The Commissioner Of Income Tax Chennai v. M/S.srivathsa Industries

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 27.07.2016C O R A M THE HONOURABLE MR.JUSTICE S.MANIKUMARANDTHE HONOURABLE MR.JUSTICE D.KRISHNAKUMAR Tax Case Appeal No.477 of 2016 The Commissioner of Income TaxChennai. ... Appellant/RespondentVs M/s.Srivathsa IndustriesNo.1-A Rajaji SalaiMadhavaramChennai 600 060.... Respondent/Petitioner Prayer:Appeal under Section 260 A of Income Tax Act, 1961filed against the order of the Income Tax Appellate Tribunal,Madras 'B' Bench, Chennai, dated 31/7/2015, passed in SPNo.386/Mds/2015 in I.T.A.No.1562/Mds/2015 against the Order ofthe Commissioner of Income Tax (Appeals)-5, Chennai 34 dated30.03.2015 made in I.T.A.No.298/13-14, against the AssistantCommissioner of Income Tax, Business Circle-XII, Chennai 06, forPAN No.AAAFS9220L dated 21.03.2013 for the Assessment year 2010- 2011. For appellant : Mr.T.Ravi Kumar Senior Standing Counsel for the Income Tax Department J U D G M E N T(Judgment of the Court was made by S.Manikumar,J) for the Income Tax Department Instant Tax Case Appeal is filed against the order, dated31/7/2015, made in Stay Petition No.386/MDS/2015, inI.T.A.No.1562/MDS/2015 by which the Tribunal, having opined thatthere is a prima facie case for grant of stay of recovery of theoutstanding amount of Rs.15,93,670/- for the assessment year https://hcservices.ecourts.gov.in/hcservices/ 2010 – 11, for a period of six months from the date of the saidorder or till the disposal of the appeal, whichever is earlier.The Tribunal has fixed the date of hearing of the appeal on16/9/2015 and for the reasons stated supra, allowed the staypetition. 2. The instant Tax Case Appeal is filed on the followingsubstantial questions of law:- “1. Whether on the facts and in thecircumstances of the case, the Income taxAppellate Tribunal was justified in grantingstay of recovery of the outstanding amountfor a period of six months till 31/7/2015 ortill the disposal of appeal withoutprotecting the interest of the Department? 2. Is not the finding of the Tribunalbad by holding that the major disallowanceof Rs.29,56,419/- in relation to the paymentof commission outside India which iscontrary to the finding rendered by the AOthat the activities done by the foreignagent clearly fell within the ambit of Feesfor technical services and the said decisionhad also been upheld by the CIT (A)?3. Whether the reasoning of theTribunal is proper by holding that thepayment of freight charges made amounting toRs.5,99,266/- on which no TDS has beendeducted fell under Section 194 C of theIncome Tax Act?” 3. Having regard to the date on which the stay petition wasallowed with a direction to post the appeal for hearing on16/9/2015, we directed Mr.T.Ravikumar, learned Senior StandingCounsel for the Income Tax Department to ascertain as towhether the appeal in I.T.A.No.1562/Mds/2015 is still pending onthe file of the Tribunal. 4. Reverting, Mr.T.Ravikumar, learned Senior Standingcounsel for the Income Tax Department submitted that appeal inI.T.A.No.1562/Mds/2015 has been disposed of on 20/11/2015. 5. From the perusal of the photocopy of the order inappeal, produced today, it could be deduced that the appeal washeard on 16/9/2015 and orders were pronounced on 20/11/2015.Thus, as observed, in the Stay Petition No.386/Mds/2015 inI.T.A.No.1562/Mds/2015, appeal had been taken up for hearing on16/9/2015. https://hcservices.ecourts.gov.in/hcservices/ 6. In the light of the subsequent developments, the interimorder passed in S.P.No.386/Mds/2015 in I.T.A.No.1562/Mds/2015dated 31/7/2015 has merged with the final order inI.T.A.No.1562/Mds/2015 dated 20/11/2015. 4. Reverting, Mr.T.Ravikumar, learned Senior Standingcounsel for the Income Tax Department submitted that appeal inI.T.A.No.1562/Mds/2015 has been disposed of on 20/11/2015. 5. From the perusal of the photocopy of the order inappeal, produced today, it could be deduced that the appeal washeard on 16/9/2015 and orders were pronounced on 20/11/2015.Thus, as observed, in the Stay Petition No.386/Mds/2015 inI.T.A.No.1562/Mds/2015, appeal had been taken up for hearing on16/9/2015. https://hcservices.ecourts.gov.in/hcservices/ 6. In the light of the subsequent developments, the interimorder passed in S.P.No.386/Mds/2015 in I.T.A.No.1562/Mds/2015dated 31/7/2015 has merged with the final order inI.T.A.No.1562/Mds/2015 dated 20/11/2015. 7. However, Mr.T.Ravikumar, learned Senior Standing Counselfor the Income Tax Department submitted that as per the decisionof the Hon'ble Supreme Court, while considering the issue as towhether an applicant is entitled to stay of an order, subjectmatter of an appeal is filed, it is the duty of the Tribunal orthe Court for the matter to consider as to whether there is anyirreparable loss, balance of convenience and prima faciehardship and on the facts and circumstances of the instant case,when the Tribunal has failed to consider and advert to the abovesaid aspects, at least a direction be issued to the Tribunal, tobe followed in future cases, whenever a request for an interimorder is made and for the matters pending before the Tribunal.According to him, interest of the revenue has to be protected.On the above submission, this Court is of the view that beforethe Tribunal, it is for the Department to substantiate that theabove said conditions do not exist in a given case, and to praythat no interim order be granted or extended, or take steps tovacate the same. Needless to state that the above parametershave to be considered. 8. As we have already observed, the impugned interim orderhas merged in the final disposal of the appeal inI.T.A.No.1562/Mds/2015. The request of the learned SeniorStanding Counsel for issuance of any directions to the Tribunal,on the above parameters, can be considered and issued in pendingappeals, where an interim order has become final, withoutconsidering the abovesaid paramount factors, viz., prima facie,balance of convenience and irreparable hardship, and in caseswhere steps have been taken by the Department to highlight theparameters and despite the case, the Tribunal had passed a non-speaking order,and in not in cases where the appeals are alreadydisposed of,issuing directions in the appeals, would be disposedof, academic in nature and therefore, we refrain from doing so. 9. In the light of the above discussion, we are of the viewthat Tax Case Appeal No.477 of 2016 has become infructuous andaccordingly the same is dismissed. No costs. Sd/- Assistant Registrar(CS IV) //True Copy// Sub Assistant Registrar mvs. To 1. The Income Tax Appellate Tribunal, Madras 'B' Bench, Chennai. Madras 'B' Bench, Chennai. 2. The Commissioner of Income Tax(Appeal) - 5, Chennai 34. Chennai 34. 3. The Assistant Commissioner of Income Tax, Business Circle XII, Chennai 06. +1cc to Mr.T.Ravikumar, Advocate, S.R.No.42351 Tax Case Appeal No.477 of 2016 VGI(CO)CA(23/08/2016)