The issues arose out of an amendment to the income tax act in 2019 that sought to curtail the powers of ITAT in stay matters. As per the amendment unless 20% of the demand is deposited by the assessee ITAT cannot accord a stay on the demand.
Tata Education & Development Trust was arguing for a stay on its ₹100 crore tax demand saying that amendemnt is directory, not mandatory and does not curtail the powers of the Tribunal.
The ITAT after hearing the arguments observed that this question of legality on staying a tax demand is a pan-India issues of far reaching consequence
It is desirable to have the benefit of arguments from stakeholders in different part of the country and therefore refers the matter to President of ITAT for consideration of constitution of a larger bench and to frame questions for the larger bench's consideration, it said in the order.
The matter is posted to 6 July, in the interim the tax demand was stayed under condition that the trust will furnish an undertaking setting out complete details of investments of amounts not less than ₹99,75,60,400 which the assessee will not encash till the stay applications are disposed of, the tribunal ruled.
"This matter assumes significance as several taxpayers facing these high-pitched assessments are undergoing hardship in making these pre-deposits. ITAT is a quasi-judicial institution and ordinarily the government cannot curtail its powers. The The moot question is whether this amendment is directory or mandatory. This case would be watched closely and if passed in favor of taxpayers would provide relief to taxpayers," said Amit Maheshwari, Partner, Ashok Maheshwary & Associates.
This tax demand on Tata Education & Development Trust is part of larger tax litigation on 6 Tata trusts. In this particular case the trusts had reported nil income for assessment year 2011-12 and 2012-13.
In both of these assessment years, the trust had returned NIL income, but had also claimed amounts remitted to the educational universities outside India as income under relevant sections of I-T Act. This amount, for the assessment year 2011-12, was ₹197 crore and for the assessment year 2012-13, was ₹25 crore. The tax officer observed that there was a lack of approval from the Central Board of Direct Tax (CBDT), thus the amounts remitted abroad for application of trust funds had to be included in the income . These amounts were thus added to the income for taxation leading to a tax demand of ₹100 crore.
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