LOUIS VUITTON INDIA RETAIL PRIVATE LIMITED,GURGAON V. DCIT CIRCLE-1(1), GURGAON

SA 17/DEL/2025

AI Insights

The case involves Louis Vuitton India Retail Private Limited, which filed a Stay Application against an outstanding tax demand raised by the Deputy Commissioner of Income Tax, Circle-1(1), Gurgaon. The demand arose from transfer pricing adjustments and other tax assessments for the Assessment Year 2020-21. The Tribunal considered the submissions of both parties, including the complexities of the transfer pricing adjustments and the protective additions related to advertisement, marketing, and promotion expenses. The Tribunal noted the assessee's commitment to expedite the appeal process and not seek unnecessary adjournments, leading to the decision to grant a partial stay on the demand.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473541 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 07-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2020-2021
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH
• Assessee Lawyers: AJIT JAIN
• Keywords: Transfer pricing; International transaction; Application of stay; Arm length price
• Section: 143(3); 92CA; 144C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘I’ NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE-PRESIDENT AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER S.A. No.17/Del/2025 [Arising out of ITA No.4348/Del/2024] Assessment Year: 2020-21 Louis Vuitton India Retail Private Limited, 901-A, 9th Floor, Time Tower, MG Road, Gurugram, Haryana-122002 PAN:AAACL8230E v. Dy. CIT, Circle-1(1), Gurgaon. (Appellant) (Respondent) ORDER PER RAMIT KOCHAR, AM: The Stay Application in SA No.17/Del/2025 for Assessment Year 2020-21 filed by the assessee has arisen out of ITA No.4348/Del/2024 . By way of this Stay Application, the assessee is seeking for stay of outstanding demand of tax and demand aggregating to Rs1,86,66,936/- raised by the Revenue vide notice of demand/computation sheet dated 23rd July, 2024(DIN & Document No. ITBA/AST/S/630/2024-25/106703. The said Assessee by Shri Ajit Jain, CA Department by Shri Amit Katoch, Sr. DR Date of hearing 07.02.2025 Date of pronouncement 07.02.2025 S.A.No.17/Del/2025 Arising out of ITA no. 4348/Del/2024 2 | P a g e computation sheet is placed in paper book filed along with stay application at page ni. 57-61. 2. At the outset, Ld. Counsel for the assessee submitted that the assessment has been framed by Revenue wherein addition of Rs.4,34,45,060/- has been made by way of TP adjustment u/s 92CA(3) of the Income-Tax Act, 1961, vide assessment order dated 23rd July,2024 passed by the Assessing Officer u/s 143(3) r.w.s 144C(13) read with section 144B of the Act, pertaining to international transaction of sale of goods-felt packing material keeping in view principles of arm length principles(ALP) envisaged under the 1961 Act.It was submitted that additions to the tune of Rs. 25,92,830/- was also made by CPC in an intimation issued u/s 143(1) on account of late deposit of employees contribution to provident fund u/s 36(1)(va). It was also submitted that protective additions were also made to the tune of Rs. 1,84,35,150/- by way of adjustment to income of the assessee on grounds of alleged excess Advertisement, Marketing and Promotion Expenses(AMP). It was submitted that the AO passed assessment order dated 23.07.2024, and made TP additions as aforesaid in compliance of the directions of learned DRP order u/s 144C dated 30th June, 2024. Our attention was drawn to the orders passed by Authorities below. The assessee is engaged in the business as a retailer of luxury goods in India dealing with portfolio of leather goods, shoes, textiles, watches and fashion accessories.The Ld. Counsel for the assessee submitted that the assessee has challenged all the additions made by the Revenue , in an appeal filed with ITAT, Delhi S.A.No.17/Del/2025 Arising out of ITA no. 4348/Del/2024 3 | P a g e Bench, Delhi which is listed as Appeal in ITA no.4348/Del/2024 for assessment year 2020-21. The assessee has entered into International Transactions with its Associate Enterprises (“AE”) during the year viz. provisions of sale goods- felt bags packing material.The TPO has rejected the TP study conducted by the assessee and economic analysis undertaken by the assessee was rejected. TPO conducted a fresh search wherein TPO introduced additional 10 comparable using additional/modified quantitative filters as against the 5 selected comparable by the