14A

 

IT : Where total income of a dealer of shares includes dividend (which is tax-free income under section 10) from unsold stock of shares (which were retained not with intent to earn dividend income but to trade in them), section 14A not to be invoked to apportion expenditure incurred in purchasing shares between dividend (tax-free income) and share trading profit (taxable income) and disallow expenditure proportionate to dividend income; this is in view of fact that dividend income is only incidental to assessee's business of sale of shares

[2012] 20 taxmann.com 196 (Karnataka)
HIGH COURT OF KARNATAKA

CCI Ltd.

v.

Joint Commissioner of Income-tax

TRIBUNAL TAX REPORTS : Volume 18 : Part 2 (Issue dated : 27-08-2012)

TR’S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 18 : Part 2 (Issue dated : 27-08-2012)

Best judgment assessment --Rejection of accounts and assessment under section 144--Disallowance of expenses under section 40(a)(ia) on ground of non-deduction of tax at source--Not justified--Income-tax Act, 1961, ss. 40(a)(ia), 144-- ITO v. Sahadev Pradhan (Cuttack) . . . 180

Business income --Income from other sources--Interest on income-tax refund--Is income from other sources, not business income--Income-tax Act, 1961, ss. 28, 56-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

Capital gains --Computation--Effect of section 50C--Assessee booking flat--Amount paid for booking returned subsequently--Section 50C not applicable--Income-tax Act, 1961, ss. 45, 50C-- ITO v. Yasin Moosa Godil (Ahmedabad) . . . 253

----Loss--Carry forward and set off--Change of law--Amendment with effect from April 1, 2003 restricting set-off of long-term capital loss only against long-term capital gains and not against short-term capital gains--Applicable only to long-term capital loss incurred in assessment year 2003-04 and subsequent years--Set-off of long-term capital loss brought forward from periods prior to assessment year 2003-04 governed by provisions as they stood prior to amendment--Assessee entitled to set off brought forward long-term capital loss relating to assessment year 2001-02 against short-term capital gains of assessment year 2003-04--Income-tax Act, 1961, s. 74 (as amended by Finance Act, 2002)-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

Charitable purpose --Donation for charitable purpose--Approval of institution--If objects charitable no right to deny approval--Registration under section 12A is sufficient proof--Assessee entitled to renewal of exemption certificate--Income-tax Act, 1961, ss. 12A, 80G(5)(vi)-- Bengal Hosiery Manufacturers’ Association v. Director of Income-tax (Exemption) (Kolkata) . . . 205

----Donation for charitable purposes--Registration of trust under section 80G--Clause in trust deed empowering trustees to invest in business--Other clauses making it clear that all powers subject to limitations and restrictions under Income-tax Act--Clause cannot be read in isolation--Trust granted registration under sections 10(23C) and 12A--Trust entitled to registration under section 80G--Income-tax Act, 1961, ss. 10(23C), 12A, 80G-- NSHM Academy v. CIT (Kolkata) . . . 244

Company --Book profits--Minimum alternate tax--Interest--Section 115JB not applicable--Net profit already computed under Companies Act--Addition to book profit not proper--Income-tax Act, 1961, s. 115JB-- Joint CIT v. Shreyans Industries Ltd. (Chandigarh) . . . 169

----Book profits--Provision for gratuity--To be excluded from calculation of book profits--Income-tax Act, 1961, s. 115JB-- Joint CIT v. Shreyans Industries Ltd. (Chandigarh) . . . 169

Depreciation --Goodwill--Amalgamation of wholly owned subsidiary with assessee-company--Subsidiary company earning income by lease of property--Primary asset transferred was land--No proof of transfer of goodwill--Depreciation not allowable on goodwill--Income-tax Act, 1961, s. 32-- Deputy CIT v. Toyo Engineering India Ltd. (Mumbai) . . . 159

Export --Special deduction--Profit on transfer of DEPB licence--Duty of Assessing Officer to grant opportunity of hearing to assessee--Matter remanded--Income-tax Act, 1961, s. 80HHC-- Jacob Export House v. Assistant CIT (Chandigarh) . . . 175

Interpretation of taxing statutes --Strict construction--Construction according to rules of grammar-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

Non-resident --Business loss--Set off--No permanent establishment in India--Assessee choosing to be governed by Income-tax Act and not by Double Taxation Avoidance Agreement--Assessing Officer cannot impose Double Taxation Avoidance Agreement--Assessee entitled to set off loss under “Profits and gains of business or profession†against “Income from other sources†--Income-tax Act, 1961, ss. 71, 90(2)-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

Reassessment --Notice issued after four years--No case of failure to disclose material facts--Reassessment on change of opinion--To be quashed--Income-tax Act, 1961, ss. 143(3), 147, 148-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

Refund --Interest--Interest on excess refund--Provision inserted with effect from June 1, 2003--Explanation that interest leviable for assessment years prior to that date if proceedings completed thereafter--Assessee liable to pay interest--Income-tax Act, 1961, s. 234D-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10(23C) --Charitable purposes--Donation for charitable purposes--Registration of trust under section 80G--Clause in trust deed empowering trustees to invest in business--Other clauses making it clear that all powers subject to limitations and restrictions under Income-tax Act--Clause cannot be read in isolation--Trust granted registration under sections 10(23C) and 12A--Trust entitled to registration under section 80G-- NSHM Academy v. CIT (Kolkata) . . . 244

S. 12A --Charitable purpose--Donation for charitable purpose--Approval of institution--If objects charitable no right to deny approval--Registration under section 12A is sufficient proof--Assessee entitled to renewal of exemption certificate-- Bengal Hosiery Manufacturers’ Association v. Director of Income-tax (Exemption) (Kolkata) . . . 205

----Charitable purposes--Donation for charitable purposes--Registration of trust under section 80G--Clause in trust deed empowering trustees to invest in business--Other clauses making it clear that all powers subject to limitations and restrictions under Income-tax Act--Clause cannot be read in isolation--Trust granted registration under sections 10(23C) and 12A--Trust entitled to registration under section 80G-- NSHM Academy v. CIT (Kolkata) . . . 244

S. 28 --Business income--Income from other sources--Interest on income-tax refund--Is income from other sources, not business income-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

S. 32 --Depreciation--Goodwill--Amalgamation of wholly owned subsidiary with assessee-company--Subsidiary company earning income by lease of property--Primary asset transferred was land--No proof of transfer of goodwill--Depreciation not allowable on goodwill-- Deputy CIT v. Toyo Engineering India Ltd. (Mumbai) . . . 159

S. 40(a)(ia) --Best judgment assessment--Rejection of accounts and assessment under section 144--Disallowance of expenses under section 40(a)(ia) on ground of non-deduction of tax at source--Not justified-- ITO v. Sahadev Pradhan (Cuttack) . . . 180

S. 45 --Capital gains--Computation--Effect of section 50C--Assessee booking flat--Amount paid for booking returned subsequently--Section 50C not applicable-- ITO v. Yasin Moosa Godil (Ahmedabad) . . . 253

S. 50C --Capital gains--Computation--Effect of section 50C--Assessee booking flat--Amount paid for booking returned subsequently--Section 50C not applicable-- ITO v. Yasin Moosa Godil (Ahmedabad) . . . 253

S. 56 --Business income--Income from other sources--Interest on income-tax refund--Is income from other sources, not business income-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

S. 71 --Non-resident--Business loss--Set off--No permanent establishment in India--Assessee choosing to be governed by Income-tax Act and not by Double Taxation Avoidance Agreement--Assessing Officer cannot impose Double Taxation Avoidance Agreement--Assessee entitled to set off loss under “Profits and gains of business or profession†against “Income from other sources†-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 74 (as amended by Finance Act, 2002) --Capital gains--Loss--Carry forward and set off--Change of law--Amendment with effect from April 1, 2003 restricting set-off of long-term capital loss only against long-term capital gains and not against short-term capital gains--Applicable only to long-term capital loss incurred in assessment year 2003-04 and subsequent years--Set-off of long-term capital loss brought forward from periods prior to assessment year 2003-04 governed by provisions as they stood prior to amendment--Assessee entitled to set off brought forward long-term capital loss relating to assessment year 2001-02 against short-term capital gains of assessment year 2003-04-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

