Wp/23416/2011 Of M/S.andhra Pradesh Beverages Corporation Ltd v. The Chief Commissioner ,Income Tax -I

THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No. 23416 of 2011. ORDER: (Per Goda Raghuram, J) Heard the learned Advocate General for the petitioner andSri.S.R.Ashok, learned Standing Counsel for the respondents. The disinclination to pay income tax demand of Rs. 639.93Crores by the petitioner to the respondents pursuant to the order ofassessment dt. 31.10.2010 for the assessment years 2008-09 is thetrigger for this writ petition, directed against the order dt. 29.7.2011of the 1[st] respondent and the earlier proceedings dt. 29.6.2011 of the3[rd] respondent. The petitioner is a Government Company registered underthe Companies Act, 1956. The State conferred its privilege in termsof the A.P. (Regulation of Trade in Indian Liquor, Foreign Liquor),Act 1993 (for shot ‘the 1993 Act’) including the exclusive privilege forimporting, exporting and carrying on the wholesale trade anddistribution of Indian Made Foreign liquor, Foreign Liquor, Wine,Beer. On 27.9.2008, the petitioner submitted its returns of incometax for the assessment year 2008-09 admitting profits of Rs.2,85,642/- and loss of Rs.36,82,862/-. By the order dt. 31.10.2010,the Assessing Officer determined the liability to income tax at Rs.639.93 Crores. Against the order of assessment, the petitioner preferredT.A.No. 69/CIT(A)-II/10-11 before the Commissioner of Income Tax(Appeals)-II on 18.1.2011. While so, the petitioner filed an applicationbefore the Income Tax Officer Ward-I seeking grant of stay ofcollection of demand till disposal of the appeal before theCommissioner of Income Tax which was scheduled for hearing on 15.2.2011. By a letter dt. 4.2.2011, a petitioner was informed that asthe demand is substantial, stay of the entire demand is not possibleand the petitioner was called upon to come up with suitableinstalments proposal to consider the request, an unusual courtesy tothe assessee but nevertheless. On 11.2.2011, the petitioner represented to the Chairman,Central Board of Direct Taxes (CBDT) seeking stay of collection ofdemand till disposal of the appeal by the Appellate Authority. On20.6.2011, the CBDT advised the petitioner to present its applicationto the Assessing Officer i.e. the Additional Commissioner of IncomeTax and thereafter, if required, to the Commissioner of Income Tax. Eventually, the 1[st] respondent, the Chief Commissioner of IncomeTax-I by the impugned communication dt. 29.7.2011 intimated thePrincipal Secretary to the Government that since absolute stay ofdemand is not possible, 50% of the demand be paid in eight equalmonthly instalments of Rs. 40 crores, commencing from August,2011. The 2[nd] respondent by the endorsement dt. 3.8.2011communicated the order of the 1[st] respondent to the petitioner callingupon the petitioner to pay instalments and submit proof of paymentof monthly instalments to the 2[nd] respondent. Aggrieved thereof, thepresent writ petition is filed. Since the issue whether the petitioner, on whom the Statehas conferred exclusive privilege of importing, exporting andcarrying on wholesale trade and distribution of Indian Made Foreignliquor, Foreign liquor, Wine, Beer under Section 17 of the Act r/wSection 23 of the A.P. Excise Act, 1968, is liable to income tax fromout of the income derived from the business activity in respect ofwhich privilege has been conferred by the State Government orwhether the entire amount received by the petitioner by way ofSpecial Privilege Fee, any other receipts and any other amountrealised by the petitioner from whatever source after deducting theexpenses incurred by the petitioner being liable to be made over to the State as privilege fee or special privilege fee or any other fee;and is deductible, is an issue substantially to be considered by theAppellate Authority in the appeal preferred by the petitioner againstthe order of assessment. the State as privilege fee or special privilege fee or any other fee;and is deductible, is an issue substantially to be considered by theAppellate Authority in the appeal preferred by the petitioner againstthe order of assessment. Several contentions have been urged by the learnedAdvocate General and Sri.S.R.Ashok, learned Standing Counsel, asto the liability or otherwise of the petitioner to pay income tax. Sri.S.R.Ashok relies on Accounting Standard 22 which obligates taxexpenditure to be included in the demand of net profit and loss forthe assessment year in question to contend that the petitioner isliable to factor the expenditure on income tax also while drawing upits balance sheet and profit and loss account. Since the substantive appeal of the petitioner is pendingbefore the Commissioner of Income Tax (Appeals)-II, we consider itinappropriate to analyse the rival contentions on the liability of thepetitioner to income tax. Having regard to the fact that the petitioner is aninstrumentality of the State, a public sector company and as theincome tax liability of the petitioner has been assessed at Rs. 639-93 Crs., we consider it just and equitable to direct the respondentsnot to initiate any coercive steps for recovery of demand under theorder of assessment, which is the subject matter of appeal at theinstance of the petitioner; on condition that the petitioner shall pay anamount of Rs. 160 crores in eight instalments @ Rs. 20 crores eachcommencing from October, 2011. The 1[st] instalment shall be paidby the 20[th] October, 2011 and other instalments shall be paid by 20[th]of each succeeding month till the eight instalments are paid. Indefault of any of the instalments, the entire liability as determined inthe assessment order shall become due and the respondents shallbe at liberty to take steps for recovery of the same, in accordancewith law. In the circumstances and as the interest of the State’s revenue is involved, we request the Commissioner of Income Tax(Appeals) to expeditiously dispose of the appeal, preferably within aperiod of three months from the date of receipt of a copy of thisorder. The writ petition is disposed of as above. There shall be noorder as to costs. ____________________ RAGHURAM, J GODA ____________________________ RAMESH RANGANATHAN, J22.09.2011. THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No. 23416 of 2011. ORDER: (Per Goda Raghuram, J) Dt. 22.9.2011.