TMI Blog2020 (6) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to be heard by this or such a larger bench as the Hon ble President may be pleased to constitute under section 255(3) of the Income Tax Act, 1961. We must take suitable steps to maintain the status quo, so far as collection of disputed impugned demands are concerned, and, at the same time, to protect legitimate interests of the revenue to recover the disputed impugned demands in the event of the assessee not being successful in the present stay applications, or, the assessee not being successful eventually in the appeals. Given the overall situation- as also the fact that the stay petitions have been referred for consideration of constitution of a larger bench, we deem it fit and proper to grant an interim stay on collection/ recovery of the aggregate amounts of tax and interest etc, for the assessment yea₹ 2011-12 and 2012-13 respectively, impugned in these appeals, This interim stay will remain in operation till the related stay applications are disposed of, till the appeals are disposed of or till further orders whichever is earlier. - SA Nos. 147 and 148/Mum/2020 Arising out of ITA Nos 1423 and 1424/Mum/2018 - - - Dated:- 17-6-2020 - Justice P P Bhatt, Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the learned CIT(A), the Central Board of Direct Taxes, vie order dated 10th November 2015, granted approval under section 11(1)(c), which was specifically stated to have effect for the period covered by assessment years 2009-10 to 2016-17 and it permitted application of funds, by the trust, for charitable purposes for grant of creation of endowment funds through contribution at the Cornwell University USA, for scholarship of Indian students as well as for foreign collaboration project between Indian and Cornell scientists, and grant of financial assistance to Harvard Business School for construction of a new executive building named Tata Hall, as per details below which included US $ 43.75 million for the assessment year 2011-12 and US $ 5 million for the assessment year 2012-13. Based on this approval issued by the CBDT, the Assessing Officer rectified, under section 154 of the Act, the assessment orders for the assessment year 2011-12, on 8th December 2015, and for the assessment year 2012-13, on 9th August 2016. The additions in question, i.e. on account of application of funds abroad without specific approval of the CBDT- ₹ 192.79 crores for the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the CIT(A) was blatantly in error in holding that the amounts so spent by the assessee trust abroad, notwithstanding the specific approval of the CBDT, will not be eligible for the benefit of Section 11(1)(c). Learned counsel also took us through several judicial precedents, including Hon ble Supreme Court s landmark judgment in the case of Gestetner Duplicators Pvt Ltd Vs CIT [(1979) 117 ITR 1 (SC)], in support of the proposition that the CIT(A) could not have sat in judgment over what the CBDT has decided, in exercise of its powers under proviso to Section 11(1)(c), and that the action of the CIT(A) was contrary to the settled legal position. He thus submitted that he has a very strong prima facie case, and very good chances to succeed. It was also suggested that the assessee trusts are well settled public service institutions and there cannot be any bonafide apprehension to the legitimate interests of the revenue, by waiting till outcome of the appeals in question. Learned counsel further submitted that he is willing to argue the appeals whenever asked to do so, and offered all his cooperation in expeditious disposal of the appeals. It was thus urged that the assessee has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the appeal was not disposed of within 365 days of the stay being granted, the stay will stand vacated. Learned counsel for the assessee submitted that dealing with this issue, Hon ble jurisdictional High Court has made some observations which are equally relevant in the present context. He read out and emphasized on certain observations made by Hon ble jurisdictional High Courtwhile holding that third proviso to Section 254(2A) is directory in nature.On a parity of reasoning, learned counsel submits that, the amendment to Section 254 (2A), by the Finance Act 2020, is also required to be read as directory in nature. He submits that it is not a legal position in which partial pre deposit of dues is a condition precedent for admission of appeal, but then if we are to interpret this provision as mandatory we will end up holding that such a pre deposit is de facto the legal requirement. Learned counsel further points out that today when appeal is before the CIT(A), the Assessing Officer can grant the stay on payment of 20% of disputed demands but then that amount can be lowered, in deserving cases, apparently referring to the CBDT instructions dated 31st July 2017, subject to approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es our attention to Hon ble Punjab Haryana High Court s judgment in the case of PML Industries Ltd Vs CCE [2013 (3) ECS (45 ) (P H-HC)]. He first takes us to paragraph 8 of the said judgment which takes note of the questions before Their Lordships, including the question whether the second proviso in sub section (2A) of Section 35 C [of the Central Excise Act, 1944] is directory and that the Tribunal in appropriate circumstances can extend the period of stay beyond 180 days . He then takes us to paragraph 11 of this judgment which, inter alia, notes that The right of appeal is a creation of a statute. It is not in doubt. Such right of appeal can be circumscribed by the conditions imposed by the Legislature as well . Our attention is then invited to Their Lordships observations to the effect that In Hoosein Kasam Dada (India) Ltd. Vs. State of Madhya Pradesh AIR 1953 SC 221, the (Hon ble Supreme) Court held that a provision which is calculated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. It was held that in truth such provisions whittles down the right itself and cannot be regarded as a mere rule of procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the CBDT order which states that verifications are required to be made but these orders do not refer to the fact of verifications having been actually carried out. He further submits that furthermore such a contention issue could not have been subjected to the rectification proceedings. It is also submitted that the learned CIT(A) has passed a detailed order on the subject and he relies upon the same. He further submits that right now the appeals are not being argued on merits, and, therefore, it is not really material whether the assessee has a good case or not. He pointed out that no case has been made out for the paucity of funds, and that, in any case, in view of the amendment to first proviso to Section 254 (2A), the assessee is required to pay at least 20% of the disputed demand raised on the assessee. Learned Departmental Representative further pointed out that the assessee has not paid any part of the disputed demands, and, therefore, he should at least pay 20% of the disputed demands. Learned Departmental Representative then refers to the memorandum to the finance bill 2020 available on the official website www.indiabudget.gov.in which specifically states, under the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o say that on a careful consideration of all these factors, we find that, broadly speaking, there are two very significant aspects of the whole controversy- first, with respect to the legal impact, if any, of the amendment in first proviso to Section 254(2A) on the powers of the Tribunal, under section 254(1) to grant stay; and, second, if this amendment is held to have any impact on the powers of the Tribunal under section 254(1),- (a) whether the amendment is directory in nature or is mandatory in nature; (b) whether the said amendment affects the cases in which appeals were filed prior to the date on which the amendment came into force; (c) whether, with respect to the manner in which, and nature of which, security is to be offered by the assessee, under first proviso to Section 254(2A), what are broad considerations and in what reasonable manner, such a discretion must essentially be exercised, while granting the stay,by the Tribunal. 8. We are of the considered view that these issues are of vital importance to all the stakeholders all over the country, and in our considered understanding, on such important pan India issues of far reaching consequence, it is desirable to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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