Delhi High Court Quashes Order Requiring OYO Parent Oravel Stays To Deposit 20% Tax Demand During Appeal

The Delhi High Court has quashed an order directing Oravel Stays Limited, the parent company of OYO, to deposit 20% of the outstanding tax demand as a condition for the grant of a stay during the pendency of its appeal.

A division bench of Justices Dinesh Mehta and Vinod Kumar set aside the order passed by the Commissioner of Income Tax which had disposed of the company's stay application by directing payment of 20% of the total demand while keeping the remaining demand stayed.

In its petition, the company had argued that the condition of depositing 20% of the outstanding demand had been imposed despite the Income Tax Appellate Tribunal (ITAT) having already ruled in its favour on the core issue.

Senior Advocate Ajay Vohra, appearing for the petitioner, pointed out that the ITAT in its order dated November 21, 2025 had clearly held that in the given factual circumstances, the assessee was not required to deduct tax at source and therefore no disallowance could be made. The Tribunal's decision was brought to the notice of the appellate authority, yet the authority imposed the pre-deposit condition while disposing of the stay application.

It was further argued that in the petitioner's own case for earlier assessment years 2018–19 and 2019–20, the department itself had held the company not to be an “assessee in default” through orders dated March 31, 2025.

Opposing the plea, the Revenue submitted that the ITAT's order had not attained finality as the limitation period for filing an appeal before the High Court had not yet expired. It was also argued that grant of interim stay in fiscal matters is discretionary and should ordinarily not be interfered with by courts.

The High Court observed that although courts are generally reluctant to interfere in matters relating to stay of tax demands, the present case warranted intervention due to its peculiar facts.

The bench noted that the ITAT, which is the final fact-finding authority, had already recorded a clear finding that the petitioner was not required to deduct tax at source. Such a finding had a direct bearing on the demand raised and should have been duly considered by both the Assessing Officer and the appellate authority while deciding the stay application.

“The Tribunal vide its order dated 21.11.2025 in petitioner's own case, for the very same assessment year while dealing with the issue of disallowance of expenditure has clearly recorded a finding that the assessee was not required to deduct tax at source and therefore, such finding being a finding of fact and decision on the requirement of deduction of tax, had a necessary bearing which not only Assessing Officer but also the Appellate Authority should have taken into consideration while deciding the stay application,” it said.

As such, the Court quashed the pre-deposit order and granted complete stay on the tax demand.

For Petitioner: Senior Advocate Ajay Vohra with Advocate Manuj Sabharwal

For Respondent: Puneet Rai, SSC.