Dr B L Kapur Memorial Hospital v. Commissioner Of Income Tax (Tds)Delhi 1 & Ors

Signature Not Verified $~24 & 25 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 16287/2022 DR B L KAPUR MEMORIAL HOSPITAL ..... Petitioner Through:Mr. Ajay Vohra, Senior Advocate &Ms. Kavita Jha & Mr. HimanshuAggarwal, Advocates. versus COMMISSIONER OF INCOME TAX (TDS)DELHI 1 & ORS. ..... Respondents Through:Mr.PuneetRai,SeniorStandingCounsel for Revenue. 25 +W.P.(C) 16288/2022 DR B L KAPUR MEMORIAL HOSPITAL ..... Petitioner Through:Mr. Ajay Vohra, Senior Advocate &Ms. Kavita Jha & Mr. HimanshuAggarwal, Advocates. versus COMMISSIONER OF INCOME TAX (TDS)DELHI 1 & ORS. ..... RespondentsThrough:Mr.PuneetRai,SeniorStandingCounsel for Revenue. Date of Decision: 25[th]November, 2022 % CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA W.P.(C) Nos. 16287/2022 & 16288/2022 Signature Not Verified J U D G M E N T MANMOHAN, J (Oral): CM APPL. 50982/2022 (for exemption) in W.P.(C) 16287/2022CM APPL. 50984/2022 (for exemption) in W.P.(C) 16288/2022 Exemptions allowed, subject to all just exceptions. Accordingly, the present applications are disposed of. W.P.(C) 16287/2022 & CM APPL. 50981/2022W.P.(C) 16288/2022 & CM APPls. 50983/2022 1.Present writ petitions have been filed challenging the orders dated06[th]September, 2022 and 07[th]November, 2022, rejecting the applicationsfiled by the petitioner and directing the petitioner to make payment to theextent of 20% of total tax demand arising under Section 201(1) of theIncome Tax Act, 1961, (for short ‘the Act’) for Assessment Years 2013-14and 2014-15. 2.Learned senior counsel for the petitioner states that respondent No.2passed orders dated 30[th]March, 2021 under Section 201(1) / 201(1A) of theAct holding the petitioner to be an ‘assessee-in-default’ for short deductionof tax at source and total tax liability was computed at Rs.16,47,35,035/- andRs.20,09,39,099/- for Assessment Years 2013-14 and 2014-15 respectively.He states that aggrieved by the orders dated 30[th]March, 2021, the petitionerfiled appeals before respondent No.3 along with an application seeking stayon the recovery of demand. 3.Learned senior counsel for the petitioner states that the respondentNo.2 passed the orders dated 06[th]September, 2022, whereby the stayapplications filed by the petitioner were dismissed in a non-speaking manner W.P.(C) Nos. 16287/2022 & 16288/2022Page 2 of 5 Signature Not Verified and the petitioner was directed to pay twenty per cent of the disputeddemand. He states that the petitioner filed applications dated 20[th]September,2022, before respondent No.3 for review of the stay orders dated6[th]September, 2022. He, however, states that the impugned orders dated7[th]November, 2022 were passed rejecting the stay applications of thepetitioner without dealing with the contentions raised by the petitioner. 4.Learned senior counsel for the petitioner submits that the petitionerhas executed contracts for service and not contract of service with itsconsultant doctors. He further states that as the consultant doctors have paidtheir tax dues, the first proviso to Section 201 is attracted to the presentcases. W.P.(C) Nos. 16287/2022 & 16288/2022Page 2 of 5 Signature Not Verified and the petitioner was directed to pay twenty per cent of the disputeddemand. He states that the petitioner filed applications dated 20[th]September,2022, before respondent No.3 for review of the stay orders dated6[th]September, 2022. He, however, states that the impugned orders dated7[th]November, 2022 were passed rejecting the stay applications of thepetitioner without dealing with the contentions raised by the petitioner. 4.Learned senior counsel for the petitioner submits that the petitionerhas executed contracts for service and not contract of service with itsconsultant doctors. He further states that as the consultant doctors have paidtheir tax dues, the first proviso to Section 201 is attracted to the presentcases. 