M/S. NORWICH CLINICAL SERVICES PVT LTD., ,BENGALURU V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1) , BENGALURU

SA 55/BANG/2024

AI Insights

The case involves Norwich Clinical Services Private Limited, which filed a stay application against an outstanding tax demand of Rs.1,73,73,762 for the assessment year 2012-13. The demand arose from a rectification order dated 30.7.2024, which included a double addition of Rs.9,55,24,316 to the income computed. This double addition was identified as a mistake since the amount had already been included in the income computation in a previous order. The Tribunal's decision to grant a stay was based on the prima facie incorrectness of the demand due to the double addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397925 (ITAT-BANGALORE)
• Appeal Type: Stay Application
• Pronouncement Date: 02-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Transfer pricing; International transaction; Rectification of order; Application of stay
• Section: 154

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL MEMBER SP No.55/Bang/2024 [in IT(TP)A No.516 /Bang/2024] Assessment year : 2012-13 M/s. Norwich Clinical Services Private Limited, No.147/F, Ground & First Floor, 8th Main, 3rd Block, Koramangala, Bengaluru – 560 034. PAN: AADCN 1161B Vs. The Deputy Commissioner of Income Tax, Circle 3(1)(1), Bengaluru APPLICANT RESPONDENT Applicant by : Shri G.S. Prashanth, CA Respondent by : Shri Amith Doreraju, M., Addl. CIT(DR)(ITAT), Bengaluru. Date of hearing : 30.05.2025 Date of Pronouncement : 02.06.2025 O R D E R Per Prashant Maharishi, Vice President 1. This Stay Application is filed by Norwich Clinical Services Private Limited (the assessee/applicant) in IT(TP)A No.516 /Bang/2024 for the assessment year 2012-13 seeking stay of outstanding demand of tax payable of Rs.1,73,73,762 arising out of the assessment order, rectification order and notice of demand dated 30.7.2024 in the second SP No.55/Bang/2024 Page 2 of 5 round of appellate proceedings, pursuant to the order of ITAT dated 4.3.2020 wherein assessment order originally passed by the ld. AO and the appeal decided by the ld. CIT(Appeals) was set aside to the file of the ld.AO by directing the AO to make a proper reference to the TPO as the aggregate of the international transaction exceeded Rs.5 crores during the year. 2. During the set aside proceedings a reference was made to the TPO, who proposed an adjustment of Rs.10,99,53,453 as per order u/s. 92CA(3) r.w.s. 254 of the Income-tax Act, 1961 [the Act] dated 27.1.2023. Against the draft order, the assessee preferred objections before the ld. DRP, who passed directions on 27.12.2023 wherein the adjustment of Rs.10,99,53,453 was enhanced to Rs.12,12,45,627. The ld. AO passed the final assessment order on 29.1.2024 as per the computation of total income by taking the income initially upheld after the order of the ld. CIT(A) in the first round of appellate proceedings at Rs.90,28,706 as per order giving effect. Further, the enhancement made by the ld. DRP of Rs.257,27,311 was added thereto for the reason that the original addition of Rs.955,24,316 was already upheld by the ld. CIT(A). Thus in the assessment order itself, the total income was determined at Rs.3,47,50,077 and after the carry forward losses setoff, further loss of Rs.2,38,45,404 was allowed to be carried forward. 3. However, a further rectification order was passed on 30.7.2024 wherein the computation was started by taking the income as per the order giving effect to the CIT(A)’s order wherein the income of Rs.90,28,706 SP No.55/Bang/2024 Page 3 of 5 was determined, but the TP adjustment enhanced by the ld. DRP was added of Rs.12,12,45,627/- . Thus it is apparent that there is a double addition of Rs.9,55,24,316 being the original TP addition confirmed by the ld. CIT(A) and thereby the tax demand of Rs.1,73,73,762 has arisen. 4. The ld. AR has reiterated the above facts and submitted that if the double addition of Rs.9,55,24,316 is reduced, the whole demand becomes Nil. The demand has arisen because of wrong rectification order passed by the ld. AO u/s. 154 on 30.7.2024. Therefore assessee deserves stay of this demand. 5. The ld. DR objected to the stay petition submitting that assessee may be directed to deposit the tax. 6. We have carefully considered the rival contentions and perused the orders of assessment dated 29.1.2024 as well as the rectification order dated 30.7.2024. At the time of making the original assessment order on 29.1.2024 the ld. AO has made the addition of enhancement made by the ld. DRP reduced by the original addition confirmed by the ld. CIT(A) in his order dated 26.4.2018. By that appellate order, the ld. CIT(A) confirmed the TP adjustment of Rs.9,55,24,316. At the time of passing the final assessment order, the enhanced TP adjustment was made of Rs.257,21,311 and accordingly total income was computed at Nil and losses to be carried forward of Rs.238,45,404. However, suddenly a rectification order was passed on 30.7.2024, wherein the ld. AO has made addition of Rs.12,12,45,627 being total TP adjustment SP No.55/Bang/2024 Page 4 of 5 upheld including enhancement and original addition. As the original addition of Rs.9,55,24,316 has already been included in the total income computed of Rs.90,28,706 at the time of Order Giving Effect to the order of the ld. CIT(A), this further addition of Rs.12,12,45,627 is the double addition to the extent of Rs.9,55,24,316. Due to this, the present outstanding demand of Rs.1,73,73,762 has arisen. Therefore without going into the merits of the addition, because of the double addition of Rs.9,55,24,316, the demand arose in the hands of assessee is prima facie incorrect. Therefore, allowing the stay petition of the assessee, we direct the ld. AO to keep the outstanding demand of Rs.1,73,73,762 in abeyance till the disposal of the appeal or 180 days from the date of this order, whichever is earlier. The appeal of the assessee is fixed for hearing on 09.06.2025. The assessee is directed to make efforts for early disposal of the appeal by not seeking adjournment on unreasonable grounds. 7. Accordingly Stay Petition is allowed. Pronounced in the open court on this 2nd day of June, 2025. Sd/- Sd/- ( KESHAV DUBEY ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER VICE PRESIDENT Bangalore, Dated, the 02nd June, 2025. /Desai S Murthy / SP No.55/Bang/2024 Page 5 of 5 Copy to: 1. Applicant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "