IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "B" : DELHI
BEFORE SHRI BHAVNESH SAINI, J.M. AND SHRI O.P. KANT, A.M.
Stay Application No.984/Del./2018
Arising out of
ITA.No.8058/Del./2018 - Assessment Year 2015-2016
Dabur Invest Corp.
4th Floor, Punjabi The JCIT, Range-46
Bhawan, 10, Rouse
vs.
Avenue, New Delhi. New Delhi.
PIN 110 002
PAN AADFD2529G
(Applicant) (Respondent)
For Assessee : Shri M.P. Rastogi, Advocate
For Revenue : Shri S.R. Senapati,
A.R of Revenue.
Date of Hearing : 02.01.2019
Date of Pronouncement : 02.01.2019
ORDER
PER BHAVNESH SAINI, J.M.
The assessee filed the present stay application
seeking stay against the outstanding demand of
Rs.111,61,79,720/- (Tax Rs.83,91,40,424/- + Interest) for
A.Y. 2015-2016.
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SA.No.984/Del./2018 in ITA.No.8058/Del./2018
Dabur Invest Corp. New Delhi.
2. We have heard the Learned Representatives of
both the parties and perused the material available on
record.
3. Learned Counsel for the Assessee submitted that
assessee has filed the return of income declaring total
income of Rs.54,51,110/-. The case was selected for
scrutiny on the reasons that there is large increase in
investment in unlisted equities during the year. The A.O.
noted from the audited accounts that assessee has received
Rs.2070.04 crores (including Rs.246.84 crores received
during the year) from Commercial Union International
Holding Limited (CUIH) as option money. The option money
has to be adjusted against further reduction of
shareholdings in M/s. Aviva Life Insurance Corporation Pvt.
Ltd., by the assessee in favour of CUIH, U.K. at a price to be
determined at the time of transfer of shares. The revenue, if
any, will be accounted for in the years of transfer of shares.
The explanation of assessee was called for as to why the
amount of Rs.246.84 crores should not be treated as
taxable income of the assessee in the year under
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SA.No.984/Del./2018 in ITA.No.8058/Del./2018
Dabur Invest Corp. New Delhi.
consideration. The assessee explained impugned amount of
option money is refundable security deposit. The A.O. after
examining the reply of the assessee held that in the present
case assessee has received "option price" every year and it is
not in any way linked to divestment of stake. Therefore,
same is chargeable to tax as business income. The A.O.
accordingly held that the amount of Rs.246.84 crores
received by the assessee this year is taxable in the hands of
the assessee as business income. The A.O. accordingly
made the addition of such amount and computed the
income of the assessee at Rs.247.39 crores. The addition
has been confirmed by the Ld. CIT(A).
4. Learned Counsel for the Assessee, therefore,
submitted that the entire demand has arisen on account of
the aforesaid addition. Learned Counsel for the Assessee
further submitted that there was a Joint Venture Agreement
Dated 07.08.2001 (PB-88) between CUIH and assessee for
the purpose of creating of leading company in India in the
field of Insurance which was to be opened for private players
in India and for that purpose various terms and conditions
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SA.No.984/Del./2018 in ITA.No.8058/Del./2018
Dabur Invest Corp. New Delhi.
were embodied in the agreement in Order of govern the
inter-se relations between the parties. The Insurance
business is controlled by IRDA and has also approved by
the Reserve Bank of India. On account of sterilization of
assessee's share due to option of purchase of shares
granted to CUIH, it was agreed amongst the parties that
CUIH shall pay option price to assessee. Such option price
as would have been received from CUIH, would be adjusted
and considered at the time of sale of shares by assessee to
CUIH. In case the above option price so received by the
assessee is in excess of selling price determinable in terms
of the agreement, then the assessee would be under
obligation to refund the excess option price so received.
Learned Counsel for the Assessee submitted that since the
agreement in question is dated 07.08.2001, therefore, it was
examined in earlier years by the A.O. and explanation of
assessee has been accepted in the assessment orders under
section 143(3) for A.Ys. 2005-2006 to 2014-2015. Copies of
the same are filed at pages 201 to 208 of the stay
application. He has submitted that for the first time in
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Dabur Invest Corp. New Delhi.
assessment year under appeal i.e., 2015-2016 the A.O. was
of the view that option price is business income and taxable
as revenue receipt. He has submitted that in fact it is on
account of capital receipt and is not taxable. He has
submitted that nature of option price as received by the
assessee is totally linked with the capital investment and
would be capital receipt in the hands of assessee and will
form part of sale consideration at the time of exist. He has
submitted that in A.Y. 2017-2018 the assessee has offered
the same as income on account of capital gains. He has
further submitted that due to above, the demand has been
raised at Rs.111.61 crores against which assessee has
already paid Rs.36 crores on different dates to the Revenue
Department. He has submitted that in earlier year A.O. was
satisfied with the explanation of assessee that the amount
in question is received on account of capital receipt.
