UTI Mutual Fund v. Incometax Officer

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The Tax Publishers2012 TaxPub(DT) 1939 (Bom-HC) : (2012) 345 ITR 0071 : (2012) 249 CTR 0190 : (2012) 206 TAXMAN 0341 : (2012) 069 DTR 0306 INCOME TAX ACT, 1961 --Recovery --Demand of invoking section 177(3) and garnishee proceedings under section 226(3)Appeal and stay application of trust were pending--A trust registered with the SEBI as a Mutual Fund, income of which was exempted under the provisions of section 10(23D). The assessee was one of the beneficiaries of the trust. The trust was set up for securiting a loan which was granted by Yes Bank Ltd. to HPCL company and ionterest was received by it from HPCL company on account of the loan which had been assigned to it. The rust had been assessed as an AOP. It submitted an application for stay of the demand to the AO. Without the application being disposed of, the AO called upon the rust to pay atleast 50 per cent of the demand. y a communication, assessee had been called upon to make payment of certaion sum under the provisions of section 177(3) on the ground that the assessee was a member of the AOP trust and was jointly and severally liable in respect of the demand against the AOP. Assessee moved the AO with an application for stay which was disposed of by the AO. In the mean time, the AO had taken action under section 226(3) by calling upon the bankers of the assessee to pay voer to the revenue certain sum on account of the arrears claimed from the assessee. The issue was whether the revenue should be permitted to enforce the demand under section 177(3) of the Act and to take coercive steps under section 226(3)in the form of a garnishee notice which had been issued to the bankers of the assessee. Assessee contended that the trust could not be considered as being an Association of Persons with regard to several judgments of Division Benches of Bombay High Court in that case, the provisions of section 177(3) could not be invoked against the assessee. Besides the assessee was not a member of the trust and could not be regarded as member of an AOP. Assessee had intervened in the appeal filed by the trust before the CIT(A). *Held:* The assessee had a serious issue to urge as regards the legitimacy of the demand which had been raised by the notice regard to the applicability of Section 177(3) of the Income Tax Act, 1961 on which the demand had been founded. The assessee had intervened in the appeal filed by the trust before the Commissioner (Appeals). Pending the disposal of the appeal and for a period of six weeks thereafter, the revenue should not take any coercive steps against the petitioner for enforcing the demand as contained in the communication. The revenue should also refrain from taking any coercive steps or from enforcing the notice issued by the AO on 12-3-2012 under section 226(3). The Attachment, if any, that had been levied should stand lifted. Income Tax Act, 1961 Section 226 IN THE BOMBAY HIGH COURT D.Y. CHANDRACHUD A& M.S. SANKLECHA, JJ. UTI Mutual Fund v. ITO Writ Petition Lodging No. 606 of 2012 14 March, 2012 No recovery of tax should be made pending (a) expiry of time-limit for filing an appeal and (b) disposal of a stay application, if any, moved by assessee and for a reasonable period thereafter to enable assessee to move a higher forum Section 226 of the Income-tax Act, 1961 - Collection and recovery of tax - Other modes of recovery - Assessment year 2009-10 Petitioner by : S.E. Dastur, MadhurAgarwal and Atul K Jasani Respondent by : Suresh Kumar SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1939 (Bom-HC) : (2012) 345 ITR 0071 : (2012) 249 CTR 0190 : (2012) 206 TAXMAN 0341 : (2012) 069 DTR 0306

INCOME TAX ACT, 1961

--Recovery --Demand of invoking section 177(3) and garnishee proceedings under section 226(3)Appeal and stay application of trust were pending--A trust registered with the SEBI as a Mutual Fund, income of which was exempted under the provisions of section 10(23D). The assessee was one of the beneficiaries of the trust. The trust was set up for securiting a loan which was granted by Yes Bank Ltd. to HPCL company and ionterest was received by it from HPCL company on account of the loan which had been assigned to it. The rust had been assessed as an AOP. It submitted an application for stay of the demand to the AO. Without the application being disposed of, the AO called upon the rust to pay atleast 50 per cent of the demand. y a communication, assessee had been called upon to make payment of certaion sum under the provisions of section 177(3) on the ground that the assessee was a member of the AOP trust and was jointly and severally liable in respect of the demand against the AOP. Assessee moved the AO with an application for stay which was disposed of by the AO. In the mean time, the AO had taken action under section 226(3) by calling upon the bankers of the assessee to pay voer to the revenue certain sum on account of the arrears claimed from the assessee. The issue was whether the revenue should be permitted to enforce the demand under section 177(3) of the Act and to take coercive steps under section 226(3)in the form of a garnishee notice which had been issued to the bankers of the assessee. Assessee contended that the trust could not be considered as being an Association of Persons with regard to several judgments of Division Benches of Bombay High Court in that case, the provisions of section 177(3) could not be invoked against the assessee. Besides the assessee was not a member of the trust and could not be regarded as member of an AOP. Assessee had intervened in the appeal filed by the trust before the CIT(A). Held: The assessee had a serious issue to urge as regards the legitimacy of the demand which had been raised by the notice regard to the applicability of Section 177(3) of the Income Tax Act, 1961 on which the demand had been founded. The assessee had intervened in the appeal filed by the trust before the Commissioner (Appeals). Pending the disposal of the appeal and for a period of six weeks thereafter, the revenue should not take any coercive steps against the petitioner for enforcing the demand as contained in the communication. The revenue should also refrain from taking any coercive steps or from enforcing the notice issued by the AO on 12-3-2012 under section 226(3). The Attachment, if any, that had been levied should stand lifted.

Income Tax Act, 1961 Section 226

IN THE BOMBAY HIGH COURT

D.Y. CHANDRACHUD A& M.S. SANKLECHA, JJ.

UTI Mutual Fund v. ITO

Writ Petition Lodging No. 606 of 2012

14 March, 2012

No recovery of tax should be made pending (a) expiry of time-limit for filing an appeal and (b) disposal of a stay application, if any, moved by assessee and for a reasonable period thereafter to enable assessee to move a higher forum

Section 226 of the Income-tax Act, 1961 - Collection and recovery of tax - Other modes of recovery - Assessment year 2009-10

Petitioner by : S.E. Dastur, MadhurAgarwal and Atul K Jasani

Respondent by : Suresh Kumar