M/s Acer India Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-1(1)(1), Bangalore

SA 100/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6219 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 08-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T N PRAKASH
• Keywords: Transfer pricing
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BENCH: BANGALORE BEFORE SHRI A.K. GARODIA , ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER S.P . NO.100/BANG/2019 (ARISING OUT OF ITA. NO. 3391 /BANG /2018 ) ASSESSMENT YEAR: 2014 - 15 ACER INDIA PRIVATE LIMITED, NO.13, 6 TH FLOOR, EMBASSY HEIGHTS, MAGRATH ROAD, NEXT TO HOSMAT HOSPITAL, BANGAORE 560025. PAN: AACCA 1237 A VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(1)(1), BANGALORE. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SRI NEERAJ JAIN FOR REVENUE : SRI T.N. PRAKASH, ADDL. CIT DATE OF HEARING : 05. 04.2019 DATE OF PRONOUNCEMENT : 10 .04 .2019 ORDER PER PAVAN KUMAR GADALE , JM . THIS STAY PETITION IS FILED BY THE ASSESSEE SEEKING STAY OF COLLECTION OF R ECOVERY OF OUTSTANDING TAX DEMAND INCLUDING INTEREST RS.85,93,12710/ - . 2. THE LEARNED AR SUBMITTED THAT THE ASSESSEE - COMPANY IS A SUBSIDIARY OF ACER HOLDING INC. BRITISH VIRGIN ISLAND AND IS ENGAGED IN MANUFACTURE AND DISTRIBUTION OF DESKTOP COMPUTERS A ND SERVERS AND ALSO 2 IMPORTS CERTAIN COMPONENTS AND PARTS FROM ITS ASSOCIATED ENTERPRISES (AE) FOR MANUFACTURING OF SAID PRODUCTS AND DISTRIBUTION OF LAPTOPS, MONITORS PROJECTORS AND PERIPHERAL PRODUCTS AND IMPORTS COMPUTER NOTEBOOKS AND OTHER FINISHED PROD UCT S FOR DISTRIBUTION ACROSS INDIA. 3. THE ASSESEE FILED R ETURN OF INCOME FOR THE AY 2014 - 15, DECLARING A LOSS OF RS. 23,37,99,093/ - UNDER THE NORMAL P ROVISIONS OF THE ACT AND, THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 144 C OF THE ACT WITH TOTAL INCOME DETERMINED AT RS. 2,22,04,89,263/ - WHEREIN THE TPO HAD MADE ADJUSTMENT OF RS. 2,31,99,70,457/ - ON ACCOUNT OF ADVERTISING AND MARKETING PROMOTION EXPENSES. FURTHER, THERE WAS A DISALLOWANCE OF PROVISION FOR INVENTORY OBSOLESCENCE TO THE EXTENT OF RS . 13,43,17,899/ - . SUBSEQUENTLY, THE TPO HAS PASSED THE ORDER U/S 154 OF THE ACT GIVING EFFECT TO THE DIRECTIONS OF THE DRP WHEREIN THE ADJUSTMENT ON ACCOUNT OF AMP EXPENSES WAS REDUCED AND THE ASSESSMENT WAS COMPLETED DETERMINING THE TAX LIABILITY OF RS. 1,10,93,12,710/ - , INCLUDING INTEREST OF RS. 39, 36,27,080/ - . AS AGAINST THE OUTSTANDING DEMAND, LD AR SUBMITTED THAT, THE ASSESSEE HAS ALREADY PAID RS. 25 CRS AND PRAYED FOR STAY OF COLLECTION OF RECOVERY OF BALANCE OF OUTSTANDING DEMAND. ON THE MERITS O F THE CASE, LD AR SUBMITTED THAT THE ADJUSTMENT MADE BY THE TPO IS AGAINST THE PROVISIONS OF LAW AND REFERRED TO THE VOLUMINOUS PAPER BOOK TO SUPPORT HIS STAND AND EMPHASISED THAT PRIMA FACIE THE 3 ASSESSEE HAS A STRONG CASE ON MERITS AND THE BALANCE OF C ONV ENIENCE LIE S IN FAVOUR OF THE ASSESSEE AND PRAYED FOR GRANTING OF STAY. 4 . CONTRA, LD DR OBJECTED FOR GRANT OF STAY AND SUBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED THE FINANCIAL CRISIS AND PRAYED FOR REJECTION OF STAY PETITION. 5 . WE HAVE HEARD THE RIV AL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE STAY PETITION. THE LD AR SUBMITTED THAT THE TP ADJUSTMENT MADE BY THE TPO DOES NOT HOLD GOOD AND PRIMA FACIE THE ASSESSEE HAS A STRONG CASE ON MERITS AND IN SUPPORT OF HIS CONTENTION HE RELIED UPON THE JUDICIAL DECISIONS AND EARLIER YEARS ORDERS AND T HE ASSESSEE HAS ALREADY PAID RS 25 CRS OUT OF THE OUTSTANDING DEMAND, WHICH CONSTITUTES 20% OF THE DEMAND RAISED BY THE AO. F URTHER, I N RESPONSE TO A QUERY FROM THE BENCH REGARD ING THE FINANCIAL STABILITY AND THE FINANCIAL HARDSHIP, THE LD A R FILED THE ASSESSEE - COMPANYS BALANCE S HEET AND SUBMITTED THAT THE ASSESSEE HAS MORE LIABILITIES TO PAY THAN RECEIVABLES . HENCE, THE ASSES SEE IS NOT IN A POSIT ION TO MAKE ANY FURTHER PAYMENT OF DISPUTED DEMAND, WHEREAS LD DR SUBMITTED THAT SI NCE THE LD AR COULD NOT EXPLAIN THE FINANCIAL HARDSHIPS FACED BY THE ASSESSEE . T HE STAY PETITION SHOULD BE REJECTED. WE ARE OF THE OPINION THAT AT THE TIME OF GRANT ING OF STAY, THE TRIBUNAL SHOULD LOOK INTO THE BALANCE OF 4 CONVENIENCE AND THE FINANCIAL DIFFICULTIES OF THE ASSESSEE. THEREFORE, C ONSIDERING THE FACT THAT ASSESSEE HAS PAID RS. 25 CRS OF DISPUTED DEMAND AND IS NOT IN A POSITION TO MAK E FURTHER PAYMENTS, AND THE JUDICIAL DECISIONS RELIED ON BY THE LD AR IN SUPPORT OF ITS CASE ON MERITS, WE ARE OF THE SUBSTANTIVE OPINION THAT IT IS A FIT CASE TO GRANT EARLY HEARING OF CASE . WE FIND, E ARLIER THE CASE WAS FIXED FOR HEARING ON 27/06/2019 WHICH IS PREPONED AND FIXED FOR HEARING ON 15 TH MAY, 2019. ACCORDINGLY, WE DIRECT THE REGISTRY TO POST THE CASE FOR HEARING ON THE AFORESAID DATE AND INFORM BOTH THE PARTIES BY ISSUE OF NOTICE. T HE STAY PETITION FILED BY THE ASSESSEE IS DISPOSED OF ACCOR DINGLY. S D / - S D / - (A.K. GARODIA ) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 0 T H APRIL , 2019 . OKK, SR.PS COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. DCIT, CIRCLE 1(1)(1), BANGALORE. 4. DRP, PANEL - 1, BANGLORE. 5. DR, ITAT, BANGALORE . 6. GUARD FILE