GATES INDIA PRIVATE LIMITED,DELHI V. .ASSESSMENT UNIT, INCOME TAX DEPARTMENT

SA 485/DEL/2024

AI Insights

Gates India Private Limited filed a stay application against the outstanding tax demand for the assessment year 2021-22, which arose from adjustments made by the Transfer Pricing Officer (TPO) related to international transactions. The TPO's adjustments included management charges, royalty payments, and imputed interest on receivables, which were contested by the assessee. The Dispute Resolution Panel (DRP) upheld some adjustments but directed the TPO to re-evaluate the arm's length price of the royalty. The Tribunal, after considering the submissions and the precedent set in the assessee's own case for AY 2018-19, decided to grant a stay on the demand, emphasizing the need for a balanced approach pending the appeal's resolution.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 30326 (ITAT-DELHI)
• Duration Of Justice: 18 day(s)
• Appeal Type: Others
• Pronouncement Date: 13-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2021-2022
• Appeal Filed On: 25-11-2024
• Other Referred Cases: Assessee's own case for AY 2018-19
• Laws Referred To: Income Tax Appellate Tribunal Rules, 1963
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Keywords: Transfer pricing; International transaction; Application of stay

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘FRIDAY-I’’ : NEW DELHI) BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI BRAJESH KUMAR SINGH, ACCOUTANT MEMBER SA No. 485/Del/2024 Arising out of ITA No. 5350/Del/2024 Asstt. Year: 2021-22 Gates India Private Limited, vs. Assessment Unit, NFAC, AO, 434, Defence Colony, New Delhi South Delhi – 24 (PAN: AAACA8125F ( Applicant) ( Respondent ) Applicant by : Sh. Rohit Tiwari, Adv. And Ms. Tanya, Adv. Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR. Date of Hearing 13.12.2024 Date of Pronouncement 13.12.2024 ORDER PER MAHAVIR SINGH, VICE PRESIDENT This Stay Application under Rule 35A of the Income Tax Appellate Tribunal Rules, 1963 has been preferred by the assessee, seeking stay of outstanding demand of 2 Rs. 4,34,32,220/- which only includes tax component pertaining to assessment year 2021-22. 2. At the time of hearing, Ld. Representative for the assessee submitted that assesse is engaged in the business of manufacturing, trading, and marketing of rubber hoses and hose assembly at its facilities at Lalru (Punjab), Faridabad and Pune. The assesse had undertaken various international transactions with its associated enterprises which were duly reported in Accountant’s Report (Form No. 3CEB). He submitted that TPO proceeded to undertake adjustment on account of adjustment in relation to payment of management charges of Rs. 6,36,03,091/-; adjustment in relation to payment of royalty to AE of Rs. 3,74,76,635/- and adjustment in relation of imputed interest on outstanding receivables of Rs. 51,17,082/-. The AO passed the draft assessment order and upheld the proposed addition made by the TPO. Subsequently, Applicant filed its objection before the DRP and DRP directed the TPO to provide relief on number of days for computing interest in outstanding receivables and other additions, he upheld. Additionally the DRP directed the TPO to determine arm’s length price of royalty paid to AE on account of sales made to third party. Pursuant to this, AO passed the final assessment order dated 25.10.2024 and raised the demand of Rs. 4,34,32,220/-. He further submitted that the issue of payment of management charges and adjustment in relation of imputed interest on outstanding receivables, both the issues are fully covered in favour of the assesse in assessee’s own case for AY 2018-19 vide order dated 22.8.2024. In view of the above, he requested for grant of stay of the demand in dispute and in the meantime, early hearing in the corresponding appeal may be granted. 3. Ld. DR opposed the request of the Ld. AR and requested to direct the assesse to pay some amount. 4. We have carefully considered the rival submissions and perused the records. Though the merits of the dispute shall be considered in detail in the course of 3 determination of appeal, but so far as it is necessary to consider the existence of a prima-facie case, for the purpose of the present stay application, the same has been considered by us. In our view, the assessee has a strong arguable case. Considering the entirety of circumstances, we deem it fit and proper to preclude the Assessing Officer from taking any coercive measures to collect the disputed demand, till the disposal of the corresponding appeal or 06 months from today, whichever is earlier, subject to payment of Rs. 50 lacs (Rupees Fifty Lacs) by 31st December, 2024, for which both parties agreed. 5. In the result, the stay application is disposed off, as above. Order Pronounced in the Open Court on 13/12/2024. Sd/- Sd/- (BRAJESH KUMAR SINGH) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT SRBhatnagar Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT Assistant Registrar "