M/s Ad2pro Media Solutions Private Limited , Bangalore V. The Deputy Commissioner of Income Tax (International Taxation) Circle-1(1), Bangalore

SA 103/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6222 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 12-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIMAL ANAND
• Assessee Lawyers: TATA KRISHNAN
• Keywords: Application of stay; Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI P.K GADALE JUDICIAL MEMBER S.P NOS.103 TO 116/BANG/2019 [IN ITA NOS.490 TO 503/BANG/2019] ASSESSMENT YEARS : 2011-12 TO 2017-18 M/S AD2PRO MEDIA SOLUTIONS PVT. LTD., #10, 2 ND FLOOR, BANNERGHATTA ROAD, J.P NAGAR III PHASE, BENGALURU-560 078. PAN AAFCA 9418 A. VS. THE DY. COMMISSIONER OF INCOME-TAX (IT), CIRCLE-1(1), BENGALURU. APPLICANT RESPONDENT APPLICANT BY : SHRI TATA KRISHNAN, ADVOCATE RESPONDENT BY : SHRI VIMAL ANAND, ADDL. CIT (DR) DATE OF HEARING : 03.05.2019 DATE OF PRONOUNCEMENT : 03.05.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THESE STAY APPLICATIONS SEE KING STAY OF DEMAND RAISED U/S 201(1) AND 201(1A) OF THE INCOME- TAX ACT 1961 (THE ACT) FOR ASST. YEARS 2011-12 TO 2017-18. 2. THE LD COUNSEL APPEARING FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAD PAID FEE FOR MARKETING/BUSINESS FACILI TATION SERVICES TO M/S AMSI, USA WITHOUT DEDUCTING TAX AT SOURCE. HOWEVE R, THE AO HAS TREATED THE SAID PAYMENTS AS FEE FOR TECHNICAL SERVICES AND ACCORDINGLY TREATED THE ASSESSEE AS AN ASSESSEE IN DEFAULT FOR NOT DEDUCT ING TAX AT SOURCE FROM THE ABOVE SAID PAYMENTS. ACCORDINGLY HE RAISED A DEMAND AGGREGATING TO S.P NOS.103 TO 116/BANG/2019 PAGE 2 OF 5 RS.764.60 LAKHS U/S 201(1) FOR ASST. YEAR 2011-12 T O 2017-18 AND ALSO INTEREST U/S 201(1A) OF THE ACT FOR THE ABOVE SAID ASST. YEARS TO THE TUNE OF RS.301.77 LAKHS. THE LD AR SUBMITTED THAT THE ASSE SSEE HAS PAID A SUM OF RS.2.63 CRORES IN AGGREGATE FOR THE ABOVE SAID ASST . YEARS. THE SAID PAYMENT CONSTITUTED TO ABOUT 34% OF THE TAX DEMAN D RAISED U/S 201(1) OF THE ACT. 3. THE LD AR SUBMITTED THAT THE AO HAS INITIATED PR OCEEDINGS U/S 201(1) OF THE ACT BY ISSUING NOTICE ON 16/1/2018. THE LD AR SUBMITTED THAT THE HONBLE HIGH COURT OF KARNATAKA HAS PRESCRIBED A TIME LIMIT OF 4 YEARS FROM THE END OF FINANCIAL YEAR AS THE REASONABLE PE RIOD FOR INITIATING ACTION U/S 201 IN THE CASE OF CIT V S. BHARATH HOTELS LTD ., (2016) 384 ITR 77. ACCORDINGLY, HE SUBMITTED THAT THE DEMAND RAISED FO R ASST. YEAR 2011-12 TO 2013-14 ARE LIABLE TO BE DELETED AS THE PROCEEDING IS BARRED BY LIMITATION AS PER THE DECISION RENDERED ABOVE. THE LD AR SUB MITTED THAT THE REMAINING AMOUNT OF TAX PAYABLE FOR ASST. YEAR 201 4-15 TO 2017-18 OVER AND ABOVE THE AMOUNT PAID BY THE ASSESSEE WOULD WOR K OUT TO RS.6.26 LAKHS. ACCORDINGLY HE SUBMITTED THAT THE PAYMENT O F RS.2.63 CRORES MADE BY THE ASSESSEE WOULD WORK OUT ABOUT 42% OF THE ABO VE SAID AMOUNT. THE LD AR FURTHER SUBMITTED THAT THE ASSESEE HAS GOT ST RONG CASE IN ITS FAVOUR ON MERITS. HE FURTHER SUBMITTED THAT THE FINANCIAL POSITION OF THE ASSESSEE IS PRECARIOUS AND FURNISHED BANK STATEMENTS TO SHOW THAT THE ASSESSEE HAS FULLY UTILIZED THE OVERDRAFT LIMIT GRANTED TO IT. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ALSO MADE ADDITION U/S 40(A)( I) OF THE ACT IN AY 2016- 17 AND THE ASSESSEE IS PAYING TAX DEMAND IN INSTALM ENTS, WHICH ACTUALLY AMOUNT TO DOUBLE TAXATION OF SAME AMOUNT. ACCORDIN GLY HE PRAYED FOR COMPLETE STAY OF OUTSTANDING DEMAND OF THE TAX. S.P NOS.103 TO 116/BANG/2019 PAGE 3 OF 5 4. ON THE CONTRARY, THE LD DR STRONGLY SUPPORTED TH E ORDER PASSED BY THE LD CIT(A) AND SUBMITTED THAT THE LD CIT(A) PASS ED A REASONED ORDER CONFIRMING THE DEMAND RAISED BY THE AO. HE FURTHER SUBMITTED THAT THE PROCEEDINGS INITIATED U/S 201(1) AND ASSESSMENT PRO CEEDINGS ARE TWO DIFFERENT PROCEEDINGS. ACCORDINGLY HE STRONGLY OPP OSED THE STAY PETITION FILED BY THE ASSESSEE. 5. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE R ECORD. WE NOTICED THAT THE CLAIM OF THE ASSESSEE REGARDING LIMITATION FOR ASST. YEAR 2011-12 TO 2013-14 IS, PRIMA FACIE, SUPPORTED BY THE DECISI ON RENDERED BY HONBLE JURISDICTIONAL HIGH COURT. WE FURTHER NOTICE THAT THE ASESSEE HAS ALREADY PAID 2.63 CRORES WHICH ACCOUNT T FOR 40% OF THE DEM AND RAISED U/S 201(1) FOR ASST. YEARS 2014-15 TO 2017-18. THE CONTENTI ONS OF THE ASSESSEE ON MERITS COULD NOT BE EXAMINED AT THIS STAGE. ACCORD INGLY, WE ARE OF THE VIEW THAT THE BALANCE OF CONVENIENCE IS IN FAVOUR OF GRA NTING PARTIAL STAY TO THE ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESEE TO PA Y A FURTHER SUM OF RS.50 LAKHS IN 2 EQUAL INSTALLMENTS. THE 1 ST INSTALLMENTS SHALL BE PAID BEFORE THE END OF MAY 2019 AND 2 ND INSTALLMENTS SHALL BE PAID BEFORE THE END OF JUNE 2019. SUBJECT TO THE PAYMENT OF ABOVE SAID TAX , WE STAY THE OUTSTANDING DEMAND RAISED U/S 201(1) AND 201(1A) OF THE ACT IN ALL THE YEARS UNDER CONSIDERATION FOR A PERIOD OF 6 MONTHS FROM THE DATE OF THIS ORDER OR TILL THE DATE OF DISPOSAL OF THE APPEALS, WHICH EVER PERIOD EXPIRES EARLIER. 6. SINCE WE HAVE GRANTED STAY, WE ARE OF THE VIEW T HAT THESE APPEALS SHOULD BE TAKEN UP FOR DISPOSAL ON OUT OF TURN BASI S. ACCORDINGLY WE DIRECT THE REGISTRY TO POST THESE APPEALS FOR FINAL HEARIN G ON 08/7/2019. WE ALSO DIRECT THE ASSESSEE NOT TO SEEK ADJOURNMENT ON TH E DATE OF HEARING WITHOUT REASONABLE CAUSE FAILING WHICH THE PRESENT ORDERS SHALL BE SUBJECT S.P NOS.103 TO 116/BANG/2019 PAGE 4 OF 5 TO REVIEW BY DIVISION BENCH HEARING THE APPEALS. SI NCE THE DATE OF HEARING IS ANNOUNCED IN THE OPEN COURT IN THE PRESENCE OF B OTH THE PARTIES, THE REGISTRY MAY DESIST FROM ISSUING FORMAL NOTICE OF HEARING TO THE PARTIES. 7. IN THE RESULT, , THE STAY APPLICATIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAY , 2019 . SD/ - ( P.K GADALE) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 3 RD MAY, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. S.P NOS.103 TO 116/BANG/2019 PAGE 5 OF 5 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..