Rep By Its Director P. Shanmugham v. The Deputy Commissioner Of Income Tax Corporate Circle 6 (2) Room

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 06.10.2015 THE HONOURABLE MR. JUSTICE R. MAHADEVANW.P.No.31030 of 2015andM.P.No.1 of 2015 M/s.Southern Agrifurnace Industries (P) Limited, Rep by its Director P. Shanmugham S/o.PonniahNo.6 (36)Krishnaswamy Avenue,Luz Mylapore, Chennai 4. -Versus- ... Petitioner 1.The Deputy Commissioner of Income Tax Corporate Circle 6 (2) Room No.705 7th Floor, Vanaparathy Bloc 121 M.G. Road, Nungambakkam, Chennai 34. 2.The Assistant Commissioner of Income Tax Non Corporate Circle 15 (1) 121 M.G.Road Nungambakkam Chennai 34. 3.The Commissioner of Income Tax (Appeals), 121 M.G.Road, Nungambakkam, Chennai 34. Writ Petition filed under Article 226 of the Constitution of Indiafor the relief of issuance of Writ of Certiorarified Mandamus callingfor the records in SP/Corp Cir-6 (2)/AAGCS9705F/2015-16 dated14.9.2015 on the file of the 1st respondent and to quash the same andfurther directing the 2nd respondent not to initiate or continue withany other proceedings for coercive recovery of the disputed demandduring the pendency of the appeal before the 3rd respondent For Petitioner:Dr.Anita SumanthFor Respondent(s): :Mr.T.Pramodkumar Chopda, SeniorStanding Counsel https://hcservices.ecourts.gov.in/hcservices/ ORDER Challenging the order of the 1st respondent dated 14.09.2015refusing to grant an order of stay, the petitioner is now before thiscourt with this writ petition. 2. The case of the petitioner in brief is that the petitioneris a company engaged in the manufacture and distribution of IndianMade Foreign Liquor and an assessee in terms of the provisions of theIncome Tax Act. The petitioner has been filing its returns of incomeregularly in accordance with the provisions of the Income Tax Act. 3. According to the petitioner company, as a part of itsbusiness transaction, it had entered an agreement with variousentities for provision of infrastructure for manufacture of liquorfor rendition of bottling and labelling services and as per theagreement, the role of the petitioner company was limited toprovision of infrastructure and space. As usual, the petitionerfiled return for the assessment year 2012-13 and disclosed variousitems of receipts and expenditure. The financials disclosed an amountof Rs.9,33,63,000/- which related to the sale consideration of otherbrand liquor of the companies that had been paid over to thecompanies and this constituted expenditure for the petitioner.Pursuant to bottling and labelling, the petitioner sold the liquorboth its own brand as well as the brands of companies to TASMAC andremitted the sale consideration attributable to each company afterdeducting a flat contracted rate towards its charges in connectionwith bottling. According to the petitioner, the assessing authoritydid not initially raise any query relating to labelling and provisionof infrastructure. While so, to the shock of the petitioner, theassessing authority raised a query relating to sale considerationpassed on to the companies and reflected as payment to 'brand owners'in its financial. It was explained that the payment represented theconsideration from sales of the third party brand of liquors, passedon by the petitioner to the respective companies. While so, an orderof assessment came to be passed on 31.03.2015 making additions /disallowances of an addition of Rs.9,33,63,000/-. According to thepetitioner company, the order is cryptic, non speaking and contraryto the provisions of the Income Tax Act. It was the said order takenon appeal to the 3rd respondent / Commissioner of Income Tax(Appeals) and the same is pending. In the mean while, the 1strespondent while rejecting the petition for stay called upon thepetitioner to pay 50% of the disputed demand on or before 21.09.2015.The said order is now under challenge in this writ petition. 4. Heard both sides and also perused the records carefully. 4. Heard both sides and also perused the records carefully. 5. Though the order refusing to grant an order of interim stayis put under challenge in this writ petition, the learned counselappearing for the petitioner submitted that the petitioner would besatisfied if a direction is issued to the 3rd respondent concerned todispose of the stay petition filed by the petitioner within a timeframe and until then, the authority concerned may be directed not totake any coercive action for recovery of amount allegedly due to thedepartment. https://hcservices.ecourts.gov.in/hcservices/ 6. The learned standing counsel for the respondents submittedthat the application for stay can be moved before the jurisdictionalcommissioner and on such filing of stay petition, the same bedisposed of. 7. Considering the facts and circumstances of the case and inview of the submissions made by the learned counsel for both sides,this court directs that the stay petition pending before theCommissioner of Income Tax (Appeals), the 3rd respondent herein, betaken and disposed of on merits and in accordance with law within aperiod of two weeks from the date of receipt of a copy of this orderand until then there shall not be any recovery proceedings. 8. The writ petition is disposed of with the above directions.No costs. Consequently, connected MP is closed. -Sd/- Assistant Registrar(LA) //True Copy// Sub Assistant RegistrarkmkTo1.The Deputy Commissioner of Income Tax Corporate Circle 6 (2) Room No.705 7th Floor, Vanaparathy Bloc 121 M.G. Road, Nungambakkam, Chennai 34. 2.The Assistant Commissioner of Income Tax Non Corporate Circle 15 (1) 121 M.G.Road Nungambakkam Chennai 34. 3.The Commissioner of Income Tax (Appeals), 121 M.G.Road, Nungambakkam, Chennai 34. +1 CC to Dr.Anita Sumanth Advocate. Sr.No.54079+1 CC to MR.T.Pramod Kumar Chopda Advocate. Sr.No.54360 W.P.No.31030 of 2015 CO-NMJD(08/10/2015)