M/S. HIC ABF SPECIAL FOOD PRIVATE LI MITED V. UNION OF INDIA

WA/785/2016

AI Insights

The case involves M/S. HIC-ABF Special Foods Private Limited, the appellant, challenging the conditions imposed by the learned single Judge while granting a stay of recovery pending appeal before the Income Tax Appellate Tribunal. The dispute centers on adjustments to international transactions with associated enterprises for the assessment year 2011-2012, initially handled by the Transfer Pricing Officer and the Dispute Resolution Panel, leading to an assessment order appealable to the Tribunal. The appellant contested the requirement of furnishing a bank guarantee as a condition for the stay of recovery, arguing it was unjustly applied from a previous case. The court found merit in the appellant's argument, noting the significant increase in assessed income and modified the stay conditions to allow for security through immovable property instead of a bank guarantee.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 681417 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 07-04-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: M NAMBIAR; P GOPINATH
• Keywords: Assessment Order; Bank guarantee; Immovable Property; International Transactions; Stay of recovery; Transfer pricing
• Section: 143(3)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN THURSDAY, THE 7TH DAY OF APRIL 2016/18TH CHAITHRA, 1938 WA.No. 785 of 2016 () IN WP(C).11887/2016 ------------------------------------------- AGAINST THE ORDER/JUDGMENT IN WP(C) 11887/2016 of HIGH COURT OF KERALA DATED 29.03.2016 APPELLANT(S):/PETITIONER ------------ M/S. HIC-ABF SPECIAL FOODS PRIVATE LIMITED, 11/8, PROJECT COLONY ROAD, INDUSTRIAL DEVELOPMENT AREA, AROOR POST, ALAPPUZHA - 688 534, REPRESENTED BY ITS MANAGING DIRECTOR CHERIAN KURIAN. BY ADVS.SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS RESPONDENT(S):/RESPONDENTS -------------- 1. THE UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE (DEPARTMENT OF REVENUE), NORTH BLOCK, NEW DELHI - 110 001. 2. THE INCOME TAX APPELLATE TRIBUNAL, KENDRIYA BHAVAN, KAKKANAD, PIN - 682 037, REPRESENTED BY ASSISTANT REGISTRAR. 3. THE ASSISTANT COMMISSIONER OF INCOME TAX CORPORATE CIRCLE - 1 (2), KOCHI - 682 018. R BY SRI.PKR MENON, SENIOR STANDING COUNSEL FOR INCOME TAX DEPT. SRI.JOSE JOSEPH, SC FOR INCOME TAX DEPT. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 07- 04-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA 785/16 APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A : COPY OF LETTER DATED 30.03.2016 ISSUED BY THE CHIEF MANAGER OF THE FEDERAL BANK, AROOR. //TRUE COPY// PA TO JUDGE. jg-18/4 THOTTATHIL B.RADHAKRISHNAN & ANU SIVARAMAN, JJ. .................................................................... W.A.No.785 of 2016 .................................................................... Dated this the 7th day of April, 2016. J U D G M E N T Thottathil B.Radhakrishnan, J. 1.Heard the learned counsel for the appellant and the learned Senior counsel for the Income Tax Department. 2.This appeal is against the judgment of the learned single Judge. The appellant writ petitioner is the assessee. It challenges the conditions imposed by the learned single Judge while granting stay of recovery pending appeal before the Income Tax Appellate Tribunal. 3.The issue pending consideration in the appeal before the Tribunal relates to adjustments to international transactions with associated enterprises. That exercise is initially carried by a decision making process which involves Transfer Pricing Officer and the Dispute Resolution Panel. The TPO's adjustment was contested by the assessee before the Dispute Resolution Panel. WA785/16 -2- The resultant decision leads to an assessment order being issued by the assessing authority. This assessment order is directly appealable to the Tribunal. This is how the writ appellant's appeal for the assessment year 2011-2012 is now before the Tribunal. 4.As regards the previous year, the proceedings before the Tribunal had ended, by and large, against the assessee. That led to ITA No.215 of 2014 in which Ext.P7 order has been issued granting stay of recovery on condition that the appellant furnishes security by way of bank guarantee from a Nationalised Bank in Kerala for the amount covered by the order passed by the Income Tax Appellate Tribunal. 5.In the case in hand, there is no crystallized decision by the Tribunal which is subjected to an appeal before this Court. That stage is yet to be reached. The learned counsel for the appellant is, therefore, justified in pointing out that the yardstick applied by this Court in granting Ext.P7 order of stay pending an income tax appeal against the decision of the Tribunal ought not to have WA785/16 -3- been automatically adopted and applied to decide the writ petition from which this writ appeal arises. We also see that for the assessment year 2011-2012, the assessed income has gone up more than threefold. We are, therefore, of the view that the judgment issued by the learned single Judge needs to be modified. In the result, this appeal is allowed in part, and it is ordered that if the appellant furnishes security to the satisfaction of the third respondent by way of immovable property within the State of Kerala within a period of three months from today, the impugned recovery proceedings as against the appellant will stand stayed pending adjudication and disposal of the appeal against Ext.P1 assessment order. The impugned judgment is modified as above. (THOTTATHIL B.RADHAKRISHNAN, JUDGE) (ANU SIVARAMAN, JUDGE) jg-7/4 "