Income Tax Appellate Tribunal - Mumbai
Kersiwood Holdings Ltd., Cyprus vs Asst Cit (It) Circle- 3 (1)(2), Mumbai on 17 January, 2020
SA No. 15/Mum/2020
Assessment Year: 2015-16
Page 1 of 4
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI"I" BENCH, MUMBAI
[Coram: Pramod Kumar (Vice President)
And Ravish Sood (Judicial Member)]
SA No.15/Mum/2020
(Arising out of ITA No. 7108/Mum/2019)
Assessment year: 2015-16
Kersiwood Holdings Limited ......................Applicant
3 Afentrikas, Office 101,6018 Larnaca, Cyprus
C/o. Algo Legal, 25/2, 8th Floor, SN Towers,
MG Road, Bengaluru - 560 001[PAN: AAFCK 9247 B]
Vs
Asst. Commissioner of Income Tax
(IT), Circle 3(1)(2), Mumbai ......................Respondent
Appearances by
Rajan Vora & Hemen Chandaria for the applicant
Avneesh Tiwari for the respondent
Date of concluding the hearing : January 17, 2020
Date of pronouncement of the order : January 17,2020
O R D E R
Per Pramod Kumar, VP:
1. By way of this application, the assessee applicant seeks a stay on collection / recovery of outstanding tax and interest amount aggregating to Rs.22,60,83,354/-, in respect of the demand created as a result of assessment under section 143(3) r.w.s. 144C (13) of the Income Tax Act, 1961, for the assessment year 2015-16, which is impugned in appeal filed before us.
The assessee applicant has also prayed for an out of turn hearing of the appeal wherein correctness of this demand is challenged.
SA No. 15/Mum/2020Assessment Year: 2015-16 Page 2 of 4
2. When this stay application came up for hearing, it was noticed that, vide order dated 14th January 2020 [DIN:ITBA/COM/F/17/2019-20/1023871408(1)], the Commissioner of Income Tax (International Taxation) Mumbai-III has already granted stay on collection/ recovery of the disputed demands till 30th June 2020 or till disposal of appeal- whichever is earlier, on the condition that the assessee applicant pays 30% of the demand on or before 31st January 2020. It was in this background that it was put to the assessee as to why we should not decline to interfere in the matter unless any perversity is shown in the stay granted by the learned Commissioner, or unless it is demonstrated that there are genuine hardships in complying with the conditions attached to the grant of stay.
3. Learned counsel for the assessee made an attempt to demonstrate strong prima facie case in favour of the assessee. It was submitted that the assessee is a Cyprus based company, incorporated as a joint venture between two entirely unrelated companies incorporated in British Virgin Islands- namely Enfield Investments Holding Corp and Palam Management Corporation. The assessee company has held investments in various countries including Singapore, Germany, USA and Mauritius. The assessee company had made investments in, inter alia, a Singaporean company by the name of Accelyst. This investment was made, under an arrangement with Accelyst and in tandem with other investors- including institutional investors, with the approval of shareholders and board of directors of Accelyst. In what is said to be an unrelated development, under a share purchase agreement dated 11th March 2015, all the shareholders of Accelyst sold their shares to Jasper, an Indian company, and it was under this arrangement that the assessee received Rs 144.23 crores. The Assessing Officer, however, declined to grant the protection of India Cyprus tax treaty for a number of reasons which indicate that the assessee was not a beneficial owner in respect of the investment in question. Learned counsel for the assessee took pains to demonstrate, or rather attempt to demonstrate, that the reasoning adopted by the Assessing Officer, which has met the approval of DRP as well, is ex facie unsustainable in law. It was submitted that the assessee has a very strong prima facie case, reasonable chances to succeed, and, therefore, stay should be granted to the assessee. In response to bench's question about the financial position, learned counsel for the assessee did not even contend that the assessee has significant financial problems, but he submitted that it will take some time for him to bring in the monies for making the payment of tax demands. He, however, reiterated that in view of strong prima facie case, the stay should be granted. Learned Departmental Representative, SA No. 15/Mum/2020 Assessment Year: 2015-16 Page 3 of 4 taking a cue from the propositions put to the assessee applicant, submitted that the action of the Commissioner of Income Tax, being reasonable and appropriate, does not call for any interference. He also submitted that as the assessee is a foreign company with no presence in India, it is all the more important to protect the interests of the income tax department. He urged us not to interfere in the matter. In a brief rejoinder, learned counsel for the assessee submitted that he should at least be allowed two installments for making payment of 30% of the demand, and the time for making the payment may be extended to 29th February 2020 as it will take time for the assessee to bring in funds from abroad.
4. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.
5. We must refrain from making comments on the merits of the appeal at this stage. In any event, we are not of the considered view that it is such an open and shut case in favour of the assessee that not granting a complete stay on the facts of this case will amount to a gross miscarriage of justice. We may also add that while recognizing inherent powers of the Income Tax Appellate Tribunal to stay the demands impugned in appeal in appropriate cases, Hon'ble Supreme Court, in the case of ITO Vs M K Mohd Kunhi [(1969) 71 ITR 815 (SC)], had also observed that, "......It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue laws. It will only be when a strong prima facie case is made out that the Tribunal will consider whether to stay the recovery proceedings and on what conditions, and the stay will be granted in most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal...". Essentially, therefore, as long as the authorities below, including the Assessing Officer and his administrative superiors such as Joint/ Additional Commissioners of Income Tax, Commissioners/ Principal Commissioners of Income Tax etc, have dealt with the stay petitions of the assessee in a reasonable manner and there is no perversity or unreasonableness in their approach, there is no occasion for this Tribunal to interfere in the matter. The powers of the Tribunal to grant stay on collection/ recovery of demands, during the pendency of appeal, cannot be exercised in a routine manner simply on the basis of an assessment of prima facie merits in the appeal.
SA No. 15/Mum/2020Assessment Year: 2015-16 Page 4 of 4 No case is made out that by making the partial payment of demands, as directed by the learned Commissioner, the assessee will be subjected to any serious and undue hardship. There is nothing to show that any significant inconvenience will be caused to the assessee in complying with the conditions imposed by the learned Commissioner, while granting the partial stay, or that the order of the learned Commissioner, in so granting the partial stay, is perverse or unreasonable. In these circumstances, we are not inclined to interfere in the matter so far as grant of stay is concerned. In today's world of ultrafast banking transactions, it is difficult to believe that a period of 15 days is less than sufficient to organize an inward foreign remittance, and it is not even the case of the assessee that the assessee has paucity of funds. In any event, it is open to the assessee to point out all the related facts to the Commissioner, and seek appropriate relaxations as he may be advised. Suffice to say that in the absence of any perversity or any unreasonableness on the part of the Commissioner, in granting the partial stay, we are not inclined to interfere in the matter.
6. With the consent of the parties, however, we have posted the matter for an out of turn hearing on 24th February 2020. This date of hearing is pronounced in the open court and parties are directed to make every effort to ensure that the appeal can be disposed of on that date, and file the paper-books etc, if any, well in advance.
7. In the result, the stay application is dismissed. Pronounced in the open court on 17th day of January, 2020.
Sd/- Sd/-
Ravish Sood Pramod Kumar
(Judicial Member) (Vice President)
Mumbai, dated the 17 th day of January, 2020
Copies to: (1) The Applicant (2) The respondent
(3) CIT (4) CIT(A)
(5) DR (6) Guard File
By order
True Copy
Assistant Registrar
Income Tax Appellate Tribunal
Mumbai benches, Mumbai