M/S. VOLVO GROUP INDIA PRIVATE LIMITED ,BANGALORE V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7(1)(1), BANGALORE

SA 61/BANG/2024

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The case involves Volvo Group India Pvt. Ltd., a company engaged in manufacturing commercial vehicles, which filed a stay application concerning the assessment year 2020-21. The company contested several transfer pricing adjustments made by the Deputy Commissioner of Income Tax (DCIT), Bangalore, which significantly increased their assessed income and tax liability. The adjustments were related to international transactions involving purchase support services, engineering design services, and interest on delayed receivables. After a dispute resolution panel (DRP) reduced the adjustments, the final assessment still resulted in a substantial tax demand. The tribunal's decision to grant a stay was influenced by the company's willingness to make a partial payment and the arguments presented regarding the selection of comparables and the application of the FAR test.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470105 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Others
• Pronouncement Date: 11-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-11-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 27-09-2024
• Other Referred Cases: CIT Vs. Roca Bathroom case
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEHA SAHAY
• Assessee Lawyers: NEERAJ K. JAIN
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary; Application of stay
• Section: 143(3)

Judgement Text

"SP No.61/Bang/2024 Volvo Group India Pvt. Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER SP No.61/Bang/2024 (Arising out of IT(TP)A No.1909/Bang/2024 Assessment Year: 2020-21 M/s. Volvo Group India Pvt. Ltd. Bagmane Parin Bagmane Tech Park C.V. Raman Nagar Bangalore 560 093 PAN NO : AAACV6747N Vs. DCIT Circle-7(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri Neeraj K. Jain, A.R. Respondent by : Ms. Neha Sahay, D.R. Date of Hearing : 08.11.2024 Date of Pronouncement : 11.11.2024 O R D E R PER PRAKASH CHAND YADAV, JUDICIAL MEMBER: Present stay application has been filed by the assessee in relation to assessment year 2020-21 and relates to IT(TP)A No.1909/Bang/2024. 2. Short facts regarding the stay application are that the assessee is a company engaged in manufacturing of Volvo range of commercial vehicles (trucks and buses) based on the technology received from Volvo Group. It is a wholly owned subsidiary of Volvo Lastvagnar Aktiebolag. For the assessment year 2020-21, the assessee filed return of income declaring income of Rs.1,67,35,14,780/- against which assessment u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (in short “The Act”). The assessment was made after making additions/disallowances on account of the following: SP No.61/Bang/2024 Volvo Group India Pvt. Ltd., Bangalore Page 2 of 4 a) Transfer Pricing adjustment of Rs.5,54,03,441/- on account of international transaction of purchase support services. b) Transfer Pricing adjustment of Rs.13,79,26,427/- on account of international transaction of Engineering Design Services. c) Transfer Pricing adjustment of Rs.2,98,19,099/- on account of interest on delayed receivables. 2.1 The assessee filed objections against the draft assessment order dated 19.10.2023. Pursuant to the direction of the DRP, the adjustment reduced to Rs.22,31,48,967/- as against the adjustments of Rs.55,20,57,029/- made in the draft order. Pursuant to DRP directions, the assessment order was passed by the AO u/s 143(3) r.w.s. 144C(13 of the Act computing the total income of the assessee at Rs.1,89,66,63,747/- with a total demand of Rs.3,52,19,116/- including interest of Rs.48,13,890/-. 3. Drawing attention of the Bench towards summary chart filed in Paper book counsel for the assessee contended that the assessee has already paid an amount of Rs 2,64,47,650/- by way of adjustment of refund. As per AR this payment constitutes 43.47% of the total demand outstanding. 3. Pointing out the merits of the case. Counsel for the assessee has argued that the TPO has wrongly selected the comparable, while computing the ALP and has also excluded the comparable chosen by the assessee without applying the FAR test. The ld. Counsel for the assessee further argued that the present assessment is also barred by limitation as per the law laid down by Hon’ble Madras High Court in the case of CIT Vs. Roca Bathroom case. 4. The ld. D.R. appearing on behalf of the revenue relied upon the orders of authorities below and pointed out that the contention of the assessee that it has already paid 43% of the outstanding demand is SP No.61/Bang/2024 Volvo Group India Pvt. Ltd., Bangalore Page 3 of 4 factually incorrect in as much as the total outstanding demand is Rs.3,52,19,116/- after the final assessment order. When the Bench put a question to the Ld AR vis-à-vis submissions of the Ld DR, the AR agreed to pay an amount of Rs 70,00,000/- against the outstanding demand of Rs.3,52,19,116, the Ld DR also agreed to the proposal of the AR. 5. We have heard the rival submissions and perused the materials available on record. We find that this stay application was heard by the predecessor bench on 25.10.2024, wherein the predecessor bench has rejected the contention of the assessee that it has paid 43% of the taxes assessed by the AO. We also note that the predecessor bench has categorially recorded that the assessee has not paid 20% of the demand outstanding as of today i.e. Rs 3,52,19,116/-. However, now the AR of the assessee is agreeing to pay an amount of Rs 70,00,000/-. We note that the assessee is a largest manufacturer of automobiles and at the same time the interest of revenue shall also not to be jeopardize. Therefore, considering the facts that the assessee has a prima facie case and balance of the convenience lies in favour of the assessee and the AR has also agreed to pay an amount of Rs 70,00,000/-. We direct the Ld AO to keep the outstanding demand in abeyance, if Rs 70,00,00/- (Seventy lakhs) is paid by the assessee on or before 30.11.2024. 6. In the result, appeal of the assessee is allowed as indicated above. Order pronounced in the open court on 11th Nov, 2024 Sd/- (Prashant Maharishi) Vice President Sd/- (Prakash Chand Yadav) Judicial Member Bangalore, Dated 11th Nov, 2024. VG/SPS SP No.61/Bang/2024 Volvo Group India Pvt. Ltd., 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. "