INCOME TAX : ITAT order not accepted by Dept. & pending appeal should be followed by Dept. for succeeding AYs unless operation of order is stayed/suspended.

• Where ITAT held that amount paid by assessee to its foreign parent was not taxable and was hence not liable to TDS u/s 195 and the order was in appeal before HC but was not stayed, there is no excuse for Department not to follow the ITAT order in deciding cases of subsequent assessment years unless the operation of ITAT’s impugned order has been stayed/suspended by HC/SC. In the result, HC was justified in quashing the order u/s 201. However, it is also directed that the matter be remitted to the Assessing Officer (TDS) at the stage of issuance of show cause notice under Section 201 so that after the decision of the High Court in the pending Appeal, the same can be proceeded further in accordance with law and on merits.

SUPREME COURT OF INDIA
Income Tax Officer (International Taxation) IT Ward 2(3)(2)
v.
GIA Laboratory (P.) Ltd.
M.R. SHAH AND MS. HIMA KOHLI, JJ.
SPECIAL LEAVE TO APPEAL (C) NO(S). 19873 OF 2022
DECEMBER 6, 2022
Balbir Singh, ASG Rupesh Kumar, Shashank Bajpai, Rupender Sinhmar, Shyam Gopal, Samarvir Singh, Ms. Monica Benjamin, Advs. and Raj Bahadur Yadav, AOR for the Petitioner. Jehangir D. Mistry, Sr. Adv. Niraj D. Sheth, Utkarsh Vats, Deepanshu, Advs. and Bhargava V. Desai, AOR for the Respondent.

ORDER

1. While issuing notice, this Court, on 31.10.2022, passed the following order:-
“Delay condoned.
Shri Balbir Singh, learned ASG has submitted that in the present case, notice under Section 201 of the Income Tax Act, 1961 was issued much prior to the ITAT decided against the Department, which was for the AY 2014-2015. It is submitted that the appeal against the final decision of the ITAT for AY 2014-2015 is pending before the High Court. It is submitted that even the judgment for AY 2010-2011 which is followed subsequently while deciding the dispute for AY 2014-2015 is also pending before this Court. It is submitted that even in a case the Department succeeds before the High Court in an appeal for AY 2014-2015, in that case also subsequently there may be dispute with respect to limitation. It is submitted that therefore, the proper course for the High Court would have been to club the writ petition(s) to be heard with the pending appeal against the final decision of the ITAT for AY 2014-2015 so that the dispute with respect to limitation may not arise subsequently.
Issue notice for the aforesaid purpose, making it returnable on 25-11-2022.
Dasti, in addition, is also permitted.
The respondent be served within a period of one week from today.”
2. Having heard Shri Rupesh Kumar, learned Counsel, appearing for the Revenue and Shri Jehangir D. Mistry, learned Senior Advocate, appearing on behalf of the assessee and in the facts and circumstances of the case and considering the fact that the liability of the recipient in the subject-matter of Appeal before the High Court and to avoid any further question, which may arise on limitation, we confirm the impugned judgment and order passed by the High Court quashing and setting aside the order under Section 201 of the Income Tax Act, however, we also direct that the matter be remitted to the Assessing Officer (TDS) at the stage of issuance of show cause notice under Section 201 so that after the decision of the High Court in the pending Appeal, the same can be proceeded further in accordance with law and on merits.
3. The Special Leave Petitions stand disposed of.
4. Pending applications also stand disposed of.

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