In a recent ruling, the Madras High Court dismissed the Appeal against Income Tax Appellate Tribunal’s decision on extended tax stay beyond the statutory limit under section 245(2A). This decision was made since the stay in question had already expired.
Commissioner of Income Tax (Appeals), the appellant filed an appeal under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal (ITAT) dated 29.04.2022. In the order, the ITAT decided to grant an extension of stay for a period beyond 365 days to Durr India Pvt. Ltd.(assessee)
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The Revenue contended that as per Section 254(2A) of the Income Tax Act, the ITAT did not have the authority to grant a stay beyond 365 days. The counsel argued that the assessee was responsible for the delay. Thus, such an extension violated the statutory provision.
As stated in the impugned order, the Tribunal allowed the stay application because the assessee complied with all prior stay orders, including making payments as directed and the refunds for various years had been adjusted, further reducing the outstanding demand.
Referring to the Delhi High Court ruling in Pepsi Foods Pvt. Ltd. v. ACIT, the tribunal extended the stay for an additional 180 days or until the disposal of the quantum appeal, whichever occurred earlier, with the same conditions from previous stay orders remaining in effect. Upon the above reasoning, the tribunal allowed the stay application.
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Justice R. Mahadevan observed that the stay period granted by the ITAT had already expired. Therefore the court decided no further adjudication was required. The court kept open the substantial questions of law raised by the Revenue for adjudication in an appropriate future proceeding. Thus, the appeal of the revenue was disposed of without any order as to costs.
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