PHINIA DELPHI INDIA PRIVATE LIMITED,NEW DELHI V. .DCIT CIRCLE 15(1), NEW DELHI

SA 347/DEL/2024

AI Insights

The case involves Phinia Delphi India Private Limited, the applicant, seeking a stay on an outstanding tax demand related to transfer pricing adjustments made by the Assessing Officer (AO) and the Transfer Pricing Officer (TPO). The dispute centered on the rejection of 35 comparable agreements by the TPO, which were deemed not suitable for comparison as they involved exclusive licenses, whereas the assessee only received non-exclusive licenses. Additionally, the AO made adjustments concerning interest on receivables without allowing working capital adjustments. The Tribunal considered the arguments and the readiness of the assessee to pay 20% of the disputed demand, leading to the decision to grant a stay on the demand.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472036 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Others
• Pronouncement Date: 13-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2020-2021
• Appeal Filed On: 28-08-2024
• Laws Referred To: Income Tax Appellate Tribunal Rules, 1963
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Keywords: Application of stay

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘FRIDAY-I’’ : NEW DELHI) BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI BRAJESH KUMAR SINGH, ACCOUTANT MEMBER SA No. 347/Del/2024 Arising out of ITA No. 3960/Del/2024 Asstt. Year: 2020-21 Phinia Delphi India Private Limited, vs. DCIT, Circle 15(1), Kh No. 1273, Lower Ground Floor, New Delhi Kapashera, Near Deep Plaza, Gurgaon Road South West, New Delhi – 37 (PAN: AAGCD3810Q ( Applicant) ( Respondent ) Applicant by : Sh. Rohit Tiwari, Adv. And Ms. Tanya, Adv. Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR. Date of Hearing 13.12.2024 Date of Pronouncement 13.12.2024 ORDER PER MAHAVIR SINGH, VICE PRESIDENT This Stay Application under Rule 35A of the Income Tax Appellate Tribunal Rules, 1963 has been preferred by the assessee, seeking stay of outstanding demand of Rs. 39,97,525/- pertaining to assessment year 2020-21. 2 2. At the time of hearing, Ld. Representative for the assessee submitted that the assessee is engaged in manufacturing of automotive component and also engaged in software development segment and engaged in trading of automotive components. It was submitted that TPO in its order has rejected 35 comparable agreements out of set of 40 comparable agreements selected by the Assessee in the TP documentation on the ground that the comparable set included agreements that provided the licenses ‘exclusive licenes’ for know how. However, the assesse only received a non-licenses as per the agreement with its AE, hence, the exclusive licenses cannot be used as comparable and rejected the comparable that are not pertaining to same product / industry of the assessee. Accordingly, based on the above approach, the AO/TPO have determined the payment of royalty to be Rs. 71,680,816/- and have proposed an adjustment of Rs. 337,732,149/- to the total income of the assessee. He further submitted that comparable agreements selected by the TPO do not pass the criteria applied by the TPO himself of selecting only those agreements which pertain to the same product/industry as that of the assesse. Another addition raised by the AO on account of interest on receivables wherein, the AO had not allowed working capital adjustment. He submitted that outstanding receivables from AE do not constitute separate international transaction. It was the further contention that once the impact of receivables on working capital is evaluated and the consequent profitability / pricing is compared vis-à-vis that of the comparable, there is no more requirement of any further adjustment. However, going by the nature of additions and prima facie of the case, Ld. AR is ready to pay 20% of the outstanding demand in dispute. In view of the above, he requested for grant of stay of the demand in dispute and in the meantime, early hearing in the corresponding appeal may be granted. 3. Ld. DR did not controvert the aforesaid proposition of the Ld. AR, as Ld.AR is ready to pay 20% of the outstanding demand. 3 4. We have carefully considered the rival submissions and perused the records. Though the merits of the dispute shall be considered in detail in the course of determination of appeal, but so far as it is necessary to consider the existence of a prima-facie case, for the purpose of the present stay application, the same has been considered by us. In our view, the assessee has a strong arguable case. Considering the entirety of circumstances, we deem it fit and proper to preclude the Assessing Officer from taking any coercive measures to collect the disputed demand, till the disposal of the corresponding appeal or 06 months from today, whichever is earlier, subject to payment of Rs. 8 lacs (Rupees Eight Lacs) by 31st December, 2024, for which both parties agreed. 5. Registry is directed to fix the appeal of the assessee for hearing before the regular Bench in the third week of January, 2025. 6. In the result, the stay application is disposed off, as above. Order Pronounced in the Open Court on 13/12/2024. Sd/- Sd/- (BRAJESH KUMAR SINGH) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT SRBhatnagar Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT Assistant Registrar "