The Karnataka High Court has said that theIncome-tax Appellate Tribunal or ITAT does not have powers to stay the tax demands beyond 365 days, an order which is expected to have a wide bearing. 

The ruling of the High Court on July 5 in the case of Ecom Gill Coffee Trading Pvt Ltd will be a set back to taxpayers whose appeals before the ITAT , the second appellate body on tax matters, are yet to be decided for a period beyond one year. In many cases, the disposal of appeals get delayed for reasons beyond the taxpayers' control. 

The division bench comprising Mr Justice D V Shylendra Kumar and Mr Justice B Manohar said that the ITAT is not statutory empowered to grant a stay on tax demand beyond 365 days. Section 254 (2A) of the Income-tax Act clearly provides ITAT with powers to stay a demand for 180 days. 

This section also provides for a further stay if the appeal is not disposed off within this period, and if the taxpayer is not responsible for the delay. However, the section also stipulates that the ITAT cannot give a stay beyond 365 days, whatever the reasons for the delay in disposal of the appeal. 

The division bench has made it clear that the ITAT does not have the powers to deviate from the law. (Economic Times)