The Lucknow Bench of the Income Tax Appellate Tribunal (ITAT) has stayed the income tax demand of Rs. 398 crores on the Lucknow Development Authority by observing that the authority has a prima facie case in its favour. The stay was granted on the condition of payment of 20 crore rupees in two equal instalments.
The stay is granted for a period of six months or till the disposal of the appeals, whichever is earlier, the order said.
Lucknow Development Authority was slapped with a tax demand of around 398 Crores on the ground that it had given benefit to its employees by giving them priority in allotments as well as concessions in the prices of plots. The authorities, therefore, invoked tax demand according to the provisions of section 13(3) of the Income Tax Act.
It was contended on behalf of the assessee that the employees of the assessee Pradikaran are not Managers of the Pradikaran, as they are doing routine work assigned to them and they are not involved in the management of the assessee Pradikaran. He further submitted that they are also not entrusted with taking managerial/strategic decisions. Moreover, the benefit to the employees has been given as a declared policy as notified in the Pradikaran Rules.
While granting a stay to the tax demand, the Tribunal observed that the assessee has a prima facie case in its favour.
“It is the Department’s own case that the allotments purportedly in violation of section 13(3) of the Act have been made to the employees of the assessee Pradikaran. There is no rebuttal, however, to the assertion on behalf of the assessee that these employees are not acting in any Managerial capacity, so far as regards the discharge of their duties under the Pradikaran; and that the specific requirement of the section is concerning Managers and not employees. Therefore, the assessee has a prima facie case in its favour and as such the balance of convenience is also in its favour,” the Tribunal said.
The Tribunal further directed the assessee to deposit an amount of Rs.20 crores, out of total outstanding demand of Rs.3,98,15,62,042/-, in two installments of Rs.10 crores each and the first instalment is to be paid latest by 29th February 2020 and the second instalment is to be paid latest by 15th March 2020.
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