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TMI Blog2021 (9) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner without any limit and to direct the Respondent No.2 to grant unconditional stay of demand against the application filed by the Petitioner dated 10.07.2019 till the disposal of appeal by the Income Tax Appellate Tribunal. (D) Prohibit the Respondent No.1 to recover any amount from the Petitioner No.1 towards the demand raised for AY 2012-13 or 2010-11 or adjust any refunds arising to the petitioner No.1 against the demand of A.Y.2012-13 to 2010-11 till the disposal of appeal by the Income Tax Appellate Tribunal. (D1) Quash and set aside intimations dated 22.07.2019 at Annexure-A1. (D2) Stay the operation of intimations dated 22.07.2019 at Annexure-A1 and Prohibit the Respondent No.1 to recover any amount from or adjust any refunds arising to the petitioner No.1 towards the demand raised for the Assessment Year A.Y. 2012-13 or 2010-11 till the final disposal of appeal by the Income Tax Appellate Tribunal. (E) Pending the admission, hearing and final disposal of this petition, prohibit the Respondent No.1 to recover any amount from the Petitioner No.1 or adjust any refunds arising to the Petitioner No.1 against the demand of A.Y.2012-13 or 2010-11. (F) Any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 or the order of the ITAT whichever would have been earlier but with further condition to adjust the future refunds accruing in favour of the writ applicant No.1 against the demand of A.Y.2012-13. 2.15 On 16th March, 2018, the writ applicant No.1 received a letter, seeking to review the status of the stay. 2.16 On 22nd March, 2018, the writ applicant No.1 filed its reply and further made an application to the respondent No.2 for stay. 2.17 The writ applicant No.1, vide letters dated 14th May, 2019 and 20th May, 2019 respectively sent reminders to the respondent No.2 for passing appropriate order, granting stay. 2.18 The respondent No.1 issued an intimation dated 28th June, 2019 proposing to adjust the refund of Rs. 222,93,38,240/- emanating from the order giving effect to the appellate order for the A.Y. 2014-15 against the outstanding demands of the writ applicant No.1 for the A.Y.. 2012-13 and A.Y. 2010-11. 2.19 The writ applicant No.1, thereafter, preferred a stay application dated 1st July, 2019 under Section 254 of the Act before the ITAT for the purpose of getting the demand stayed. The ITAT disposed of the application vide its order dated 5th July, 2019 relegating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition Rs. Covered by Relief in tax Authority Ref. Of Order rate Amount Rs. 1. Upward adjustment on account of transfer pricing 10,35,06,00,000 ITAT ITA No.195/Del/2013 50.80 5,25,84,22,916 2. Deduction under section VI A 80,95,76,144 ITAT ITA No.196/Del/2013 50.80 41,12,89,563 3. Deduction u/s.35(2AB) of the act 4,40,22,43,702 ITAT ITA No.1390/Ahd/2016 50.80 HC of Tax App. No.541/2017 Guj. S.C. SLP21485 of 2018 (Dismissed SLP of department) 2,23,64,75,099 4. Disallowances u/s.14A read with rule 8D 5,45,95,563 ITAT ITA No.1390/2016 50.80 (Ranbaxy Lab, Ltd. 2,77,36,224 5. Disallowance of Marked to Marker losses 6,67,29,40,000 S.C. Suzlon Energy Ltd. 50.80 (2020) 21 Taxmann.com 137(SC) 390 ITR 36 (Bom HC) 85 TC 354 (Ahd. ITAT) 3,39,00,58,6060 Total 22,28,99,55,409 11,32,39,82,408 Total tax demand as per assessment order 20,04.93,660 Less Tax relief on issues covered by various orders 11,32,39,82,408 56.5% of total demand Balance taxdemand on issues which are not in favour of Assessee 8,72,53,83, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to recovering far more tax from his client as against the disputed issues in the assessment order. 9. In the last, Mr. Soparkar also took us through the observations made by the respondent No.1 while declining to grant unconditional stay. Those are as under; Issue Para and issue in order of CIT Submission 1. 12,13: Rate of tax computed should not be 50.80% but 31.5% or 34.62% The Petitioner has computed 50.80% based on tax demand/total income (2004/3946) as per assessment order (at pg. 500). The denominator cannot be 5791.05 as claimed by CIT because net assessed income is 3946 crores only on which tax is levied. 2. 14: TP adjustment is fact-based issue (pg.22) As noted by DRP on page 232, Identical issue of TP adjustment arose in earlier years where Assessee succeeded before ITAT but because the revenue is in appeal before High Court issue is not decided in favour. Therefore, this is an issue decided in favour of the petitioner. 