assessee. Thus, the TPO has included 15 comparable as against 5 comparables selected by the assessee, wherein 10 comparable were additionally included by the Ld. TPO. The learned counsel for the assessee submitted that the comparable included by TPO were not in the same line of business as the assessee is engaged into sale of goods- felt bags packing material with AE. Thus, higher margins were applied by TPO to arrive at ALP ,as companies with super normal profits were included by the TPO. The Ld. DRP directed the TPO to verify FAR profile of the assessee with FAR profile of the comparable and to verify the calculation of RPT Filter. The ld. DRP directed TPO to accordingly decide upon inclusion/exclusion in the final list and pass speaking orders. It was submitted that the assessee has challenged the additions of Rs. 4,34,45,060/- made by way of TP adjustment u/s 92CA in arm length price(ALP) of sale of goods-felt bags packing material, as the additions have been made arbitrarily and are erroneous, which is subject matter of challenge before ITAT. Regarding TP adjustment made towards AMP expenditure to the tune of Rs. 1,84,35,150/-on protective basis, on the grounds that the judicial forums have taken a S.A.No.17/Del/2025 Arising out of ITA no. 4348/Del/2024 4 | P a g e different view, and the matter is now sub-judice . Thus, the additions were made on protective basis. It was also submitted that the assessee has also challenged the addition of Rs. 25,92,830/- made by CPC on the grounds of late deposit of PF. The learned counsel for the assessee also submitted that the appeal of the assessee in ITA no. 4348/Del/2024 is fixed for hearing before the Delhi Bench ‘I’, New Delhi on 20th March, 2025. Our attention was drawn by ld. Counsel for the assessee to page 28 of the said stay petition. It was submitted that the assessee filed Stay Application with the learned Commissioner of Income Tax, Circle 1(1), Gurgaon , praying for stay of outstanding demand, but the same has been rejected by Revenue vide order dated 6th January, 2025(DIN & Letter No. ITBA/COM/F/17/2024-25/1071901645(1)). It was submitted that the assessee want to get appeal adjudicated by the Tribunal at the earliest , and will not seek adjournment during appellate proceedings conducted by ITAT in ITA no. 4348/Del/2024. Thus, in view of aforesaid submissions prayers were made to grant stay of outstanding demand . 3. The Ld. CIT-DR has no objection, if the stay of outstanding demand is granted on the condition at least 20% of the amount deposited by the assessee. 4. After hearing both the parties and perusing the material on record , We have observed that the assessee has made out a prima facie case for grant of partial stay of outstanding demand keeping in view provisions of Section 254(2A), subject to the condition that the assessee deposit Rs. 40 lacs with Government Treasury. Thus, S.A.No.17/Del/2025 Arising out of ITA no. 4348/Del/2024 5 | P a g e without commenting on the merits of the issue involved in the appeal, we direct the assessee to deposit an amount of Rs.40,00,000/- against the outstanding demand of tax and interest with Government latest by 28.02.2025, which is more than 20% of the outstanding demand, and the balance outstanding demand will be stayed for a period of 180 days or till the disposal of the appeal in ITA No.4348/Del/2024 for Asst. Year 2020-21 , whichever is earlier. The assessee will submit proof of deposit of aforesaid payment before the AO. We once again clarify that we have not commented on the merits of the issue. Further, that the assessee will fully co-operate in speedy disposal of the appeal by ITAT, and the assessee will not seek any un-necessary adjournments before the Tribunal in the appellate proceedings in ITA No. 4348/Del/2024. On breach of conditions, the stay shall stand vacated . The appeal of the assessee in ITA no. 4348/Del/2024 for assessment year 2020-21 is now coming up for hearing before “I’ Bench, Delhi on 20.03.2025. The terms of stay were announced by Division Bench during the course of hearing of stay application in open Court. We order accordingly. 5. In the result, Stay Application is allowed in the manner as indicated above. Order pronounced in the open court on 07th February, 2025. Sd/- Sd/- Sd/- (MAHAVIR SINGH) (RAMIT KOCHAR) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 07th February, 2025. PK/Sps S.A.No.17/Del/2025 Arising out of ITA no. 4348/Del/2024 6 | P a g e Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "