EUI LIMITED,GURUGRAM V. DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX, GURUGRAM

SA 40/DEL/2025

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EUI Limited filed a stay application against the demand raised by the DCIT for the Assessment Year 2022-23, amounting to Rs.2,29,94,920. The demand arose from various disallowances and additions made in the final assessment order, including disallowances under section 10AA of the Income Tax Act on foreign exchange gains and other reimbursements due to non-deduction of TDS. The applicant argued that the additions were not in line with the directions of the Dispute Resolution Panel (DRP) and cited precedents supporting their claims. The Revenue opposed the complete stay, suggesting a significant demand should be paid due to the absence of financial constraints. The tribunal found merit in the applicant's arguments, granting a stay subject to a partial payment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31611 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 28-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Other Referred Cases: Roca Bathroom Products Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961, Income Tax (Appellate Tribunal) Rules, 1963
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: NAGESWAR RAO
• Keywords: TDS; Validity of assessment; Application of stay
• Section: 143(3); 254(2); 10AA

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT and SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER SA No.40/Del/2025 (in ITA No.331/Del/2025) (Assessment Year : 2022-23) EUI Limited, vs. DCIT, 5th Floor, Tower B, Building No.6, Gurgram. GIL IT/ITES SEZ, Sector 21, Dundahera, Gurgaon – 122 001 (Haryana). (PAN : AACCE8854F) (APPLICANT) (RESPONDENT) APPLICANT/ASSESSEE BY: Shri Nageswar Rao, Advocate Shri Parth, Advocate REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 24.01.2025 Date of Order : 24.01.2025 O R D E R PER S.RIFAUR RAHMAN, AM: 1. Applicant/Assessee, M/s. EUI Limited (hereinafter referred to as ‘the assessee’) filed the present stay application sought to stay the demand of Rs.2,29,94,920/- for the AY 2022-23 under Rule 35A of the Income Tax (Appellate Tribunal) Rules, 1963 (for short ‘the Rules’). 2 SA No.40/Del/2025 2. At the time of hearing, ld. AR of the assessee submitted that assessee has declared returned income of Rs.11,76,25,925/- and in final assessment order following additions are made as under :- (a) Disallowance of deduction under section 10AA of the Act claimed on foreign exchange gain; (b) Disallowance of reimbursements of salary etc. made to HO pertaining to employees of HO being deputed in India, on account of non-deduction of TDS; (c) Disallowance of reimbursements of leased line charges made to HO on account of non-deduction of TDS; and (d) Disallowance of claim under section 10AA of the Act on Additional Income voluntary offered to tax. And total additions made are to the extent of Rs.4,51,90,895/-. Further he submitted that disallowance of deduction u/s 10AA of the Income-tax Act, 1961 (for short ‘the Act’) claimed on foreign exchange gain was sustained by the Assessing Officer which is not in line with the directions of ld. DRP and further submitted that the claim of the assessee relating to reimbursement of salary etc. made to HO and reimbursement of lease line charges were made for the reason of non-deduction of TDS which was upheld by ld. DRP, moreover, regarding the benefit under section 10AA of the aforesaid disallowances, no reference was made on account of this issue in the directions issued by the ld. DRP. He submitted that the Assessing Officer has made total addition of Rs.4,51,90,895/- and raised proportionate demand of Rs.2,29,94,920/- which includes erroneous levy of interest and fee payable 3 SA No.40/Del/2025 and non-grant of self-assessment tax paid to the extent of Rs.15,79,144/- and Rs.18,05,000/- respectively and submitted that the net demand should have been Rs.1,96,10,776/-. 3. In the reason for seeking stay, ld. AR submitted that the assessee has raised the issue of validity of assessment passed u/s 143(3) r.w.s. 144C(13) of the Act by relying on the decision of Hon’ble Madras High Court in the case of Roca Bathroom Products Pvt. Ltd. Further he submitted that even, on merits, the impugned order passed by the Assessing Officer is baseless and unjustified. In this regard, he submitted that foreign exchange gain earned on the invoices which were raised in respect of ITES rendered to overseas customers, the foreign exchange gain reported are arisen in the normal course of business and the assessee has offered the same under the Profits & Gains of Business and Profession. Therefore, the assessee is eligible for deduction u/s 10AA of the Act. He submitted that the issue under consideration is squarely covered issue in favour of the assessee. Further he submitted that the issue of reimbursement of salary and other reimbursement of expenses were also covered in favour of the assessee where the payment is not subject to TDS provisions. With the above submissions, he prayed that the assessee has prima facie case and balance of convenience is in favour of it and prayed that complete stay may be granted and pre-deposit of 20% tax demand as laid down u/s 254(2) may be relaxed in this case. 4 SA No.40/Del/2025 4. On the other hand, ld. DR of the Revenue objected for granting of complete stay and prayed that assessee may be asked to pay considerable demand as there are no financial constraints in this case. 5. Considered the rival submissions and material placed on record. After considering the factual matrix on record and in our considered view, assessee may have balance of convenience in its favour, still stay may be granted on payment of 20% of the demand. In this regard, assessee is directed to pay Rs.40,00,000/- (Rupees Forty lakhs only) by 28.02.2025. The assessee is directed to file a copy of the payment of the above amount before Assessing Officer and the Registry. Balance of outstanding demand is stayed for a period of 180 days from the date of this order or till the date of disposal of present appeal, whichever is earlier, subject to the rider that the assessee shall not take unnecessary adjournment to prolong the appeal otherwise stay order would cease to operate. The appeal is fixed for hearing on 06.03.2025. No separate notice shall be issued. 6. In the result, the aforesaid stay application is allowed as above. Order pronounced in the open court on this 24th day of January, 2025 after the conclusion of the hearing. SD/- SD/- (MAHAVIR SINGH) (S.RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 24.01.2025 TS 5 SA No.40/Del/2025 Copy forwarded to: 1. Appellant 2. Respondent 3. 6CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "