S. 254(2A) Third Proviso: Tribunal has the power to grant unlimited stay of demand

Vodafone West Ltd vs. ACIT (ITAT Ahmedabad)

The assessee’s appeal was not disposed of by the Tribunal as a similar issue was pending in the case of another assessee before the Supreme Court. The Tribunal had granted a stay on recovery of the demand. On the expiry of 365 days, the assessee filed an application seeking extension of the stay for a further period. The assessee relied on Ronuk Industries 333 ITR 99 (Bom), Tata Communications Ltd 138 TTJ 257 (Mum)(SB) and Qualcomm Incorporated (ITAT Del) where it had been held that despite the Third Proviso to s. 254(2A), the Tribunal had the power to grant stay of demand beyond 365 days if the assessee was not at fault. The Department opposed the application by relying on Ecom Gill Coffee Trading (K’Taka HC) where a contrary view was taken and on Dunlop India Ltd 154 ITR 172 (SC). HELD by the Tribunal allowing the stay application:

The assessee is seeking extension of stay beyond 365 days. The assessee argued that on similar facts the matter is pending before the Supreme Court in case of Idea Cellular Ltd and Bharti Cellular Ltd wherein ad interim order had been passed. In CIT vs. Ronuk Industries Ltd 333 ITR 99 (Bom) & Tata Communications Ltd 138 TTJ 257 (Mum) (SB) it has been held that the Tribunal has power to extend the period of stay beyond 365 days under the Third Proviso to s. 254(2A) even if the delay in disposing off the appeal is not attributable to the assessee as there may be several other reasons for not disposing of the appeal by the ITAT. In Qualcomm Incorporated (ITAT Del) it was held that as there was a cleavage of opinion between the Bombay High Court and the Karnataka High Court and there was no decision of the jurisdictional High Court on the issue, the view favourable to the assessee has to be adopted. Consequently, the stay has to be extended subject to certain conditions.