offered the said advisory fee from KCIML as business income and, thus, could not be taxed again. The Assessing Officer in respect of this contention of the Petitioner observed: "In various replies submitted by the assessee, the firm instead of proving the genuineness of the transactions, it is only arguing that it may result double taxation if the receipts from Mauritius company is taxed u/s 68 of the act. In the wake....
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....mpugned order rejecting an unconditional stay of the demand. 14. In these facts and circumstances of the case, the Petitioner submits that the impugned letter dated 30th July 2025 rejecting the Petitioner's stay application is unlawful, unsustainable, contrary to the provisions of law, and thus, liable to be quashed and set aside. It is further urged that the present facts warrant a full stay on the impugned demand for A.Y. 2023-24 considering that (i) the Petitioner has a strong prima facie case on merits, (ii) the assessment is high-pitched as the assessed income is more than twice the returned income, (iii) the balance of convenience is in the Petitioner's favour (iv) a recovery of the outstanding demand, or even a part thereof will cause irreversible loss, prejudice and hardship to the Petitioner. 15. On the other hand, the learned advocate appearing on behalf of the Revenue supported the order and stated that the genuineness of the transaction between the Petitioner and KCIML has not been established by the Petitioner. It is for this reason, that the Assessing Officer correctly added the amount of Rs. 336.95 Crores to the income of the Petitioner under Section 68 of the ....
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....with the Petitioner's fundamental argument that the addition under Section 68 was a double addition. 19. This apart, whilst making the addition under Section 68, at least prima facie, the Assessing Officer ignored all supporting documents which could establish the identity, creditworthiness and genuineness of KCIML. Hence, we are of the opinion that the Petitioner had made out a strong prima facie case. 20. As far as the rejection of the Petitioner's stay Application is concerned, it was rejected by simply relying on the CBDT's instruction dated 31st July 2017. It is well settled that CBDT's Office Memorandums/Instructions by which assessing officers have been directed to grant stay of the disputed demand on payment of 20% does not fetter the power of the Assessing Officer to grant stay on payment of amounts lesser than 20% and they must deal with the prima facie merits and give reasons for rejection of the stay Application. This has been so held by the Hon'ble Supreme Court in PCIT V/S LG Electronics India (P.) Ltd. [(2018) 96 taxmann.com 656]. 21. Apart from the above, we find that the impugned order dated 30th July 2025 is in breach of the principles laid down b....
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....ake a representation or seek recourse to a remedy in law; 5. In exercising the powers of stay, the Income Tax Officer should not act as a mere tax gatherer but as a quasi judicial authority vested with the public duty of protecting the interest of the Revenue while at the same time balancing the need to mitigate hardship to the assessee. Though the assessing officer has made an assessment, he must objectively decide the application for stay considering that an appeal lies against his order : the matter must be considered from all its facets, balancing the interest of the assessee with the protection of the Revenue." 23. Since, prima facie, we feel that the Petitioner had made out a strong prima facie case, the Petitioner's case merits a stay on the recovery of the entire demand for A.Y.2023-24. Recovery of the demand would cause tremendous injustice and severe hardship to the Petitioner. We are of the opinion that therefore, the balance of convenience also lies in favour of the Petitioner. Hence, the following order:- (i) The CIT (Appeals) is directed to dispose of the Appeal of the Petitioner for A.Y. 2023-24 in accordance with law, as expeditiously as possibl....