S. 80G --Charitable purposes--Donation for charitable purposes--Registration of trust under section 80G--Clause in trust deed empowering trustees to invest in business--Other clauses making it clear that all powers subject to limitations and restrictions under Income-tax Act--Clause cannot be read in isolation--Trust granted registration under sections 10(23C) and 12A--Trust entitled to registration under section 80G-- NSHM Academy v. CIT (Kolkata) . . . 244

S. 80G(5)(vi) --Charitable purpose--Donation for charitable purpose--Approval of institution--If objects charitable no right to deny approval--Registration under section 12A is sufficient proof--Assessee entitled to renewal of exemption certificate-- Bengal Hosiery Manufacturers’ Association v. Director of Income-tax (Exemption) (Kolkata) . . . 205

S. 80HHC --Export--Special deduction--Profit on transfer of DEPB licence--Duty of Assessing Officer to grant opportunity of hearing to assessee--Matter remanded-- Jacob Export House v. Assistant CIT (Chandigarh) . . . 175

S. 90(2) --Non-resident--Business loss--Set off--No permanent establishment in India--Assessee choosing to be governed by Income-tax Act and not by Double Taxation Avoidance Agreement--Assessing Officer cannot impose Double Taxation Avoidance Agreement--Assessee entitled to set off loss under “Profits and gains of business or profession†against “Income from other sources†-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 115JB --Company--Book profits--Minimum alternate tax--Interest--Section 115JB not applicable--Net profit already computed under Companies Act--Addition to book profit not proper-- Joint CIT v. Shreyans Industries Ltd. (Chandigarh) . . . 169

----Company--Book profits--Provision for gratuity--To be excluded from calculation of book profits-- Joint CIT v. Shreyans Industries Ltd. (Chandigarh) . . . 169

S. 143(3) --Reassessment--Notice issued after four years--No case of failure to disclose material facts--Reassessment on change of opinion--To be quashed-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 144 --Best judgment assessment--Rejection of accounts and assessment under section 144--Disallowance of expenses under section 40(a)(ia) on ground of non-deduction of tax at source--Not justified-- ITO v. Sahadev Pradhan (Cuttack) . . . 180

S. 147 --Reassessment--Notice issued after four years--No case of failure to disclose material facts--Reassessment on change of opinion--To be quashed-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 148 --Reassessment--Notice issued after four years--No case of failure to disclose material facts--Reassessment on change of opinion--To be quashed-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 234D --Refund--Interest--Interest on excess refund--Provision inserted with effect from June 1, 2003--Explanation that interest leviable for assessment years prior to that date if proceedings completed thereafter--Assessee liable to pay interest-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

INCOME TAX REPORTS Volume 346 Part 4 (Issue dated 27-8-2012)

INCOME TAX REPORTS (ITR)

INCOME TAX REPORTS

Volume 346 Part 4 (Issue dated 27-8-2012)

HIGH COURTS
Advance tax --Interest--No material on record that assessee committed default in payment of advance tax--Tribunal justified in remitting matter to Assessing Officer for decision afresh--Income-tax Act, 1961, s. 234B-- CIT v . Kotak Securities Ltd . (No. 2)
(Bom) . . . 352
Business expenditure --Purchase of software--Is revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Amway India Enterprises (Delhi) . . . 341
----Repairs--Current repairs--Is revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Amway India Enterprises (Delhi) . . . 341
----Software expenses--Expenditure not to create new asset or a new source of income but to upgrade system--Extent of expenditure cannot be a decisive factor in determining its nature--Treatment in books of account not conclusive--Software expenditure is revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Asahi India Safety Glass Ltd . (Delhi) . . . 329
Capital or revenue expenditur e--Software expenses--Allowable--Income-tax Act, 1961-- CIT v . Kotak Securites Ltd . (No. 1) (Bom) . . . 349
Depreciation --First stock exchange membership card--Entitled to depreciation--Income-tax Act, 1961-- CIT v . Kotak Securites Ltd . (No. 1) (Bom) . . . 349
----First stock exchange membership card--Entitled to depreciation--Income-tax Act, 1961-- CIT v. Kotak Securities Ltd . (No. 2) (Bom) . . . 352
Reassessment --Reassessment after four years--Failure by assessee to disclose material facts--Income from other sources--Reopening of assessment to disallow interest on borrowings for purchase of shares--No failure by assessee--Reassessment not permissible--Income-tax Act, 1961, ss. 57(iii), 147, 148-- Ashank D. Desai v . Asst. CIT
(Guj) . . . 326
AUTHORITY FOR ADVANCE RULINGS
Non-resident --Royalty--Provision of social media monitoring service for company, brand or product, for subscribing clients--Subscriptions are royalty chargeable to tax in India--Tax deductible at source on payments--Income-tax Act, 1961, ss. 9(1)(vi), Expln. 2(iv), 195--Double Taxation Avoidance Agreement between India and Singapore, art. 12-- ThoughtBuzz Pvt. Ltd., In re . . . 345

ITR (TRIB)) Volume 18 : Part 1 (Issue dated : 20-08-2012)

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 18 : Part 1 (Issue dated : 20-08-2012)

Assessment --Notice--Service of notice at address other than address shown on return--Notice returned unserved--No proper service of notice--Assessment invalid--That assessee participated in proceedings--Does not preclude right to object on ground of non-service of notice--Provision precluding assessee from taking such objection not applicable to assessment years prior to 2008-09--Income-tax Act, 1961, ss. 143(2), 292BB-- Ashok B. Bafna v. Deputy CIT (Mumbai) . . . 43

Deduction of tax at source --Payment of royalty to non-resident for hire of transponder--Payment from one non-resident to another non-resident made outside India--Deduction of tax at source not required--Income-tax Act, 1961, ss. 40(a)(i), 195-- B4U International Holdings Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 62

Exemption --Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption--Income-tax Act, 1961, ss. 2(29BA), 10A, 10B--Special Economic Zones Act, 2005, s. 2(r)-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

Industrial undertaking --Infrastructure facility--Special deduction--Inland port--Container freight station is inland port--Income entitled to deduction--Income-tax Act, 1961, s. 80-IA(4)-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

Search and seizure --Assessment in search cases--Conditions precedent--Warrant of authorisation must be executed in name of assessee--Warrant in name of trust and assessee as managing trustee--Search executed in branches of bank--No search executed on assessee in individual capacity--No undisclosed income of assessee discovered--Assessment of assessee in individual capacity not permissible--Income-tax Act, 1961, ss. 132, 153A-- Dr. Mansukh Kanjibhai Shah v. Assistant CIT (Ahmedabad) . . . 80

----Assessment in search cases--Scope of proceedings--Abatement of pending assessments--Effect--Only one assessment for each assessment year separately on basis of findings of search and other material brought on record of Assessing Officer--Assessments not abating--Assessment to be made on basis of books or other documents not produced in course of original assessment but found in course of search and undisclosed income or undisclosed property discovered in course of search--Income-tax Act, 1961, ss. 132, 153A-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

Words and phrases --†Manufacture†-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

 Special Economic Zones Act, 2005 :

S. 2(r) --Exemption--Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

Income-tax Act, 1961 :

S. 2(29BA) --Exemption--Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

S. 10A --Exemption--Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

S. 10B --Exemption--Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption--Special Economic Zones Act, 2005, s. 2(r)-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

S. 40(a)(i) --Deduction of tax at source--Payment of royalty to non-resident for hire of transponder--Payment from one non-resident to another non-resident made outside India--Deduction of tax at source not required-- B4U International Holdings Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 62

S. 80-IA(4) --Industrial undertaking--Infrastructure facility--Special deduction--Inland port--Container freight station is inland port--Income entitled to deduction-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

S. 132 --Search and seizure--Assessment in search cases--Conditions precedent--Warrant of authorisation must be executed in name of assessee--Warrant in name of trust and assessee as managing trustee--Search executed in branches of bank--No search executed on assessee in individual capacity--No undisclosed income of assessee discovered--Assessment of assessee in individual capacity not permissible-- Dr. Mansukh Kanjibhai Shah v. Assistant CIT (Ahmedabad) . . . 80

----Search and seizure--Assessment in search cases--Scope of proceedings--Abatement of pending assessments--Effect--Only one assessment for each assessment year separately on basis of findings of search and other material brought on record of Assessing Officer--Assessments not abating--Assessment to be made on basis of books or other documents not produced in course of original assessment but found in course of search and undisclosed income or undisclosed property discovered in course of search-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

S. 143(2) --Assessment--Notice--Service of notice at address other than address shown on return--Notice returned unserved--No proper service of notice--Assessment invalid--That assessee participated in proceedings--Does not preclude right to object on ground of non-service of notice--Provision precluding assessee from taking such objection not applicable to assessment years prior to 2008-09-- Ashok B. Bafna v. Deputy CIT (Mumbai) . . . 43

S. 153A --Search and seizure--Assessment in search cases--Conditions precedent--Warrant of authorisation must be executed in name of assessee--Warrant in name of trust and assessee as managing trustee--Search executed in branches of bank--No search executed on assessee in individual capacity--No undisclosed income of assessee discovered--Assessment of assessee in individual capacity not permissible-- Dr. Mansukh Kanjibhai Shah v. Assistant CIT (Ahmedabad) . . . 80

----Search and seizure--Assessment in search cases--Scope of proceedings--Abatement of pending assessments--Effect--Only one assessment for each assessment year separately on basis of findings of search and other material brought on record of Assessing Officer--Assessments not abating--Assessment to be made on basis of books or other documents not produced in course of original assessment but found in course of search and undisclosed income or undisclosed property discovered in course of search-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

S. 195 --Deduction of tax at source--Payment of royalty to non-resident for hire of transponder--Payment from one non-resident to another non-resident made outside India--Deduction of tax at source not required-- B4U International Holdings Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 62

S. 292BB --Assessment--Notice--Service of notice at address other than address shown on return--Notice returned unserved--No proper service of notice--Assessment invalid--That assessee participated in proceedings--Does not preclude right to object on ground of non-service of notice--Provision precluding assessee from taking such objection not app

Prima facie demand raised has no leg to stand, it should be stayed fully

 

if Prima facie demand raised has no leg to stand, it should be stayed fully

If on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. From the perusal of materials brought on record, we are of the view that the Commissioner having himself expressed opinion in the order that there is enough strength in the plea of the assessee for stay of the demand, there was no occasion to direct for deposit of 30 percent.

Allahabad High Court

WRIT TAX No. – 367 of 2012

L.G.Electronics India Pvt. Ltd.

Vs.

The Commissioner Of Income-Tax And Others

Order

Heard Sri Ritesh Kumar Agrahari, learned counsel for the petitioner, and Sri Bharat Ji Agarwal, learned Senior Advocate, assisted by Sri Ritesh Jain, for the department. By consent of learned counsel for the parties, the writ petition is being finally decided.

This writ petition has been filed praying for quashing the order dated 19 March, 2012 passed by the Commissioner of Income Tax (Appeals) by which the stay application filed by the petitioners in appeal has been disposed of by allowing it partly directing the assessee to pay 30 percent of the total demand.

Learned counsel for the petitioner in support of the writ petition, contends that the Commissioner of Income Tax (Appeals) having himself found in the order impugned that "I find enough strength in the plea of the assessee for stay of demand" there was no occasion to direct for depositing 30 percent of the total demand. He submits that in view of the aforesaid prima facie opinion formed by the Commissioner, it was a fit case for stay of the total demand. He further submits that the case was covered by Section 194-C and was not governed by Section 194-I which was apparent from looking into the contract of service and other materials which were before the authorities themselves. He has placed reliance on judgment of Gujarat High Court in Tax Appeal No. 1037 of 2009 (Commissioner of Income Tax (TDS) vs. Swayam Shipping Services Pvt Ltd.) decided on 11.01.2011.

Shri Bharat Ji Agarwal, learned Senior Advocate, appearing for the department, submits that the Commissioner has discretion to grant partial interim relief even if it was a prima facie case. He has placed reliance on paragraphs 7 and 11 of the judgment of the Apex Court dated 9th February, 2009 in the case of M/s Pennar Industries Ltd. vs. State of Andhra Pradesh.

We have considered the submissions of learned counsel for the parties and perused the record.

The grounds which were pressed by the petitioner in support of the stay application has been noticed by the Commissioner. The CBDT circular No. 1914 has also been relied which has been quoted by the petitioner in writ petition. After hearing the assessee's authorised representative and written submissions of the company, following was observed by the commissioner of appeals:-

"The assessee had not taken the trailers/cranes on hire or rent from the said parties. The assessee has given sub-contracts to the said parties for the transportation of goods and not for renting out of machineries and equipments. Section 1941 of the Act makes provision for deduction of tax at source where any person who is responsible for paying to a resident any income by way of rent where as section 194C of the Act makes provision for deduction of tax at source where any person is responsible for paying any sum to any resident for carrying out any work including supply of labour for carrying out any work in pursuance of a contract between the contractor and a specified person. In the facts of the present case, there is nothing to indicate that the assessee has taken trailers/cranes on rent so as to attract the provisions of Section 1941 of the Act. The assessee had given sub-contracts for transportation of goods. In the circumstances, the said transactions would fall within the perview of section 194C of the Act as the assessee was responsible for paying the amount in question for carrying out work in pursuance of contracts between the assessee and the transporters and as such was required to deduct tax at source at the rate prescribed under the said section. The Commissioner (Appeals) was, therefore, justified in holding that the assessee was not an assessee in default within the meaning of the said expression as contemplated under section 201 of the Act and consequently, the Tribunal was justified in confirming the order passed by the Commissioner (Appeals)."

The Commissioner referred to the judgment of the Apex Court in the case of Assistant Collector of Central Excise vs. Dunlop India Ltd. reported in (1985) 154 ITR 172 (SC) and circular of CBDT No.19 14 and directed for deposit of 30% of the total demand.

The judgment of the Apex Court in M/s Pennar Industries's case (supra) laid down following in paragraph 7:-

"7. It is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. Petitions for stay should not be disposed of in a routine matter unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand. There can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved. Merely because this Court has indicated the principles that does not give a license to the forum/authority to pass an order which cannot be sustained on the touchstone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizens' faith in the impartiality of public administration, interim relief can be given."

The Apex Court in the aforesaid judgment has observed that it is true that on merely establishing a prima facie case, interim order of protection should not be passed. But if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand. From the perusal of materials brought on record, we are of the view that the Commissioner having himself expressed opinion in the order that there is enough strength in the plea of the assessee for stay of the demand, there was no occasion to direct for deposit of 30 percent. Thus the judgment relied by learned counsel for the petitioner also supports his submission. However, looking to the fact that we are only considering the stay application our any observation be not treated as concluded opinion on the issue and it shall be open for the Commissioner while deciding the appeal, to decide the appeal on merits without being influenced by any of our observation made in this order.

In view of the above, ends of justice be served in setting aside the order dated 19th March, 2012 and directing the appellate authority to decide the appeal finally on merits. We provide that during pendency of the appeal the demand against the petitioner shall be kept in abeyance. It is ordered accordingly. However, the petitioner shall furnish adequate security to the satisfaction of the respondent No. 4 for the amount to be deposited under the order of the Commissioner Income Tax (Appeals) i.e. 30% of the total demand within ten days. We make it clear that in case the security as directed above is not furnished, the petitioner shall not be entitled for any benefit of this order.

Accordingly, the writ petition is finally disposed of.