DR. REDDYS LABORATORIES LIMITED,HYDERABAD V. ACIT., CIRCLE- 8(1), HYDERABAD

SA 4/HYD/2025

AI Insights

Dr. Reddy's Laboratories Limited filed a stay application against an outstanding demand of Rs.405.80 crores arising from an assessment order under sections 144 and 144C(13) of the Income Tax Act, 1961. The demand was based on various additions made by the Assessing Officer, including transfer pricing adjustments and disallowances related to R&D expenditure and ESOPs. The assessee contested the validity of the assessment order, citing it was barred by limitation as it was not passed within one month of the Disputes Resolution Panel's directions, referencing a judgment in Rapiscan Systems Pvt. Ltd. vs. ADIT (Int.Tax), Hyderabad. The Tribunal considered the precedents and the legal arguments presented, along with the financial compliance of the assessee, which included a deposit of Rs.80 crores and an available refund of Rs.11.22 crores.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471810 (ITAT-HYDERABAD)
• Appeal Type: Stay Application
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2020-2021
• Other Referred Cases: Rapiscan Systems Pvt. Ltd. vs. ADIT (Int.Tax), Hyderabad
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINATH SADANALA
• Keywords: Validity of assessment; Application of stay

Judgement Text

"IN THE INCOME TAX APPEELLATE TRIBUNAL HYDERABAD “A” BENCH : HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER STAY APPLICATION NO.4/HYD/2025 ARISING OUT OF ITA NO.983/HYD/2024 ASSESSMENT YEAR 2020-21 Dr. Reddy’s Laboratories Limited, 8-2-337, Road No.3, Banjara Hills, Hyderabad – 500 034 State of Telangana PAN AAACD7999Q vs. ACIT, Circle-8(1), Signature Towers, Kondapur, Opp. Botanica Gardens, Hyderabad. Telangana. PIN – 500 084 (Applicant) (Respondent) For Applicant : Shri SP Chidambaram, Advocate For Revenue : Shri Srinath Sadanala, Sr. AR Date of Hearing : 14.02.2025 Date of Pronouncement : 14.02.2025 ORDER PER VIJAY PAL RAO, V.P. By this stay application the assessee is seeking for stay of the outstanding demand of Rs.405.80 crores arising from the assessment order passed u/sec.144 r.w.s.144C(13) of the Income Tax Act, 1961 [in short “the Act”]. 2 S.A.No.4/Hyd./2025 2. The learned AR of the assessee has submitted that the demand in the case of the assessee has been raised in view of the various additions made by the Assessing Officer comprising of TP adjustment as well as the disallowance of the claim u/sec.35(2AB) and ESOP and R & D Expenditure. He has pointed-out that most of the TP issues are covered by the decision of this Tribunal in assessee’s own case for the preceding years. Further, the assessee has also challenged the validity of the assessment order on the ground of being barred by limitation as the Assessing Officer has not passed the impugned assessment order within the period of one month from the date of directions of the Disputes Resolution Panel [in short “DRP”] and, therefore, this issue is claimed to be covered by the Judgment of Hon’be jurisdictional High Court in the case of Rapiscan Systems Pvt. Ltd., vs. ADIT (Int.Tax), Hyderabad 170 taxmann.com 753 (Telangana-HC). Hence, the AR submitted that the assessee has a good prima facie case on merits as well as on this legal ground. The learned AR has pointed-out that the assessee has already deposited a sum 3 S.A.No.4/Hyd./2025 of Rs.80 crores vide challans dated 24.12.2024 and 23.01.2025. He further submitted that the Assessing Officer has also issued a refund order dated 27.12.2024 to the tune of Rs.11.22 crores for the A.Y. 2007-2008 which may be adjusted against the current demand. The learned AR has submitted that the assessee has already deposited Rs.80 crore and credit available with the Assessing Officer is of Rs.11.22 crores which constitutes more than 20% of the total outstanding demand. Thus, the learned AR pleaded that the balance outstanding demand may be stayed till the disposal of the appeal of the assessee which has already been fixed for hearing on 17.03.2025. However, due to personal inconvenience the next date of hearing may be changed/postponed to 20.03.2025. 3. The learned DR, on the other hand, has objected to the stay of the outstanding demand and submitted that when there is no paucity of funds with the assessee, then, the entire demand should be paid. 4 S.A.No.4/Hyd./2025 4. We have considered the rival submissions as well as the material on record. In the appeal ITA.No.983/Hyd./ 2024 filed by the assessee, the assessee has raised various issues including validity of assessment order being barred by limitation. The learned AR has also relied upon Judgment of the Hon’ble jurisdictional High Court in the case of Rapiscan Systems Pvt. Ltd., (supra) wherein an identical issue has been decided in favour of the assessee. However, the legal issue as well as the other issues arising from the TP adjustment as well as other disallowances made by the Assessing Officer requires a detailed hearing and analysis of the facts as well as law which cannot be considered at this stage of deciding the stay application. Accordingly, in view of the fact that some of the issues raised by the assessee in the appeal are stated to be covered by the decision of this Tribunal in assessee’s own case for the preceding year and further the assessee has supported the legal ground by the Judgment of Hon’ble jurisdictional High Court in the case of Rapiscan Systems Pvt. Limited (supra), we find that the assessee has made-out a good 5 S.A.No.4/Hyd./2025 arguable case in the appeal. Since the assessee has already paid a sum of Rs.80 crores as well as agreed for the adjustment of the refund of Rs.11.22 crores issued by the Assessing Officer vide order dated 27.12.2024, for the A.Y. 2007-2008, a copy of which is produced before the Bench, the total payment as well as the refund available with the Department is more than 20% as required under the provisions of sec.254(2A) of the Act, the Assessing Officer is, therefore, directed to adjust the refund as per the order dated 27.12.2024 issued for the A.Y. 2007-2008 against the current demand and not to take any coercive action for recovery of the balance outstanding demand for a period of 90 days from the date of this order. The appeal of the assessee is already fixed for hearing on 17.03.2025. However, at the request of the learned AR, the date of hearing is now postponed to 20.03.2025. The Registry is directed to list the appeal of the assessee on 20.03.2025 in the category of ‘stay granted matters’. The parties are directed to fie their paper book, if any, well in advance with a copy to the other party and not to take adjournment of 6 S.A.No.4/Hyd./2025 hearing of the appeal. The next date of hearing of the appeal is pronounced in the open Court and, therefore, no separate notice shall be issued in this aspect. Accordingly, the stay application of the assessee is allowed. 5. In the result, stay application of the assessee is allowed. Order pronounced in the open Court on 14.02.2025. Sd/- Sd/- [MADHUSUDAN SAWDIA] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 14th February, 2025. VBP Copy to 1. The applicant 2. The respondent 3. DRP-1, Kendriya Sadan, 4th Floor “C” Wing, Bengaluru – 560 034. 4. The DC/ACIT, TP-1, Aaykar Bhavan, Opp. LB Stadium Basheerbagh Hyderabad – 500 004. Telangana. 5. The DR ITAT Hyderabad “A” Bench, Hyderabad 6. Guard Fie. //By Order// //True Copy// Sr. Private Secretary, ITAT, Hyderabad Benches, Hyderabad. "