India Cements Ltd., Chennai vs Assessee

M/s. India Cements Ltd, Vs. The Assistant Commissioner Santhome, of Income Tax, Chennai 600 028. Company Circle -II (3) Chennai 600 034.

[PAN AAACT 1728P]

Petitioner Respondent

Petitioner by : Shri. R. Vijayaraghavan, Advocate Respondent by : Shri. N. Madhavan, IRS, JCIT.

सन ु वाई क तार ख/Date of Hearing : 26-06-2015 घोषणा क तार ख /Date of Pronouncement : 26-06-2015

आदे श / O R D E R

PER CHANDRA POOJARI, ACCOUNANT MEMBER

By this stay petition, the assessee seeks stay of outstanding disputed

tax amount of B14,80,00,039/-.

-2- S.P.No.357/Mds/2015 (in ITA No.1070/Mds/2012)

2. The ld. Authorised Representative for assessee submitted that the

assessment was completed u/s.143(3), the Assessing Officer has added and

disallowed the following items (i) disallowance of B2,35,01,000/- under

section 43B(f) towards provisions for leave encashment, (ii) addition of

B20,20,40,373/- on account of interest recognized (iii) disallowance of

B62,56,25,000/- towards deprecation on franchisee rights of IPL and (iv)

disallowance of fees of B2,50,00,000/- paid to Rishi Vidhya Consultants P. Ltd.

On appeal the Commissioner of Income Tax (Appeals) partly allowed the

appeal by dismissing ground regarding provisions for leave encashment and

disallowance of fees paid to Rishi Vidhya consultants P. Ltd and in respect of

depreciation on franchisee rights of IPL, the Commissioner of Income Tax

(Appeals) has directed the Assessing Officer to allow the annual franchise fee

of B36.40 crores as revenue expenditure u/s.37 of the Act. Aggrieved, the

assessee and the department has filed an appeal before the Tribunal in ITA

No.1299/Mds/2012 and ITA No.1070/Mds/2012 and the same was pending.

It was the contention of the assessee that the IPL franchise rights constitute

capital assets entitled to deprecation on the total bid amount. High Courts

have held that the total cost of acquisition on which deprecation is to be paid

would be the aggregate of all the installments to be paid. Hence, the

depreciation is to be granted on the total cost of the acquisition of the license,

-3- S.P.No.357/Mds/2015 (in ITA No.1070/Mds/2012) notwithstanding the fact that the amounts was to be paid in installments. The

other issues viz., disallowance of provision for leave encashment u/s.43B(f)

has been decided in favour of the assessee by Hindusthan Latex - 2012-TIOL-

484-HC- KER, Exide batteries 292 ITR 470 Cal, Universal medicare 324 ITR

263 Bom. In this view of the favourable decision and based on the ratio of

the Supreme Court in the case of CIT Vs Vegetable Products ltd reported in 88

ITR 192 the issue to be decided in favour of the assessee. Thus, the Petitioner

has a fair chance of winning on these issues before the Tribunal. Further,

the Petitioner has paid a full amount of tax outstanding and balance amount

now being required to be paid by the department is only interest u/s.234B

(B18,58,36,516) and 234C (Rs.2,19,50,651).

3. It was submitted that the assessee also filed a Stay Application before

the Tribunal on earlier occasion. The SP No 180/Mds/2014 came up for

hearing before this Tribunal on 04.07.2014. After considering the submission

of both the sides, Bench has stayed the recovery of the demand till the

disposal of the appeal or for 90 days from the date of order whichever is

earlier. The appeal of the assessee is fixed for hearing on 30.09.2014. But on

30.09.2014. the "C" Bench did not function. In the meanwhile the stay

granted earlier by the Tribunal expired on 03.10.2014. Hence the assessee

filed petition for extension of stay in SP No. 270 of 2014. The same was

-4- S.P.No.357/Mds/2015 (in ITA No.1070/Mds/2012)

disposed off by Tribunal on 10th October, 2014 directing the assessee to pay

B50 lakhs on or before 15/11/2014 on which balance demand is stayed till

31.03.2015 or till the disposal of appeal, whichever is earlier and directed to

post the appeal on 06.01.2015. On 06.01.2015 the Departmental

Representative sought time and the case was adjourned to 05.02.2015. On

05.02.2015 the case adjourned to 19.03.2015. On 19.03.2015 the Bench

adjourned the case due to paucity of time and again posted for hearing on

25.05.2015. On 25.05.2015 the assessee sought time as Assessee

Representative was out of station. The Bench adjourned the case to

23.07.2015. In the circumstances, it was pleaded to extend the Stay of

collection of demand by another 6 months or till the disposal of appeal in the

interest of justice.

3. The ld. Departmental Representative submitted that there is a huge

tax demand, and the assessee may be asked to pay a portion of the liability.

4. We have heard both the parties and perused the material on record.

The assessee in earlier occasion filed a stay petition before the Tribunal in

S.P. No.180/2014, the Tribunal vide its order dated 4.07.2014, granted stay

for a period of 90 days from the date of order. Later on, once again the

assessee filed stay petition No.270/Mds/2014, the Tribunal vide its order

-5- S.P.No.357/Mds/2015 (in ITA No.1070/Mds/2012)

dated 10th October, 2014, disposed the same with a direction to the assessee

to pay B50,00,000/- on or before 15.11.2014 and the balance demand was

stayed till 31.03.2015. This is third stay petition filed by the assessee. The

case was adjourned on various occasions, mostly not attributable to the side

of the assessee. Being so, in our opinion, it is appropriate to extend the stay

for further period of two months from the date of this order.

5. Accordingly, the stay petition is partly allowed.

Order pronounced in the open court on 26th of June, 2015, at Chennai.

Sd/- Sd/- (एन.आर.एस. गणेशन)) (चं पज ू ार ) (N.R.S. GANESAN) (CHANDRA POOJARI) या यक सद य/JUDICIAL MEMBER लेखा सद य /ACCOUNTANT MEMBER चे नई/Chennai !दनांक/Dated:26th June, 2015 KV

आदे श क & त'ल)प अ,े)षत/Copy to:

1. Petitioner 2. Respondent 3. CIT(A) 4. CIT 5. DR. 6. Guard File.