5.Learnedseniorcounselforthepetitionerfurtherstatesthatrespondents while disposing of the petitioner’s applications have failed toappreciate that the condition under impugned Office Memorandum dated31[st]July, 2017, read with the Office Memorandum dated 29[th]February,2016, stating that, “the assessing officer shall grant stay of demand tilldisposal of the first appeal on payment of twenty per cent of the disputeddemand”, is merely directory in nature and not mandatory. In support of hissubmission, he relies on the decision of the Supreme Court in Pr. CIT v LGElectronics India (P) Ltd., 303 CTR 649 (SC) wherein it has been held thatit is open to the tax authorities, on the facts of individual cases, to grant stayagainst recovery of demand on deposit of a lesser amount than 20 per cent ofthe disputed demand, pending disposal of appeal. 6.Issue notice. Mr. Puneet Rai, learned counsel for the respondents-Revenue, accepts notice.He states that the consultant doctors of thepetitioner are not allowed to work in any other hospital. Consequently, W.P.(C) Nos. 16287/2022 & 16288/2022Page 3 of 5 Signature Not Verified according to him, the consultant doctors have executed a contract of serviceand not a contract for service. He also submits that the first proviso toSection 201 is not attracted to the present cases. 7.Having heard learned counsel for the parties and having perused thetwo Office Memorandums in question, this Court is of the view that therequirement of payment of twenty per cent of disputed tax demand is not apre-requisite for putting in abeyance recovery of demand pending firstappeal in all cases. The said pre-condition of deposit of twenty per cent ofthe demand can be relaxed in appropriate cases. Even the OfficeMemorandum dated 29[th]February, 2016, gives instances like where additionon the same issue has been deleted by the appellate authorities in theprevious years or where the decision of the Supreme Court or jurisdictionalHigh Court is in favour of the assessee.In fact, as pointed out by thelearned senior counsel for the petitioner, the Supreme Court in the case ofPCIT vs. M/s LG Electronics India Pvt. Ltd. (supra) has held that taxauthorities are eligible to grant stay on deposit of amounts lesser than twentyper cent of the disputed demand in the facts and circumstances of a case. 8.In the present cases, the impugned orders are non-reasoned orders.Neither the Assesing Officer nor the Commissioner of Income Tax haveeither dealt with the contentions and submissions advanced by the petitionernor has considered the three basic principles i.e. the prima facie case,balance of convenience and irreparable injury while deciding the stayapplication. 9.Consequently, the impugned orders and notices are set aside and thematters are remanded back to the respondent No.1-Commissioner of IncomeTax for fresh adjudication in the application for stay.However, before W.P.(C) Nos. 16287/2022 & 16288/2022Page 4 of 5 Signature Not Verified deciding the stay application, the Commissioner of Income Tax shall grant apersonal hearing to the authorised representative of the petitioner. For thispurpose, list the matter before the respondent No.1-Commissioner of IncomeTax on 12[th]December, 2022. 9.Consequently, the impugned orders and notices are set aside and thematters are remanded back to the respondent No.1-Commissioner of IncomeTax for fresh adjudication in the application for stay.However, before W.P.(C) Nos. 16287/2022 & 16288/2022Page 4 of 5 Signature Not Verified deciding the stay application, the Commissioner of Income Tax shall grant apersonal hearing to the authorised representative of the petitioner. For thispurpose, list the matter before the respondent No.1-Commissioner of IncomeTax on 12[th]December, 2022. 10.It is clarified that till the stay applications filed by the petitioner arenot decided, no coercive action shall be taken by the respondents against thepetitioner in pursuance to the demands arising out of the impugned orders.With the aforesaid directions, the present writ petitions along with pendingapplications stand disposed of. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J NOVEMBER 25, 2022msh/js W.P.(C) Nos. 16287/2022 & 16288/2022