Therefore, the assessee has a prima facie case for grant of
absolute stay. Learned Counsel for the Assessee further
submitted that in A.Ys. 2013-2014 and 2014-2015 the Ld.
Pr. CIT has invoked the provisions of Section 263 of the I.T.
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SA.No.984/Del./2018 in ITA.No.8058/Del./2018
Dabur Invest Corp. New Delhi.
Act on same issue, against which, assessee has preferred
appeals before the Tribunal which are posted for hearing on
14.01.2019. He has, therefore, submitted that an early
hearing in the above matter may also be granted and appeal
of assessee may be fixed on the same day i.e., on
14.01.2019.
5. On the other hand, Ld. D.R. similarly submitted
that appeals of assessee under section 263 of the I.T. Act for
the A.Ys. 2013-2014 and 2014-2015 on the same issue is
fixed before the Tribunal on 14.01.2019 and have also
submitted that appeal may also be fixed for the same date.
He has further submitted that though in earlier years A.O.
has passed the Orders under section 143(3) of the I.T. Act,
the A.O. has not raised any query on the nature of taxability
of option money in scrutiny proceedings. He has submitted
that in A.Ys. 2013-2014 and 2014-2015, the Ld. Pr. CIT has
reopened the assessments so framed under section 263 of
the I.T. Act against which appeals are pending before the
Tribunal on 14.01.2019. The Ld. D.R. however, admitted
that the assessee has paid an amount of Rs.36 crores
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SA.No.984/Del./2018 in ITA.No.8058/Del./2018
Dabur Invest Corp. New Delhi.
against the outstanding demand. The Ld. D.R. further
submitted that no coercive steps have been taken by the
A.O. for recovery of the outstanding demand in assessment
year under appeal and assessee has voluntarily paid the
amount in question as is referred to above. The Ld. D.R.
submitted that the present issue is involved in many years,
therefore, stay against the outstanding demand may not be
granted as it would severely impact the Revenue particularly
when assessee is in a position to pay the balance amount as
well. The Ld. D.R, therefore, submitted that the present stay
application may be dismissed.
6. We have considered the rival submissions. It is
well settled Law that while considering the stay against the
outstanding demand, the relevant criteria would be to
consider prima facie case, the balance of convenience,
irreparable loss and interest of Revenue. In the present
case, the issue involved is whether the amount in question
i.e., Rs.246.84 crores on account of option money is revenue
in nature or capital in nature ? According to the Learned
Counsel for the Assessee, the agreement in question
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Dabur Invest Corp. New Delhi.
between the assessee and M/s. CUIH is dated 07.08.2001
and have been examined by the A.O. in earlier years and no
adverse view have been taken against the assessee. In
preceding A.Ys. 2013-2014 and 2014-2015 though the
contention of assessee have been accepted by the A.O. but
the Ld. Pr. CIT has reopened the assessments under section
263 of the I.T. Act against which, appeals of the assessee
are pending before the Tribunal on 14.01.2019. Therefore,
without commenting on the merits of the case, we are of the
view that assessee has a prima facie case for grant of
absolute stay till the decision of the appeal particularly
when assessee has paid substantial demand of Rs.36 crores
against outstanding demand. It is a case where assessee
has declared income of Rs.54,51,114/- in the return of
income but due to the above addition, assessment have
been framed against the assessee in a sum of Rs.247.39
crores. The balance of convenience also lies in favour of
assessee and in case, entire demand is recovered against
the assessee, the purpose of the filing of the appeal would
be frustrated. The interest of Revenue is also protected
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Dabur Invest Corp. New Delhi.
because the assessee has already paid substantial demand
to the Revenue against the outstanding demand. The appeal
of assessee is pending for disposal and appeals of assessee
for another years on the same issue are also pending for
disposal. Therefore, considering the totality of the facts and
circumstances of the case, we stay the entire outstanding
demand for a period of six months or disposal of the appeal
whichever may expires earlier, subject to the condition that
assessee shall not seek unnecessary adjournment in the
matter. The Office is directed to fix the appeal of assessee
for final hearing on 14.01.2019 the day when other appeals
of the assessee on the same issue are fixed for final hearing.
Paper book, if any, be filed as per Rules with advance copy
to the Ld. D.R. Notice for the date fixed be issued to both
the parties. The stay application is allowed. It is clarified
that anything stated in this order shall not tantamount to
expression of opinion on merits of the case. Copy of the
Order be provided to both the parties.
7. In the result, stay application of the Assessee is
allowed.
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SA.No.984/Del./2018 in ITA.No.8058/Del./2018
Dabur Invest Corp. New Delhi.
Order pronounced in the open Court.
Sd/- Sd/-
(OP KANT) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 02nd January, 2019
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT `B' Bench, Delhi
6. Guard File.
// BY Order //
Assistant Registrar : ITAT Delhi Benches :
Delhi.
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