EXCELRA KNOWLEDGE SOLUTIONS PRIVATE LIMITED,HYDERABAD V. DCIT., CIRCLE-8(1), HYDERABAD

SA 6/HYD/2025

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Excelra Knowledge Solutions Pvt Ltd filed a stay application against the recovery of an outstanding demand of Rs.1,55,72,390 arising from a Transfer Pricing adjustment in the assessment order for the year 2021-22. The company had engaged in international transactions with its subsidiaries in the US and Europe, paying Rs.10,17,19,553 for business development services. The TPO assessed the ALP of these transactions at 'Nil', leading to a 100% adjustment. The assessee argued that the transactions were at arm's length and cited various legal precedents supporting their position. The Departmental Representative opposed the stay, citing lack of evidence of financial hardship. The Tribunal, after considering the submissions and the legal framework, decided to grant the stay, emphasizing the need for a thorough examination of the merits during the upcoming appeal hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 27307 (ITAT-HYDERABAD)
• Appeal Type: Stay Application
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SASHI MATHEWS
• Keywords: Transfer pricing; International transaction; Application of stay
• Section: 92CA

Judgement Text

" SA No 6 of 2025 Excelra Knowledge Solutions Pvt Ltd Page 1 of 4 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Manjunatha, G. Accountant Member S.A. No,.6/Hyd/2025 (आ.अपी.सं /ITA No.1319/Hyd/2024) (िनधाŊरण वषŊ/Assessment Year: 2021-22) Excelra Knowledge Solutions Private Limited HyderabadAAFCG5715Q PAN: Vs. Dy. CIT Circle 8(1) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Advocate Sashi Mathews राज̾ व Ȫारा/Revenue by:: Dr. Sachin Kumar, DR सुनवाई की तारीख/Date of hearing: 21/02/2025 घोषणा की तारीख/Pronouncement: 21/02/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President By way of this stay application, the assessee is seeking stay against the recovery of outstanding demand of Rs.1,55,72,390/- arising from the assessment order passed u/s 143(3) r.w.s 144C(13) of the I.T. Act, 1961, whereby the Assessing Officer has made an addition on account of T.P adjustment. SA No 6 of 2025 Excelra Knowledge Solutions Pvt Ltd Page 2 of 4 2. The learned AR of the assessee has submitted that the assessee has reported international transaction with AEs which are subsidiaries of the assessee in US and Europe. The assessee has made the payment in respect of the business development services availed from the AEs to the tune of Rs.10,17,19,553/- and filed the T.P analysis study to show that, the transactions are at Arms’ Length. However, the TPO has determined the ALP of the international transactions at ‘Nil’ and consequently, proposed 100% T.P adjustment on these transactions. This approach of the TPO is contrary to the law, as laid down by various judgments of this Tribunal as well as the Hon'ble High Courts. The learned AR has referred to various legal precedents on the issue wherein the Hon'ble High Courts has held that, the TPO cannot go to the issue of business need and justification of the transactions entered into by the assessee with its AEs. Thus, the learned AR has pleaded that the assessee has a good prima facie case on merits in the appeal which is already fixed for hearing on 19th March, 2025 and therefore, the recovery of the outstanding demand may be stayed till the disposal of the appeal. 3. On the other hand, the learned DR has objected to the stay of the recovery of the demand and submitted that, the assessee has not brought anything on record, to show that there is a paucity of fund or other financial difficulties in making the payment of the outstanding demand. SA No 6 of 2025 Excelra Knowledge Solutions Pvt Ltd Page 3 of 4 4. We have considered the rival submissions as well as the relevant material on record. The demand, in question, has arisen, because of the TP addition in respect of the international transaction entered into by the assessee with the AEs regarding payment against the payment of business development services availed from the AEs. The TPO has held that there was no necessity for availing of the business development services as there was no benefit accrued to the assessee out of such services and consequently, determined the ALP at ‘Nil’. Since the TPO has not undertaken any exercise of determining the ALP in terms of provisions of section 92CA r.w. rule 10 of the I.T. Rules and proceeded to deliberate on the issue of allowability of the expenditure incurred by the assessee, therefore, prima facie, the assessee has made out a good case in the appeal. Accordingly, in the facts and circumstances of the case, we incline to grant stay against the recovery of the outstanding demand for a period of 90 days from the date of this order, subject to the payment of 20% of the outstanding demand, on or before 7th March, 2025. The Assessing Officer is directed not to take any coercive action for recovery of the balance of the outstanding demand, for a period of 90 days or till the disposal of the appeal, whichever is earlier. The appeal of the assessee is listed for hearing on 19/03/2025 and parties are directed not to take any adjournment of the hearing of the appeal and also file the paper book, if any, well in advance with an advance copy to the other party. SA No 6 of 2025 Excelra Knowledge Solutions Pvt Ltd Page 4 of 4 5. In the result, stay application by the assessee is allowed. Order pronounced in the Open Court on the conclusion of the hearing i.e. on 21st February, 2025. Sd/- Sd/- (MANJUNATHA, G.) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 21st February, 2025. Vinodan/sps Copy to: S.No Addresses 1 Excelra Knowledge Solutions (P) Ltd, 6th and 7th Floor, Plot No.6 Wing- B, NSL SEZ Aerena, Survey No.1, IDA, Uppal, Hyderabad 2 Dy. CIT, Circle 8(1) Hyderabad 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "