This stay petition is filed by the assessee seeking stay of the outstanding demand of Rs.172,45,08,305/-, for the assessment year 2012-13. The demand in question had arisen on account of various SP.228/Bang/2017 Page - 2 additions made by the AO, to a tune of Rs.242.45 crores, vide order dt.31.01.2017 and the demand became due on 01.03.2017. 02 At the outset Bench asked the Ld. AR, whether the assessee is willing to pay 51 crore in addition to Rs 70 crore already paid i.e 50% of the total tax demand of Rs.242.45 crore,. The Ld. AR declined and submitted that the application be decided on merit by the Bench. Accordingly we are proceeding to decide the stay application on Merit.

03. The Ld. Sr. Advocate on behalf of the assessee has submitted a chart stating therein that the first issue is of interest income earned on interest-free advances made to USL Holdings is covered in favour of the assessee and if libor of 1.009 + 2 rate is adopted as per the decision of the coordinate bench of the Tribunal in Sami Labs Ltd v. DCIT [(2016) 66 taxmann.com 55]. Further second issue in respect to disallowance of interest u/s.14A of the is also required to be restricted for the dividend income earned by the assessee in terms of the judgment of the Hon’ble Delhi High Court in the matter of Joint Investments v. ACIT [ITA No.117/2015]. Lastly it was submitted that the disallowance of interest payment on borrowing u/s.36(1)(iii) is required to be allowed as there was business expediency as the USL- BVI is supplying the raw material for manufacture of scotch and whisky and this would enable the assessee to market WM products and adjustment of higher profits. SP.228/Bang/2017 Page - 3 04 on the other hand Dr relied upon the order of AO and DRP that the demand along with interest is payable by the assessee and further the assessee has not complied with the order of AO passed on the application for grant of stay and only part of the amount is paid by the assessee.

05. We have heard the rival submissions and perused the material on record. The AO has firstly raised the demand u/s.14A as the assessee was having dividend income from the investment made by the assessee. In our view, this issue of disallowance of interest income u/s.14A of the is required to be examined in detail and prima facie it cannot be said that the issue is covered in favour of the assessee by virtue of the Judgment of Hon’ble Delhi High Court in the matter of Joint Investments (supra), the assessee is required to establish various facts before seeking application of Judgment of Hon’ble Delhi High Court. The second addition is in respect of interest income earned on interest-free advances made to USL Holdings and application of LIBOR of 1.009 + 2. In this regard also we feel that this issue is required to be deliberated in the facts and circumstances of the case and therefore this issue also cannot be said to be covered. Last addition is in relation to disallowance of interest payment on borrowings u/s.36(1)(iii) of the. In this regard, we may note that the DRP prima facie held in para 24, of its order as under : SP.228/Bang/2017 Page - 4

24. The reasons given by the assessee are examined. The recipient of the loan ‘USL- BVI’ is located in British Virgin Islands and is just a holding company. The assessee is on record that these funds are for acquisitions of other companies. Thus the main reason for investment in this company is acquisition and expansion of assessee’s business rather than commercial expediency. It is not the case that this company (USL BVI) was supplying a critical component or raw materials to the assessee. Therefore, the test of ‘commercial expediency’ as in the case of SA Builders fails in this case. As the DRP has examined the issue of commercial expediency and held that the test of commercial expediency as laid down by the Hon’ble Supreme Court in S. A. Builders, is not applicable as mentioned herein above. Therefore once the finding of fact has concurrently been given against the assessee by the lower authorities, we do not find that the assessee was able to make out a prima facie case in its favour.

06. During the course of argument, the bench enquired from the Ld. AR whether the assessee is having any financial hardship or incapacity to pay the tax demand. To that it was replied that as on date there is no financial hardship, however, it is submitted that if the assessee was asked to pay the tax demand along with interest then the assessee’s commercial operations would be adversely prejudiced. Further the Ld. AR has submitted that the assessee has paid a sum of Rs.70 crores including partly complying the directions of the AO towards the tax demand.

07. In the break-up given by the assessee, the total tax demand as per the assessment order was Rs.313,61,60,169/-, out of that the total SP.228/Bang/2017 Page - 5 tax paid was Rs.168,46,49,465/- and the interest calculated on the unpaid tax demand was Rs.335,79,398/- and Rs.93,98,23,102/-. Thus the total demand payable was Rs.242,45,08,310/-. In fact, against the due amount of Rs.242,45 crores, the assessee till date had paid amount of Rs.70 crores as mentioned by the AO in his report and the balance payable tax demand is Rs.172.45 crores.

08. In the light of the above, we are of the considered opinion that the assessee is not able to make out a prima facie case in favour of the assessee. Further applicable principles for grant of stay have been set out succinctly in Silliguri Municipality and Ors. v. Amalendu Das and Ors. : [1984]146ITR624(SC) and Samarias Trading Co. Pvt. Ltd. v. S. Samuel and Ors. : [1985]2SCR24 .The Honble Apex Court, in the case of Asst. Central Excise vs. Dunlop India Ltd., (154 ITR 172) laid down the following three para meters to be taken into consideration at the time of grant of stay of demand by the appellate authorities: i. Existence of prima facie case ii. Financial hardship, and iii. Irreparable injury and balance of convenience. The Honble Supreme Court held as follows in para.6: "6...........All this is not to say that interim orders may never be made against public authorities. There are, of course, cases which demand that interim orders should be made in the interests of justice. Where gross violations of the law and injustices are perpetrated or are about to be perpetrated, it is the SP.228/Bang/2017 Page - 6 bounden duty of the Court to intervene and give appropriate interim relief. In cases 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, a Court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function properly and bona fide with due regard to the public interest, a Court must be circumspect in granting interim orders of far-reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties have come to the Court alleging prejudice, inconvenience or harm and that a prima facie case has been shown. There can be and there are no hard and fast rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration............ Again vide para. 9 held as follows: "9. ............... Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by the High Court. There was no question of any balance of convenience being in favour of the respondent- company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere bank guarantees. We notice that very often some Courts act as if furnishing a bank guarantee would meet the ends of justice. No Governmental business or for that matter no business of any kind can be run on mere bank SP.228/Bang/2017 Page - 7 guarantees. Liquid cash is necessary for the running of a Government as indeed any other enterprise. We consider that where matter of public revenue are concerned, it is of utmost importance to realize that interim orders ought not to be granted merely because a prima facie case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the public interest.......

09. Thus having regard to the above legal position, the assessee company had not made out a case for stay of the demand. In the circumstances, the stay petition filed by the assessee is not maintainable and is accordingly dismissed. It is made clear that by dismissing the application we are not expressing any opinion on the merits of the case. In case the Revenue loses the matters at the time of final hearing, it shall refund to the appellants the amount deposited or recovered with interest.

10. In the result, the stay petition is dismissed. Order pronounced in the open court on 17th day of November, 2017. Sd/- Sd/- (JASON P. BOAZ) (LALIT KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Bengaluru Dated : 17 th November, 2017 MCN* SP.228/Bang/2017 Page - 8 Copy to:

1. The assessee

2. The Assessing Officer

3. The Commissioner of Income-tax

4. Commissioner of Income-tax(A)

5. DR

6. GF, ITAT, Bangalore By Order SENIOR PRIVATE SECRETARY