M/S EXPEDITORS INTERNATIONAL OF WASHINGTION, INC. vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE INTERNATIONAL TAX 1(2)(2), DELHI AND ANR.

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W.P.(C)-11032/2022HC Delhi2022:DHC:287629 July 20223 pages
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What did the High Court hold?

The Delhi High Court held that the condition of depositing Rs. 5 crores imposed by the ITAT was set aside. The Court noted that the fact that the additions were decided in favor of the petitioner by the Tribunal for the last seven assessment years was not disputed. The Court referred to CBDT Instruction No. 1914 dated February 2, 1993, which provides that a complete stay can be granted if the demand relates to issues decided in the assessee's favor by an appellate authority or court. The Court also highlighted its own previous decisions holding that recovery of demand against issues decided in favor of the assessee is unwarranted. Consequently, the matter was directed to be heard by the Tribunal expeditiously, keeping in view the CBDT guidelines and the Supreme Court's judgment in Dunlop India Ltd. The Court found the impugned order to be in the teeth of its own previous decisions.

What were the facts?

The petitioner, M/s. Expeditious International of Washington, Inc., filed a writ petition challenging an order dated July 14, 2022, passed by the Income Tax Appellate Tribunal (ITAT) under Section 254 of the Income Tax Act, 1961. The ITAT directed the petitioner to pay Rs. 5 crores against an outstanding demand for Assessment Year 2018-19. The petitioner argued that this order was arbitrary, as the additions forming the basis of the demand had been decided in their favor by the ITAT in previous assessment years. The respondents, Assistant Commissioner of Income Tax and another, contended that for granting a stay, not only a prima facie case but also the balance of convenience and irreparable loss/injury must be established, citing the Supreme Court judgment in Assistant Collector of Central Excise vs. Dunlop India Ltd. & Ors.

What were the issues?

1. Whether the ITAT's order directing payment of Rs. 5 crores against an outstanding demand for AY 2018-19 was arbitrary, given that similar additions were decided in favor of the assessee by the Tribunal in previous assessment years? (Question of mixed law and fact, concerning Section 254 of the Income Tax Act, 1961). Assessee's Contentions: The order was arbitrary as the additions were covered by a series of decisions in the petitioner's favor by the Tribunal for seven previous assessment years. Revenue's Contentions: For granting a stay, not just a prima facie case, but also the balance of convenience and irreparable loss/injury must be made out. Relied on Assistant Collector of Central Excise, Chandan Nagar, West Bengal vs. Dunlop India Ltd. & Ors.

Which sections of the Income-tax Act were involved?

Section 254

AI-generated summary — verify with the full judgment below

W.P.(C) No.11032/2022 Page 1 of 3 $~21 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 11032/2022 & C.M.No.32314/2022 M/S EXPEDITORS INTERNATIONAL OF WASHINGTION, INC. ..... Petitioner Through: Mr.Deepak Chopra with Mr.Rohan Khare, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE INTERNATIONAL TAX 1(2)(2), DELHI AND ANR. ..... Respondents Through: Mr.Sunil Kumar Agarwal, Sr.Standing Counsel with Mr.Tushar Gupta and Mr.Uthkarsh Tiwari, Advocates. % Date of Decision: 29th July, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): 1. Present writ petition has been filed challenging the Order dated 14th July, 2022 passed under Section 254 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) in SA No. 180/Del/2022 in ITA No. 1464/Del/2022, whereby the Petitioner has been directed to pay an amount of Rs.5 crores against the outstanding demand for the Assessment Year 2018-19. 2022:DHC:2876-DB

W.P.(C) No.11032/2022 Page 2 of 3 2. Learned counsel for the Petitioner states that the challenge is primarily on the ground that said order has been passed arbitrarily as the payment has been directed against additions which stand covered in favour of the Petitioner by a series of decisions rendered by the Tribunal in the Petitioner’s own case in previous seven assessment years. 3. Issue notice. Mr.Sunil Kumar Agarwal, learned Senior Standing Counsel, accepts notice on behalf of the Respondents. He states that for grant of stay, not just the prima facie case but balance of convenience and irreparable loss/injury have also to be made out. In support of his submission, he relies upon the judgment of the Supreme Court in Assistant Collector of Central Excise, Chandan Nagar, West Bengal vs. Dunlop India Ltd. & Ors., (1985) 1 SCC 260. 4. In the present case, the fact that the additions stand covered in favour of the Petitioner by a series of decisions rendered by the Tribunal for the last seven assessment years is not in dispute. 5. This Court finds that the Central Board of Direct Taxes (CBDT) has itself issued Instruction No.1914 dated 02nd February, 1993 giving guidelines for Stay of Demand. One of the Guidelines for grant of complete stay is “if the demand in dispute relates to issues that have been decided in assessee’s favour by an appellate authority or court earlier.....” 6. Further the impugned Order is in the teeth of the decisions of this Court which have categorically held that recovery of demand against issues which have been decided in favour of Assessee is wholly unwarranted. 2022:DHC:2876-DB

W.P.(C) No.11032/2022 Page 3 of 3 7. Consequently, keeping in view the Guidelines/Instruction issued by the CBDT subsequent to the judgment of the Supreme Court in Dunlop India Ltd.(supra), the condition of deposit of Rs.5 crore imposed by the Tribunal vide impugned order dated 14th July, 2022 is set aside and the matter is directed to be heard by the Tribunal as expeditiously as possible. With the aforesaid direction, the present writ petition along with pending application stands disposed of. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J JULY 29, 2022 KA 2022:DHC:2876-DB

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