The Mumbai ITAT has stayed Rs.1,031 Crores income tax demand against eBay on short term capital gain arising from sale of Flipkart shares.
Assessee-Company was assessed for short term capital gain of Rs.2,258 Cr on sale of shares of Flipkart Ltd. on which demand of Rs.1031 Cr. was raised.
Revenue directed Assessee to pay 20% of the outstanding demand which was contested by the Assessee as it had already paid Rs.261 Cr by way of TDS which was more than 20% of the disputed tax liability.
The co-ordinate bench in earlier stay application accepted the plea of the Assessee holding that “computation of 20% has to be with respect to total disputed demand, and not with respect to the outstanding demand specified under section 156” and remitted the matter to the Revenue to verify and grant the stay to the Assessee if 20% of the disputed demand was paid.
The ITAT notes that the Revenue, in clear violation of direction of ITAT, directed Assessee to pay entire outstanding demand of Rs.1,031 Cr.
ITAT observes that the appeal was fixed before the co-ordinate bench on various occasions which was adjourned at the request of Revenue as they were searching for a Special Counsel as the one appointed earlier had resigned.
ITAT finds that Assessee was subjected to TDS on its capital gain which is undisputedly more than 20% of the demand computed by the AO whereas the entire addition was challenged before the Revenue as well as before ITAT.
Thus, grants stay on the balance disputed demand for further six months or disposal of appeal whichever is earlier, for two reasons: (i) there is no fault on the part of the Assessee to conduct the appeals and it is the Revenue who is been seeking adjournment time and again and (ii) already stay was granted by the co-ordinate bench looking to the prima facie case on earlier occasions which was misinterpreted by the Revenue.
Case Title: M/s. eBay Singapore Vs. Deputy Commissioner Services Pvt. Ltd. V/s DCIT
Citation: SA No.52/Mum/2023