Sri Dheeaj Amin, Mangalore vs Assessee

Shri M. Dheeraj Amin, Vs. The Assistant Commissioner of J.V. Sons Building, Income Tax, Hampankatta, Circle 2(1), Mangalore - 575 991. Mangalore. PAN : ADPPD 6279E

APPLICANT RESPONDENT

Applicant by : Shri V. Srinivasan, C.A. Respondent by : Shri C.H. Sundar Rao, CIT-I (DR)

Date of hearing : 20.02.2015 Date of Pronouncement : 20.02.2015

ORDER

Per N.V. Vasudevan, Judicial Member

This is a stay petition filed by the assessee praying that recovery of

outstanding demand of Rs.5,11,96,057 be stayed, pending disposal of the

above appeal of the assessee.

2. The particulars of the outstanding demand are as follows:- SP No.23/Bang/2015 Page 2 of 5

Tax including SC : 5,49,09,532 Interest u/s. 234B : 1,79,39,724 Interest u/s. 234C : 48,374 ---------------- 7,28,97,630 Less: Prepaid taxes 17,01,142 ---------------- Tax payable 7,11,96,488 Amount paid 2,00,00,431 ---------------- Balance payable 5,11,96,057 ----------------

3. The outstanding demand has arisen out of an addition made by the

revenue authorities by bringing to tax income arising on account of a joint

development agreement entered into by the assessee during the previous

year. According to the assessee, under the joint development agreement,

the builder has to construct a residential complex and give the assessee

40% of the built-up area in consideration of the assessee transferring 60%

of the share of the undivided land of the property, on which constructions

have to be carried out by the builder. It is the plea of the assessee that the

revenue authorities have wrongly taxed income arising out of joint

development agreement as taxable in the A.Y. 2010-11. According to the

assessee, transfer of a capital asset by the assessee would be completed

only when the assessee has share of the constructed built-up area

and not earlier. According to the assessee, the CIT(Appeals) has gone to

the extent of treating the income arising out of the joint development

agreement as business income. With regard to the financial position, the

assessee has pointed out that it is has huge borrowings from banks and SP No.23/Bang/2015 Page 3 of 5

does not have any liquid funds to pay the outstanding demand. It has also

been pointed out by the ld. counsel for the assessee that stay petition in

S.P. No.9/Bang/2014 was filed before the Tribunal by the assessee and the

Tribunal by order dated 29.01.2014 observed as follows:-

"4. We have considered the submissions of the ld. counsel for the assessee. Though the issue that arises for consideration in this appeal is debatable and there are several decisions of the higher forums on the issue, at this stage, it is not appropriate for us to express any opinion on the existence of a prima facie case. We are also not satisfied about the financial hardship to the assessee as well as threat of recovery. In the circumstances, we are of the view that it would be just and appropriate to fix the appeal out of turn for hearing on 14th May, 2014."

4. The ld. counsel for the assessee pointed out that the Tribunal

rejected the Stay Petition mainly on the ground that the issue had already

been decided by the higher forums and hence thought it fit to grant an out

of turn hearing. In the stay petition, it has also been pointed out that the

appeal could not be heard for reasons beyond the control of the assessee.

It has also been pointed out in the stay petition that the AO has attached

the bank account of the assessee making it impossible for the assessee to

realize outstandings which can be used to discharge the outstanding

demand raised by the Revenue.

5. The ld. counsel for the assessee reiterated the stand of the

assessee as reflected in the Stay Petition.

SP No.23/Bang/2015 Page 4 of 5

6. The ld. DR opposed the prayer for grant of stay of recovery of

outstanding demand and submitted that the assessee should be directed to

pay substantial amounts towards outstanding demand.

7. We have considered the rival submissions. When the first petition

for stay was filed by the assessee, the assessee had payment of only

Rs.61 lakhs. The assessee has thereafter made payments of

Rs.1,40,00,000 approximately. We also find that the bank account of the

assessee has been attached, which will put the assessee to hardships

inasmuch as his regular business affairs cannot be carried on. The ld.

counsel for the assessee has also brought to our notice that the property in

question was stock-in-trade of the business of the assessee and therefore

the computation of capital gain could not have been made at all. It was also

brought out that if the income in question is considered as business

income, then the computation of business income can happen only when

the project is completed. In that even, there can be no tax liability at all in

assessment year 2010-11. Keeping in mind the above submissions and

also keeping in mind the existence of prima facie case, balance of

convenience and hardships, we are of the view that it would be just and

appropriate to grant an order of stay of recovery of outstanding demand.

The assessee is directed to pay a sum of Rs.75 lakhs towards outstanding

demand on or before 20.3.2015. The order of attachment of bank accounts

of the assessee will stand suspended. The order of stay will operate for a SP No.23/Bang/2015 Page 5 of 5

period of 180 days from the date of this order, or till the disposal of appeal,

whichever is earlier.

8. In the result, the stay petition is allowed as indicated above.

Pronounced in the open court on this 20th day of February, 2015.

Sd/- Sd/-

( ABRAHAM P. GEORGE ) ( N.V. VASUDEVAN ) Accountant Member Judicial Member

Bangalore, Dated, the 20th February, 2015.

/D S/

Copy to:

1. Applicant 2. Respondents 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file

By order

Assistant Registrar / Senior Private Secretary ITAT, Bangalore.