Case Law Details
Grasim Industries Limited Vs DCIT (ITAT Mumbai)
By way of this stay application, the assessee applicant has sought a stay on collection/ recovery of tax and interest demands aggregating to Rs 3,786.34 crores in respect of the dividend distribution tax (DDT), and interest thereon, under section 115O/115Q r.w.s. 2(22)(a) of the Income Tax Act, 1961, on, what is termed as, a deemed dividend distribution of accumulated profits in the course of a demerger transaction which took place in the period relating to assessment year 2018-19.
ITAT Directed the assessee to furnish securities worth Rs 760 crores, to the satisfaction of the Assessing Officer, which works out to almost 20% of disputed demands anyway, we see no need to deal with the broader question about the impact of amendment in the scheme of Section 254(2A) which is said to restrict powers of the Tribunal in granting the stay, unless the assessee makes a pre-deposit of 20% of the impugned demands or provides security in respect thereof. We have noted that by way of the Finance Act 2020, there is an amendment in in the proposed proviso to Sub-section (2A) of section 254 Act after the words “from the date of such order” the words “subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnishes security of equal amount in respect thereof” are inserted. In effect thus it provides that the Tribunal “may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnishes security of equal amount in respect thereof”.That aspect of the matter, however, is wholly academic as on now. It would be relevant only when the Tribunal is, on merits of the stay petition, of the view that the assessee deserves a blanket unconditional stay which is not the case here, and, therefore, so far as the impact of amendment in Section 254(2A) by the Finance Act 2020 is concerned, that is wholly academic in the present context.
10. In view of the above discussions, and bearing in mind entirety of the case, we grant a stay on collection/ recovery of the disputed impugned demands on account of dividend distribution tax, and interest thereon, aggregating to Rs 3786.34 crores on the following conditions:
(a) The assessee shall provide a reasonable security for an amount of Rs 760 crores or more, to the satisfaction of the Assessing Officer, at the earliest possible, and, in no case, not later than two weeks from today; Provided, however, in case the Assessing Officer is, for any reasons whatsoever, not satisfied with the security offered by the assessee, the Assessing Officer shall pass a detailed speaking order in respect of the same, and will give a two week notice to the assessee, on the same lines as was directed by Hon’ble jurisdictional High Court in assesee’s own case (supra), before initiating any coercive recovery proceedings, so that the assessee can pursue appropriate legal remedies against the stand of the Assessing Officer, if so advised.
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