Income Tax Appellate Tribunal - Mumbai
Arun Toshniwal , vs Assessee on 7 December, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "A" MUMBAI
BEFORE SHRI D. MANMOHAN, VICE PRESIDENT
AND
SHRI SANJAY ARORA, ACCOUNTANT MEMBER
S.A. No. 341/Mum/2012
(Arising out of ITA No. 7034/Mum/2012)
Assessment Year 2009-10
Arun Toshniwal, DCIT - 1(3),
16 Ishwar Bhavan, Aayakar Bhavan,
"A" Road, Churchgate, Vs. M.K. Road,
Mumbai - 400 020. Mumbai - 400 020.
[PAN:AADPT 9121C]
S.A. No. 342/Mum/2012
(Arising out of ITA No. 7032/Mum/2012)
Assessment Year 2009-10
Anurag Toshniwal, DCIT - 1(3),
12 Ishwar Bhavan, Aayakar Bhavan,
"A" Road, Churchgate, Vs. M.K. Road,
Mumbai - 400 020. Mumbai - 400 020.
[PAN:AADPT9118 P]
(Applicant) (Respondent)
Applicant by : Shri Mihir Naniwadekar
Respondent by : Shri Mohit Jain
Date of hearing : 07-12-2012
Date of pronouncement : 14-12-2012
ORDER
Per Sanjay Arora, A.M.
This is a set of two stay applications in the case of two assesses, being father and son, arising in pursuance to demands since confirmed by the Commissioner of Income Tax (Appeals)-2, Mumbai ('CIT(A)' in short ), vide orders of even date (11- 2 S.A. No. 341/Mum/2012 S.A. No. 342/Mum/2012 10-2012), dismissing the respective appeals by the assessees contesting their assessments u/s. 143(3) of the Income Tax Act, 1961 ('the Act') for the assessment year (AY) 2009-10.
2.1 The facts and circumstances of the two cases being similar, these were taken up for hearing together, and are being disposed of vide a common, consolidated order. Opening the arguments for and on behalf of the assessee, it was submitted by the learned Authorized Representative (AR), their counsel, that the assessee/s has a strong prima facie case in his favour, and that he would for the purpose of arguments adopt the figures obtaining in the case of Shri Arun Toshniwal, father. The issue raising in the instant appeals, he continued, is whether the non-compete fee received by the assessee/s is taxable as 'capital gains', i.e., as considered by the assessee, or as 'business income'. Capital gains being taxable at a lower rate and, further, subject to deduction on investment in residential house, as availed of in the present case, the said difference in the head of income results in a vast difference in the tax liability, i.e., between as returned and as assessed. The outstanding demand is at Rs. 160.31 lakhs, even as the assessee has already paid Rs. 55 lakhs, i.e., over 25% of the total demand. The assessee's case is that section 28(v)(a) of the Act, i.e., the provision under which the impugned income is sought to be brought to tax by the Revenue, would not apply as the basic condition s. 28, i.e., carrying on of business by the assessee during any part of the relevant previous year, is not fulfilled. As such, the same could not be assessed as business income. This aspect has been appreciated and adjudicated by the Tribunal in favour of the assessee in the case of Hami Aspi Balsara vs. ACIT (2010) 126 ITD 100 (Mum), since followed by the tribunal in the case of Savita N. Mandhana (in ITA Nos. 3878 & 3900/Mum/2010 dtd. 07-10- 2011/copy of record). The ld. CIT(A) has, however, relied on the decision in the case of ACIT vs. Late Dr. B. V. Raju (2012) 135 ITD 1 (Hyd) (SB), before whom the issue was different, i.e., whether the sum received by way of non-compete fee constituted income subject to tax or capital receipt, not exigible to tax at all.
Further, the assessee has invested the entire receipt on purchase of property, so that he is left with no liquidity to discharge the said demand, which is being 3 S.A. No. 341/Mum/2012 S.A. No. 342/Mum/2012 sought to be recovered by the Revenue in two installments. The balance of convinience is decidedly in his favour. The assessee further undertakes not to dispose of his assets till the disposal of its appeal by the tribunal, and also to furnish security to the satisfaction of the Assessing Officer (AO).
In the case of the second assessee, Anurag Toshniwal, no security is available, yet the father's undertaking and furnishing of security, which values at about Rs. 7 crores and, thus, adequate for the entire demand on both the assessees, would be made applicable in respect of him as well. Accordingly, stay of the entire outstanding demand, till the disposal of their appeals by the tribunal, was prayed for.
2.2 The ld. Departmental Representative (DR), on the other hand, would submit that the ld. CIT(A) has passed a comprehensive order, relying on the decision by the special bench of the tribunal in the case of Late Dr. B.V. Raju (supra), as well as by the hon'ble jurisdictional High Court in the case of John D'Souza vs. CIT (2009) 226 CTR (Bom) 540, upon issuing a finding as to the facts and circumstances of these two cases as being identical with that of the assesses, and which has not been disputed by the assessee-applicants.
3. We heard the parties, and perused the material on record. The first appellate authority having relied on the decision by the hon'ble jurisdictional High Court, as well as by the special bench of the tribunal, finding the facts as identical, we cannot consider the assessees to have a strong prima facie case in their favour, so as to grant stay. At the same time, the assessees' counsel placed sufficient material before us to submit that the assessees have good arguable case on merits and the balance of convenience is in favour of granting stay of collection of balance outstanding demand in view of the liquidity crunch. Taking the overall circumstances into consideration, we are of the view that it is a fit case for granting ad-interim stay till January 7, 2013, as announced in the open court, subject to the following conditions:
(a) The assessees would furnish an undertaking to the AO for non-disposal of their immovable properties pending disposal of the appeal by the Tribunal.4 S.A. No. 341/Mum/2012 S.A. No. 342/Mum/2012
(b) Shri Arun Toshniwal, in his individual capacity and as father of Shri Anurag Toshniwal has to furnish surety to the satisfaction of the AO with regard to the outstanding demand, as agreed to by the learned counsel for the assessee on behalf of Shri Arun Toshniwal.
The Registry is directed to post the appeal for final hearing on 07.01.2013, and in the event of Revenue seeking adjournment the stay granted shall extended to the next day of hearing. In the event of the assessees seeking adjournment, the ad- interim stay granted till 07.01.2013 will stand automatically vacated, and the assessees shall have to file fresh applications, if any, for seeking stay of collection of outstanding demand. It may be clarified, at the cost of repetition, that it cannot be treated as a stay per se but it would be more in the form of a restrain order so that the Revenue is prevented from taking coercive action to recover the demand in the meantime.
4. In the result, the stay applications by the assessees are disposed of in the above terms.
Order pronounced in the open court on 14th day of December, 2012 Sd/- Sd/-
(D. MANMOHAN) (SANJAY ARORA)
VICE PRESIDENT ACCOUNTANT MEMBER
Mumbai,
Date: December 14th , 2012
TNMM
5 S.A. No. 341/Mum/2012
S.A. No. 342/Mum/2012
Copy to:
1. Applicant
2. Respondent
3. The concerned CIT (A)
4. The concerned CIT
5. DR "A" Bench, ITAT, Mumbai
6. Guard File
(True copy)
By Order
Asst. Registrar,
Income Tax Appellate Tribunal,
Mumbai Benches, Mumbai