JUBILANT FOODWORKS LIMITED,NOIDA V. ASSISTANT COMISSIONER OF INCOME TAX, NOIDA

SA 523/DEL/2024

AI Insights

The case involves Jubilant Food Works Ltd., which filed a stay application against the demand raised by the ACIT, Circle-5(1)(1), Noida, for the Assessment Year 2017-18. The demand was based on adjustments made by the Transfer Pricing Officer (TPO) concerning AMP expenses and Franchise Fee payments. The assessee contended that these did not qualify as international transactions under the given circumstances and that the benchmarking of these transactions had been accepted in previous years. The Tribunal considered the precedents and the prima facie merits of the case, leading to the decision to grant the stay.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23820 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 31-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2017-2018
• Other Referred Cases: ITA No.7937/Del/2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIDDHARTH BHIMSINGH MEENA
• Assessee Lawyers: K.M. GUPTA
• Keywords: Transfer pricing; International transaction; Application of stay

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I : NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER Stay Application No.523/Del/2024 (ITA No.4997/Del/2024) Assessment Year: 2017-18 Jubilant Food Works Ltd., Plot No.1A, Sector 16A, Noida, Gautam Budh Nagar, Uttar Pradesh – 201301. PAN: AABCD1821C Vs ACIT, Circle-5(1)(1), Noida. (Applicant) (Respondent) Assessee by : Shri K.M. Gupta, Advocate; Revenue by : Shri Siddharth Bhimsingh Meena, Sr. DR Date of Hearing : 20.12.2024 Date of Pronouncement : 31.12.2024 ORDER PER ANUBHAV SHARMA, JM: The Stay Application in had has been filed for the stay of demand for the AY 2017-18. 2. On hearing both the sides, it comes up that the adjustment in the income of the assessee has been made by the ld. TPO on account of Advertisement, Marketing and Promotion (AMP) expenses and on account of payment of Franchise Fee. The assessee’s claim is that in given facts and circumstances of the business of the assessee, AMP does not fall within the definition of SA No.523/Del/2024 2 international transaction while DRP considered it to be an international transaction and approved the benchmarking done by the ld. TPO. With regard to the disallowance of payment of Franchise Fee the case of the assessee was that the assessee and Domino’s Pizza International Franchising Inc. (DPIF) and Dunkin Donuts Franchising LLC (DDF) are not the AEs of the assessee and that in assessee’s own case for earlier years assessee’s benchmarking has been accepted. The ld. AR has submitted that in regard to AY 2018-19, by way of stay application No.360/Del/2022, by order dated 07.11.2022, a stay was granted in favour of the assessee on the basis of strong prima facie case of the assessee with regard to the AMP expenditure. As a matter of fact, this stay had been extended by further orders and presently the appeal for AY 2018-19 is pending for 4th February, 2025. 3. As with regard to the adjustments on account of Franchise Fee, in assessee’s own case for AY 2014-15 by ITA No.7937/Del/2018 the coordinate bench had examined the issue and the issue of DPIF and DDF not being AE of the assessee has not been determined being academic and left open due to deletion of the addition on merits. We find that the Bench had concluded that there is absolutely no basis provided by the TPO or DRP for revising the rate of Franchise/loyalty to 1.5 to 3% respectively. SA No.523/Del/2024 3 4. In the light of the aforesaid, we are of the considered view that there is merit in the claim of the assessee with regard to the strong prima facie case and the balance of convenience and possibility of irreparable loss, thus, follow the strong prima facie case of the assessee. 5. Consequently, the application of the assessee for stay of demand for AY 2017-18 is allowed. The Department shall not enforce the demand for 180 days or till the disposal of the appeal, whichever is earlier. 6. Let the appeal be listed by the Registry on 4th February, 2025. There shall be no separate notice of hearing. 7. In terms aforesaid, the application is allowed. Order pronounced in the open court on 31.12.2024. Sd/- Sd/- (NAVEEN CHANDRA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31st December, 2024. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "