The Tax Publishers2020 TaxPub(DT) 3387 (Del-Trib)

INCOME TAX ACT, 1961

Section 220(6)

On looking at the overall compactus of the fact of the issue, financial status of the company petitioner, the present status of the working of the company, known disclosure of the financial statements of the subsidiaries whose investments had been written of, known provision of the names of the present directors Tribunal was not in a position to extend the stay despite declining the stay on the merits of the issue but following the decision of the Delhi High Court, this Tribunal was extending the Stay till 31-8-2020, only for Covid-19 reasons.

Recovery - Stay of demand - Extenstion of stay - Financial state of affairs vis-a-vis interest of revenue

Applicant company was a Category-I Merchant Banker with the Securities and Exchange Board of India, engaged in the business of private equity syndication, securities brokerage and financial advisory services. As a result of the order passed under section 143(3) read with section 144C, income-tax demand of Rs. 108 crores had been raised on the applicant. Against the disputed demand, the applicant made payment of Rs. 15 crores as per direction given in original stay order dated 02-03-2016 and accordingly, balance demand of Rs. 93 crores [Rs. 108 crores (-) Rs. 15 crores] was currently outstanding and disputed by the applicant in this extension of stay application. Authorised representative submitted the annual accounts of the company up to 31 -3-2020. The accounts of the company were last audited only up to 31-3-2017. The audited accounts for that year showed that assessee had net worth of only Rs. 13.57 crores and for the same year it had written off the permanent diminution in the value of the investment in its subsidiaries of Rs. 717 crores. For that year assessee had shown a loss of Rs. 786 crores. Held: Without having the financials of the subsidiary company and mainly the loss arising on account of writing of the permanent diminution in the value of the investment in the subsidiaries of the company of Rs. 717 crores, it cannot be measured whether the assessee had anything to pay to the Government of India towards this tax dues. It was further to note that subsequent to the order of the co-ordinate Bench dated 1st of January, 2020, of all these financial affairs were not brought to the notice of the co-ordinate Bench either by the assessee or by the revenue. On looking at the overall compactus of the fact of the issue involved in the appeal, the financial status of the company petitioner, the present status of the working of the company, known disclosure of the financial statements of the subsidiaries whose investments have been written of, known provision of the names of the present directors, Tribunal was not in a position to extend the stay. Further, so far as the interest of the revenue was concerned, it was prime and foremost duty to safeguard it when the stay was granted. Subsequent statement of affairs presented before Tribunal did not show that Tribunal was in any way keeping the interest of the revenue safeguarded. Keeping the interest of the revenue uppermost in mind, the Tribunal declined to further extend the stay and forthwith vacate stay granted to the assessee. Despite declining the stay on the merits of the issue but following the decision of the Delhi High Court, the Tribunal was extending the Stay till 31-8-2020, only for Covid-19 reasons.

REFERRED :

FAVOUR : Against the assessee/petitioner (Partly).

A.Y. : 2011-12



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