LG ELECTRONICS INDIA PRIVATE LIMITED,NEW DELHI V. INCOME TAX DEPARTMET NFAC, DELHI

SA 389/DEL/2024

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LG Electronics India Private Limited filed a stay application against a tax demand of Rs.79,42,72,979 arising from an assessment order under sections 144C and 143(3) of the Income-tax Act, 1961. The demand included adjustments and disallowances related to warranty service charges, management services, royalty payments, and expatriate salaries. The tribunal noted that similar issues had been previously decided in favor of the assessee in earlier assessment years. The Department of Revenue did not object to the stay application. Consequently, the tribunal granted the stay and scheduled a hearing for January 6, 2025.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471528 (ITAT-DELHI)
• Duration Of Justice: 11 day(s)
• Appeal Type: Others
• Pronouncement Date: 04-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 04-10-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 23-09-2024
• Other Referred Cases: AY 2009-10 & 2010-11, AY 2008-09 & 2009-10, AY 2010-11, AY 2005-06, AY 2008-09, AY 2009-10, AY 2010-11
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: AJAY VOHRA
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary; Application of stay
• Section: 143(3); 144C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “I”, NEW DELHI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT and SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER SA No.389/Del/2024 (in ITA No.4397/Del/2024) (Assessment Year : 2020-21) LG Electronics India Private Ltd., vs. Income Tax Deptt. NFAC, a-24/6, Mohan Cooperate Indl. Estate, Delhi. Mathura Road, New Delhi – 110 044. (PAN : AAACL1745Q) (APPLICANT) (RESPONDENT) APPLICANT/ASSESSEE BY: Shri Ajay Vohra, Sr. Advocate Shri Neeraj Jain, Advocate Shri Ramit Katiyal, Advocate REVENUE BY : Shri Sanjay Kumar, Sr. DR Date of Hearing : 04.10.2024 Date of Order : 04.10.2024 O R D E R PER S.RIFAUR RAHMAN, AM: 1. Applicant/Assessee, LG Electronics India Private Limited (hereinafter referred to as ‘the assessee’) filed the present stay application sought to stay the demand of Rs.79,42,72,979/- out of assessment order passed u/s 144C r.w.s 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’). 2. During the hearing of stay application, ld. AR for the assessee submitted that assessee, a 100% subsidiary of LG Electronics Inc., Korea, is engaged in the 2 SA No.389/Del/2024 business of manufacturing of consumer electronics and home appliances. The assessee filed its return of income declaring income of Rs.26,84,62,10,310/-. The assessee suo motu offered claim of education cess and accordingly revised the income to Rs.27,10,61,26,191/-. The case was selected for scrutiny and final assessment order was passed on 26.08.2024 u/s 144C read with section 143(3) of the Income-tax Act, 1961 (for short ‘the Act’) determining the total income at Rs.29,78,19,52,957/- after making following additions/disallowances :- (i) Transfer pricing adjustment on account of warranty service charges of Rs.2,95,25,218/-; (ii) Transfer pricing adjustment on account of international transaction of management services of Rs.1,29,23,681/-; (iii) Disallowance of royalty payment amounting to Rs.2,38,26,90,223/-; and (iv) Disallowance of salary expenses incurred on expatriates of Rs.25,07,32,207/-. 3. Accordingly, tax demand of Rs.79,42,72,979/- including interest of Rs.5,54,15,880/- was raised. 4. Against the above order, assessee preferred an appeal before the ITAT which is pending for hearing. 5. Ld. AR for the assessee submitted a chart indicating the issues involved in the present appeal wherein the additions/disallowances made by the Assessing Officer relating to warranty service charges is covered in favour of the 3 SA No.389/Del/2024 assessee by the decision of coordinate Bench in AY 2009-10 & 2010-11 and he brought to our notice relevant decisions kept on record. The next issue is payment of management fees, he submitted that this issue also covered by the decision of coordinate Bench in AY 2008-09 & 2009-10. With regard to issue expatriates salary, he submitted that this issue is also covered in favour of the assessee by the coordinate Bench decision in assessee’s own case in AY 2010-11. He brought to our notice relevant decision which is placed on record. With regard to next issue of royalty payment, he submitted that this issue is also covered by the decision of coordinate Bench in AY 2005-06, 2008-09, 2009-10 & 2010-11. He brought to our notice the relevant orders which are placed on record in the form of paper book. Ld. AR submitted that all the issues under consideration are already covered in favour of the assessee and he prayed that date of hearing may be fixed on the earlier date and also the stay may be granted for a period of six months. 6. On the other hand, ld. DR for the Revenue has no specific objection. 7. Considered the rival submissions and material placed on record. We observed that the Assessing Officer/TPO has made disallowances/additions on four issues, namely, warranty service charges, payment of management fees, expatriates salary and payment of royalty, which are already considered by the coordinate Bench in the earlier assessment years and decided the issue in favour of the assessee, all the relevant orders are placed on record in the paper 4 SA No.389/Del/2024 book. Therefore, we are convinced that balance of convenience is in favour of the assessee. Accordingly, we are inclined to grant a stay of outstanding demand of Rs.79,42,72,979/- for a period of 180 days 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. As per the request of the ld. AR for the assessee, we are fixing the case for hearing on 06.01.2025. No separate notice shall be issued. 8. In the result, the aforesaid stay application is allowed as above. Order pronounced in the open court on this 4th day of October, 2024 after the conclusion of the hearing. Sd/- sd/- (SAKTIJIT DEY) (S.RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 04.10.2024 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "