HATCH ASSOCIATES INDIA PRIVATE LIMITED,GURGAON V. ASSESSMENT UNIT/ THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), GURGAON

SA 241/DEL/2025

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Hatch Associates India Pvt. Ltd., a subsidiary of Hatch Pty Ltd., Australia, filed a stay application against an outstanding demand of INR 3,92,55,330 for the Assessment Year 2021-22. The demand arose from a transfer pricing adjustment made by the Transfer Pricing Officer (TPO), which was affirmed by the Assessing Officer (AO) and upheld by the Dispute Resolution Panel (DRP). The TPO had disallowed payments made towards intra-group services, determining the arm's length price (ALP) of these transactions as NIL. The Tribunal considered the adjustment of 85% of the demand from the assessee's refund and the legal provision requiring a maximum deposit of 20% of the outstanding demand for a stay on recovery. The Tribunal's decision was influenced by the precedent set in Eko India Financial Services (P) Ltd. V. ACIT.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717201 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 21-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2021-2022
• Appeal Filed On: 04-04-2025
• Other Referred Cases: Eko India Financial Services (P) Ltd. V. ACIT [2021] 132 taxmann.com 154 (Delhi)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Application of stay
• Section: 2

Judgement Text

"1 SA No. 241/Del/2025 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H”: NEW DELHI BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER S.A. No. 241/Del/2025 ( In ITA No. 5265/DEL/2024) Assessment Year: 2021-22 Hatch Associates India Pvt. Ltd., Ist Floor, Building No. 9A DLF Cyber City, DLF QE S.O. Gurgaon (Haryana)- 122002. PAN- AABCH 6540 C Vs Assessing Officer, Assessment Unit/ DCIT Circle-1(1), Gurgaon. APPLICANT RESPONDENT Assessee represented by Ms. Reema Grewal, CA; & Ms. Snigdha Gautam, Adv. Department represented by Ms. Neeju Gupta, Sr. DR Date of hearing 21.08.2025 Date of pronouncement 21.08.2025 O R D E R PER Ms. MADHUMITA ROY, JM: The assessee has filed this stay application seeking stay on recovery of the outstanding demand of Rs. 3,92,55331/- for A.Y. 2021-22 in the above captioned appeal, arising from notice of demand u/s 156 of the Income-tax Act, 1961 (the “Act” in short) dated 19.09.2024 (DIN & Notice No. ITBA/AST/S/156/2024- 25/1068817467(1), issued by the Assessment Unit, Income Tax Department. Printed from counselvise.com 2 SA No. 241/Del/2025 2. Facts, in brief, are that assessee is a private limited company, engaged in providing engineering advisory and consultancy services to the industrial and group companies. The assessee is a subsidiary of Hatch Pty Ltd., Australia. For AY 2021-22, filed its return of income declaring total income of INR 35,53,30,500/-. The tax return of the assessee was selected for scrutiny assessment by issuance of a notice under Section 143(2) of the Act. Thereafter, the same was referred to the Transfer Pricing Officer (\"TPO\") under section 92CA(1) of the Act for determination of the arm's length price (\"ALP\") of the assessee's international transactions. The TPO rejecting the submissions made on behalf of the assessee made adjustment of INR 10,26,06,687 by disallowing the payment made towards receipt of intra group services and determining the ALP of the international transaction of the Applicant as NIL. In draft assessment order dated November 24, 2023 the AO affirmed the action of the TPO. Against it the assessee filed objections before the Dispute Resolution Panel ('DRP'), wherein the DRP summarily upheld the findings of the AO and TPO in respect of the intra group services and directed the TPO to benchmark the ALP of intra-group services by using CUP method instead of 'other method' applied by the TPO. Pursuant to the DRP directions, the TPO passed the order giving effect (\"OGE\") on September 16, 2024, wherein the TPO, applying CUP method has sustained the transfer pricing adjustment of INR 10,26,06,687 by treating the ALP of the international transaction to be nil. The AO passed the final assessment order dated September 19, 2024, incorporating the Printed from counselvise.com 3 SA No. 241/Del/2025 aforesaid adjustment and thereby assessing the total income at INR 45,79,37,190. Consequently, the impugned demand of INR 3,92,55,330 was raised against the assessee. 3. At the time of hearing of the instant stay application learned counsel appearing for the assessee submitted before us that 85% of the demand has already been adjusted by the revenue from the refund payable to the assessee and thus having regard to the statutory provision of maximum 20% deposit of the outstanding demand to be deposited by the assessee for grant of stay on recovery, the Revenue be directed to pay 65% (85%-20%) of the balance refund to the assessee and further stay is also requested to be granted on the balance outstanding demand. Ld. counsel also relied upon the decision of the Hon’ble Delhi High Court in Eko India Financial Services (P) Ltd. V. ACIT [2021] 132 taxmann.com 154 (Delhi). In fact the submission that such adjustment of 85% of the demand towards the refund to be made to the assessee has already been done by the department, has not been controverted by the Ld. DR. As per the 1st proviso to sub-section (2A) of section 254 of the Act, the Tribunal may pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act. Thus, considering the entire aspect of the matter and relying Printed from counselvise.com 4 SA No. 241/Del/2025 upon the above decision, we direct the department to retain 20% of the outstanding demand and to refund the excess amount adjusted by the Revenue to the assessee within three weeks hence. Consequently, we stay the recovery of balance outstanding demand for a period of 180 days from the date of this order or till disposal of the assessee’s corresponding appeal being ITA No. 5265/Del/2024 for Assessment Year 2021-22, whichever is earlier. 8. Assessee’s S.A. No. 241/Del/2025 stands allowed accordingly. Order pronounced in open court on 21.08.2025. Sd/- Sd/- (BRAJESH KUMAR SINGH) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "