HC refuses to vacate order staying tax demand on Tata Trust

The Bombay High Court has refused to interfere with an order of Income Tax (IT) Tribunal which granted a stay on a tax demand made by IT department of Rs 290 crores from Jamshetji Tata Trust for a period of six months from December 2013.
Hearing a petition filed by the Revenue Department yesterday, a bench headed by Chief Justice Mohit Shah refused to interfere at this stage because the appeal filed by the Trust before the Tribunal is expected to come up for hearing on March 10.
The order was passed by the IT Tribunal on December 20 last granting a stay on tax demand for six months or till the disposal of appeal whichever is earlier. The stay was granted on the ground that the respondent had made out a prima facie case on the major amount of outstanding tax.

Suresh Kumar, IT counsel, argued the order ought to have directed the respondent to deposit at least 50 per cent of the entire tax demand and furnish a bank guarantee for the balance amount. This is particularly so as there was no financial hardship pleaded by the assessee.
Soli Dastur, counsel for the Trust, submitted the respondent is a charitable trust and engaged in major charitable activities. Therefore, directing the respondent assessee to deposit or pay any amount of the demand inspite of its having a good prima facie case would entail funds not being available for charitable activities.
Further, in any case, as the assessee has a good prima facie case, no amounts need be deposited only in view of lack of financial hardship, he said.

Dastur argued that the order holds that the tax payable would be Rs 44 crores which is also disputed by the Trust. In any case, an amount of Rs 10 crores i.E. About 25 per cent of the demand of Rs 44 crores had already been paid. Therefore, the order is most reasonable and calls for no interference particularly as the appeal itself is fixed for final hearing on March 10.