M/S. FIORANO SOFTWARE TECHNOLOGIES PRIVATE LIMITED,BENGALURU V. .DCIT,CIRCLE-3(1)(1), BENGALURU

SA 69/BANG/2024

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M/s. Fiorano Software Technologies Private Limited filed a stay petition against the demand raised by the Income Tax Department following an assessment order for the assessment year 2021-22. The demand arose due to a transfer pricing adjustment. The assessee contested the adjustment amount and also claimed entitlement to MAT credit, which if considered, would reduce the tax liability substantially. The stay was sought pending the appeal's decision, citing a limitation issue supported by a precedent. The Income Tax Appellate Tribunal, after considering the rectification application and the arguments presented, decided in favor of the assessee, allowing the stay on the demand.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 34985 (ITAT-BANGALORE)
• Duration Of Justice: 11 day(s)
• Appeal Type: Others
• Pronouncement Date: 09-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2021-2022
• Appeal Filed On: 28-11-2024
• Other Referred Cases: Roca Bathroom Sanitary Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. PARITHIVEL
• Assessee Lawyers: TATA KRISHNA
• Keywords: Transfer pricing; Rectification of order
• Section: 143(3)

Judgement Text

"SP No.69/Bang/2024 M/s. Fiorano Software Technologies Private Limited, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “B’’ BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER SP No.69/Bang/2024 (Arising out of IT(TP)A No.2226/Bang/2024) Assessment Year: 2021-22 M/s. Fiorano Software Technologies Private Limited Unit-1, UGF Inventor, International Tech Park, Whitefield Road, Bengaluru 560 066 PAN NO : AAACF8707G Vs. DCIT Circle-3(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri Tata Krishna, A.R. Respondent by : Sri V. Parithivel, D.R. Date of Hearing : 06.12.2024 Date of Pronouncement : 09.12.2024 O R D E R PER PRASHANT MAHARISHI, VICE PRESIDENT: This stay petition filed by M/s. Fiorano Software Technologies Private Limited in ITA No.2226/Bang/2024 for assessment year 2021-22 seeking the direction to the ld. AO to keep the recovery of the demand of Rs.1,19,68,710/- in abeyance till the disposal of appeal. This demand has arisen on account of the assessment order passed by the assessment unit, Income Tax Department u/s 143(3) r.w.s. 144C(3) r.w.s. 144B of the Income Tax Act, 1961 (“the Act”) dated 23.9.2024, wherein the total income of the assessee is assessed at Rs.4,26,98,743/- against the returned income of the assessee at a business loss of Rs.73,94,955/- because of the transfer pricing adjustment of Rs.5,00,93,698/-. SP No.69/Bang/2024 M/s. Fiorano Software Technologies Private Limited, Bangalore Page 2 of 4 2. The ld. Authorized representative submitted that the variation of transfer pricing adjustment has been made by the ld. AO of Rs.5,00,93,698/-, whereas the ld. Dispute Resolution Panel has directed to retain the transfer pricing adjustment of only Rs.3,42,91,793/-. He further submitted that rectification application u/s 154 of the Act has been made before the ld. AO on 13.11.2024. According to that, if the above adjustment is corrected, the demand would substantially reduce. It was further stated that assessee is also entitled to MAT credit of Rs.26,32,873/-. If both these rectifications are carried out the final tax liability would be only Rs.46,66,970/-. The necessary interest would also to be calculated. Therefore, it was stated that if the two adjustments are considered, the demand would be substantially reduced. It was further stated that according to ground Number numeral 4 of the appeal, assessee has challenged that assessment order is barred by limitation of time. This ground is supported by the order of the decision of Hon’ble Madras High Court in the case of Roca Bathroom Sanitary Pvt. Ltd. in favour of the assessee and therefore, in the interest of justice, the complete demand is required to be kept in abeyance till the decision of the appeal of the assessee. 3. The ld. D.R. vehemently opposed the stay petition and submitted that assessee must pay the balance amount outstanding and assessee does not deserve the stay. 4. We have carefully considered the rival contentions and perused the order of the ld. Lower authorities. We have also carefully considered the rectification application filed by the assessee before the ld. AO on 13.11.2024. In the rectification application, the assessee has raised an issue that the ld. AO has carried out the transfer pricing adjustment of Rs.5,00,93,698/-. However, the correct adjustment is only of Rs.3,42,91,793/- in accordance with SP No.69/Bang/2024 M/s. Fiorano Software Technologies Private Limited, Bangalore Page 3 of 4 the order passed by ld. TPO, giving effect to the direction of the ld. Dispute Resolution Panel. 4.1 The second issue was with respect to the allowability of MAT credit of Rs.26,32,813/-. Both these above errors are mistake apparent from record and therefore, those deserve to be corrected immediately. Accordingly, we direct the ld. AO to pass the order u/s 154 of the Act within 30 days from the date of receipt of this order. Further, if the above two additions/adjustments are made, then the assessee has substantially reduced tax liability only of Rs.40,66,970/-, subject to interest. One of the grounds raised by the assessee is of limitation, which is covered in favour of the assessee at present by the decision of Hon’ble Madras High Court. Therefore, if the assessee is directed to deposit any sum towards that is not justified. In view of this, we direct the ld. AO to keep the balance demand of Rs.40,66,970/- and consequent interest thereon on passing of the rectification order in abeyance till the disposal of the appeal or 180 days, whichever is earlier. Registry is directed to fix hearing of appeal in the first week of February 2025. 5. In the result, stay petition filed by the assessee is allowed. Order pronounced in the open court on 9th Dec, 2024 Sd/- (Soundararajan K.) Judicial Member Sd/- (Prashant Maharishi) Vice President Bangalore, Dated 9th Dec, 2024. VG/SPS SP No.69/Bang/2024 M/s. Fiorano Software Technologies Private Limited, Bangalore Page 4 of 4 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "