Wp/52358/2017 Of Google India Private Limited v. The Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22 DAY OF NOVEMBER, 2017 BEFORE THE HON BLE MRS.JUSTICE B.V.NAGARATHNA| WRIT PETLITION Nos.5235,52359/2017 (T,IT) BETWEEN: GOOGLE INDIA PRIVATE LIMITEDNO.3, RMZ INFINITY , TOWER E,! FLOOR, OLD MADRAS ROAD,BANGALORE - 560 016|(PAN: AACCGO527D)REPRESENTED HEREIN BY ITS.AUTHORIZED SIGNATORYMR, GANGAPPA THIRUMALESH. |.. PETLTLONER| (BY SRI: DEEPAK CHOPRA, ADVOCATE A/W MR. ADITYA.VIKRAM BHAT, MR. SHRAVANTH ARYA TANDRA, ADVOCATES) AND: 1.|THE DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE-1(1) ROOM NO.441, 4 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA,BANGALORE - 560 O95.BANGALORE - 560 O95. 2 |THE COMMISSIONER OF INCOMETAX -— INTERNATIONAL TAXATION,TAX -— INTERNATIONAL TAXATION, BMTC COMPLEX, 80 FEET ROAD, KORAMANGALA, BANGALORE —- 560 O95. .. RESPONDENTS (BY SRI: ARAVIND K.V., ADVOCATE FOR C/R-1 AND R-2) OK OOK THESE WRIT PETITIONS ARE FILED UNDER ARTICLE AND|227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE|ORDER DTD.15.11.201/7 VIDE ANNEX-H PASSED BY THE R-1REQUIRING THE PETITIONER TO PAY THE BALANCE TAX) DEMAND AMOUNTING TO INR.59,42,20,422/- (RUPEES FIFTY.NINE CRORES FORTY TWO LAKHS TWENTY THOUSAND FOUR|HUNDRED AND TWENTY TWO ONLY) IMMEDIATELY AND ETC.,, THESE PETITIONS COMING ON FOR ORDERS THIS DAY,|COURT MADE THE FOLLOWING: ORDER Though these writ petitions are listed for hearing onmaintainability, on holding that these writ petitions aremaintainable, with the consent of learned counsel on bothsides, they are heard finally and are disposed by thisorder. 2 |Petitioner is stated to be a private limited)company, incorporated under the provisions of theCompaniesAct,1956.BeingaggrievedDYtneinterlocutory order dated 15/11/2017 (Annexure-H to thewrit petitions), passed by respondent No.1, directingpayment of the balance tax demand and also, pursuant toorder dated QO7/11/2017 (Annexure-F), passed by theIncome Tax Appellate Tribunal, ‘C’ Bench, Bengaluru(“AppellateTribunal’|for|snort),In.Stay|Petition No.229/Bang/2017 in ITA.No.1190/Bang/2014, pertainingto Assessment Year 2013-14, the petitioner has presentedthese writ petitions. 3.Learned counsel for the petitioner submits that| the appeal before the Appellate Tribunal was filed in theyear 2014. He draws my attention to paragraph No.3 ofthe impugned order to contend that since 31/10/2014,petitioner had the benefit of an interim order of staysubject to deposit of Rs.70,00,00,000/- (Rupees seventycrore only) out of a total demand of Rs.129, 42, 20,422/-(Rupees one hundred twenty nine crore forty two lakhtwenty thousand four hundred and twenty two only), whichis about 55% of the demand. He submits that the order ofstay was extended from time to time, but when anapplication for further extension of stay was made by thepetitioner, the Appellate Tribunal held that there was noprima faciecase, financial hardship or irreparable injury so.as to grant any further extension of stay. Learned counselsubmits that the Appellate Tribunal was not right in not|extendingtheStayand|by holdingthat|theassessee/company had not made out a case for stay of thedemand and thereby dismissing the application. AS ajresult, the appeal itself would be rendereed infructuous. 4Drawing my attention to an order passed by)the Division Bench of this Court, on 16/11/2017, in ITANo.8/9/2017, learned counsel for the petitioner submitstnat despite earlier orders passed by the Appellate Tribunalagainst the petitioner hnerein, the Division Bench hascategorically observed that ITA.No.1190/Bang/2014, out ofwhich these petitions arise, be disposed of in accordancewith law and without in anyway being influenced by orderdated 23/10/2017 passed earlier by the Appellate Tribunal.Learned counsel contends that possibly, the AppellateTribunal was influenced by the earlier order passed by it on23/10/2017 and had passed the impugned order dated07/11/2017 whereas, the order of the Division Bench isdated 16/11/2017, whicn is subsequent thereto. HeSubmits that having regard to the observations made bythe Division Bench of this Court, the appeal (out of whichtnese writ petitions arise) would nave to be heard on itsmerits and therefore, the petitioner would nave to beprotected by certain interim orders pending disposal of theappeal as the respondent is seeking to recover the balanceamount as the interim stay is not continued by theAppellate Tribunal. 5.It is submitted at the Bar that tne appeal is)Slated for final hearing tomorrow (23/11/2017) and thisCourt may put the parties to terms for expeditious disposalof the appeal. Petitioner’s counsel submits that in theinterregnum petitioner's rights cannot be jeopardized bythe revenue by precipitating the matter on account of non-extension of stay by the Tribunal on 07/11/2017. Hetherefore, submits that interim arrangements may bemade pending disposal of the appeals. 6.|Learned counsel for the revenue draws my|attention to the judgment of the Hon’bie Supreme Court inthe case ofAssistant Collector of Central Excise,|Chandan Nagar, West Bengal vs. Dunlop India Ltd.& others [(1985)2 SCC 260]to contend that in asfpetition under Article 226, interim orders cannot be madenor can any protective orders be made in favour of erringassessees and against the revenue and that this Court maynot entertain any submission made by the _ petitioneseeking protective orders. He submits tnat once theAppellateTribunalnas|exercisedIts qciscretionCOdiscontinue the interim stay granted by it earlier, this Court cannot substitute its discretion and grant protectiveorders in favour of the petitioner. He would also submittnat the appeal before tne Appellate Tribunal has to beneard on merits, and that the petitioner has no case onmerits. Therefore, directions may be issued to thepetitioner to make good the balance amount due to tnerevenue and that the appeal could be disposed in terms ofthe directions issued by this Court. JIn response, learned counsel for petitioner|would submit that pursuant to the impugned order dated07/11/2017.(Annexure-F), orderdated15/11/2017(Annexure-H) nas been issued by respondent No.1attaching the bank account of the petitioner. Thepetitioner is unable to carry on its financial transactionsand if protective orders are not granted, then the revenuewould inevitably recover the amount and the appeals ofthe petitioner would become infructuous. 8.)Havingheard|learned|counselfor|the.respective parties at length, I find that granting of anyinterim order in these writ petitions and keeping the writpetitions pending before this Court would not serve any purpose particularly, when the matter is set down for finalargumentsbeforetheAppellateTribunaltomorrow(23/11/2017). In the circumstances, a direction is issuedto the Tribunal to dispose of the appeal in an expeditiousmanner i.e., on or before|,"-*"-'*"$. It is needless toobserve that in view of the specific direction issued by thisCourt for expeditious disposal of the appeal by theAppellate Tribunal, both parties are directed to co-operatewith the Tribunal. 8.)Havingheard|learned|counselfor|the.respective parties at length, I find that granting of anyinterim order in these writ petitions and keeping the writpetitions pending before this Court would not serve any purpose particularly, when the matter is set down for finalargumentsbeforetheAppellateTribunaltomorrow(23/11/2017). In the circumstances, a direction is issuedto the Tribunal to dispose of the appeal in an expeditiousmanner i.e., on or before|,"-*"-'*"$. It is needless toobserve that in view of the specific direction issued by thisCourt for expeditious disposal of the appeal by theAppellate Tribunal, both parties are directed to co-operatewith the Tribunal. QO.IT|ISnotedtnat|the.qdemancISaboutRs.129,00,00,000/- (Rupees one hundred and twenty ninecrore only). It is an admitted fact that a sum ofRs.70,00,00,000/-(Rupees|seventyCroreonly) IS deposited by the petitioner wnicn amounts to about 55%of the outstanding demand. In order to further protect theinterest of the revenue and keeping in mind the fact thattne appeal is slated for final arguments before tneAppellate Tribunal and balancing the equities on bothsides, the petitioner is directed to retain a balance ofanother 20% in Account No.0037238007 maintained withCITI Bank, M.G.Road Branch, Bengaluru-560 OO1. Tnesaid balance is rounded off to Rs.26,00,00,000/- (Rupees twenty six crore only) shall be maintained pending disposalof the appeal by the Appellate Tribunal. It is directed thatthe respondent snail not take further steps pursuant toorder dated 15/11/2017 (Annexure-H) and notice dated20/11/2017 till the disposal of the appeal by tne AppellateTribunal. 10.With the aforesaid observations and directions, the writ petitions areaqispose Sd/-| JUDGE S*|