3. 15: Mark to market loss is debatable (pg.22-23) Issue is not debatable as the controversy is put to rest by the Hon'ble Supreme Court in Suzlon Energy 121 taxmann.com 137 10. Mr. Soparkar seeks to rely upon the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit so far as the adjustment of refund is concerned. 15. Mr. Patel submitted that the respondent No.2 -PCIT, while passing the impugned order, considered all the aspects relevant for the purpose of deciding the stay application. 16. Mr. Patel submitted that the office memorandums dated 29th February, 2016 and 31st July, 2017 respectively are not applicable to the cases wherein the appeals are pending before the ITAT. The said office memorandums would be applicable only in case where the appeals are pending before the CIT (A). He argued that in the case on hand, as the appeals are pending before the Tribunal, the said two office memorandums would have no application. In such circumstances, referred to above, Mr. Patel prays that there being no merit in this writ application, the same be rejected and the interim relief granted may be vacated forthwith. ANALYSIS 17. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the action on the part of the Revenue is in accordance with law. 18. If we have to summarize the stance of the Revenue, we may do so as under; "1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther stated that the assessee had filed a letter dated 07.03.2018 before the Ld. AO expressing its willingness to pay 20% of the total demand in consonance with the requirement of the recent CBDT Circular dated 29.02.2016 and also gave his consent for adjustment of refunds of the various years for appropriation towards tax arrears of assessment year 2013-14 till the disposal of the appeal by the Tribunal. He also argued that though the said circular would apply only for matters pending before the Ld. CIT(A) , i.e, the first appeal, the impugned appeal before this Tribunal also would have to be construed as first appeal, inasmuch as on the final assessment order passed by the Ld. AO u/s.143(3) read with Section 144C(5) of the Act pursuant to directions of Hon'ble Dispute Resolution Panel (DRP), and appeal would lie for the first time only before this Tribunal. Hence, the impugned appeal before this Tribunal also becomes the first appeal preferred by the assessee and accordingly requirements laid down for keeping the demand in abeyance in the circular dated 29.02.2016 would also apply for the assessee before us. In response to this, the L. DR vehemently relied on the decision of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e put in two different categories because in the first case refund would be adjusted whereas in the second case, no such adjustment is possible. 22. We are also not impressed by the submission canvassed on behalf of the Revenue as regards estoppel. First, there cannot be any estoppel against the statute. 23. In the last, we may only observe that the writ applicant has raised issues relating to financial hardships. The writ applicant has pointed out that it has suffered losses in earlier four years. In the aforesaid context, we may refer to a decision rendered by the Punjab & Haryana High Court in the case of Jindal Steel & Power Ltd. vs. Principal Commissioner of Income Tax, (2016) 75 taxmann.com 224 (Punjab & Haryana). We quote the relevant observations; "20. The Pr.CIT rightly did not grant a complete stay but considered the petitioner's application in the alternative for a stay subject to its paying 15% of the outstanding demand in terms of the Office Memorandum dated 29.02.2016. Considering the facts of the case, the financial position of the petitioner and having regard to the said guidelines dated 29.02.2016, the Pr.CIT granted the petitioner a stay of the demand till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to the previous order. In particular a reference was made to Clause-C of the original instructions dated 02.02.1993 which reads as under:- "C. GUIDELINES FOR STAYING DEMAND. (i) ................ (ii) In granting stay, the Assessing Officer may impose such conditions are he may think fit. Thus he may,- a) Require the assessee to offer suitable security of safeguard the interest of revenue; b) Require the assessee to pay towards the disputed taxes a reasonable amount in lump sum or in installments; c) Require an undertaking from the assessee that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled; d) Reserve the right to review the order passed after expiry of reasonable period, say upto 6 months, or if the assessee has not cooperated in the early disposal of appeal, or where a subsequent pronouncement by a higher appellate authority or court alters the above situation; e) Reserve a right to adjust refund arising, if any, against the demand." After quoting the above provision, the order dated 26.08.2016 concludes as under:- "4. From the above instruction issued by the CBDT, it is clear that for granting of stay of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Pr.CIT. In that event, Clause-4(A) alone would operate. As we mentioned earlier, clause 4(A) provides that where the outstanding amount is disputed before the CIT(A), the Assessing Officer "shall" grant stay of demand till disposal of the first appeal on payment of 15% of the disputed demand. In other words, the Assessing Officer is bound to grant a stay of the entire demand on payment of 15% of the disputed demand unless the case falls under category-B of clause-4. The Assessing Officer is not entitled to insist upon the assessee depositing a higher amount. 25. Faced with this, Mr. Putney relied upon clause4(E)(iii). He submitted that the Assessing Officer is entitled to impose such conditions as he thinks fit. A plain reading of the clause, however, militates against the submission on behalf of the Department. It entitles the Assessing Officer to reserve the right to adjust the refunds arising "to the extent of the amount required for granting stay........." Therefore, the right to adjust the refund is limited to the amount to be deposited by the assessee as a condition for the stay. 26. The Assessing Officer in the order dated26.08.2016 referred to guidelines-C(ii)(e) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther. 30. In the circumstances, the writ petition is disposed of by holding that the petitioner shall be entitled to a stay of the demand subject to its depositing the installments as required by the order dated 14.06.2016 and that the future refunds can be adjusted only to the extent of the balance amount directed to be paid as a condition for the stay. The respondents shall, however, be entitled to withhold the refund(s) upto and including 31.10.2016 to enable them to challenge this order." 24. The aforesaid decision of the Punjab & Haryana High Court, as has been referred to and relied upon by the Bombay High Court in the case of Andrew Telecommunications India (P.) Ltd. vs. Principal Commissioner of Income-tax, Goa, (2017) 77 taxmann.com 312 (Bombay), wherein the following has been observed; "7. On the contrary, it is submitted by Ms. Asha Desai, the learned Counsel for the respondents that the impugned orders passed by the competent authorities, refusing to grant stay, are passed by the respondents, what she calls to be on the administrative side. It is submitted that the petitioner has filed an appeal, which is pending before the CIT (A) and the petitioner can seek app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the CIT(A) (as in the present case), the assessing officer shall grant stay of demand, till the disposal of the first appeal on payment of 15% of the disputed demand, unless the case falls in category discussed in para 4(B). It is not in dispute that the present case would not fall in the category as provided in para 4(B) of the O.M. and thus, would be governed by para 4(A). 10. It is further not in dispute that a refund for Rs. 12,25,45,340/- is pending before the Principal CIT for the Assessment Years 2006-07 and 2007-08. It is further undisputed that the said refund is pending since 20.01.2016 (Assessment Year 2006-07) and since 20.04.2016 (Assessment Year 2007-08). 11. It would further appear that para 4(E) contemplates some additional conditions, which may be imposed by the assessing officer, while granting stay, which includes a right to adjust the refund, if any, to the extent of demand required for granting stay and subject to the provisions of Section 245. It was not disputed during the course of the arguments at bar that such a demand can be adjusted against the pending refund for the previous year, if any. The dispute is really about the extent of such adjust ..... 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