M/s Manthan Software Services Private Limited , Bangalore V. Deputy Commissioner of Income Tax (International Taxation) Circle-1(2), Bangalore

SA 134/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6179 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 9 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 22-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 201(1); 195; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER STAY PETITION NOS. 130, 131, 132, 133 & 134/BANG/20 19 IN ITA NOS. 556, 557, 558, 559 & 560/BANG/2019 ASSESSMENT YEARS : 2012-13, 2013-14, 2014-15, 2015 -16 & 2016-17 M/S. MANTHAN SOFTWARE SERVICES PRIVATE LIMITED, NO.40/4, LAVELLE ROAD, BANGALORE [PAN: AADCM7750M] VS. DCIT (INTERNATIONAL TAXATION), CIRCLE-1(2), BANGALORE APPLICANT RESPONDENT APPLICANT BY : SHRI H.N. KINCHA, C.A., RESPONDENT BY : DR. P.V. PRADEEP KUMAR, ADDL.CIT DATE OF HEARING : 26-04-2019 DATE OF PRONOUNCEMENT : 26-04-2019 O R D E R PER N V VASUDEVAN, VICE PRESIDENT : THE ASSESSEE HAS FILED THE AFORESAID STAY PETITIONS , PRAYING FOR AN ORDER OF STAY OF RECOVERY OF OUTSTANDING DEMAND ARI SEN OUT OF THE ORDERS PASSED U/S. 201(1) AND 201(1A) OF THE INCOME TAX ACT, 1961 (ACT) FOR THE AYS. 2012-13, 2013-14, 2014-15, 2015- 16 & 2016-17. 2. THE QUESTION THAT ARISES FOR CONSIDERATION IN TH E ABOVE APPEALS OF THE ASSESSEE IS AS TO WHETHER THE AMOUNT BY THE ASS ESSEE TO ITS UNITED : 2 : STAY PETITION NOS. 130 TO 134/BANG/2019 STATES OF AMERICA (USA) SUBSIDIARY MANTHAN SYSTEMS INC TOWARDS SELLING AND MARKETING SERVICES WERE IN THE NATURE O F FEES FOR TECHNICAL SERVICES (FTS)/ROYALTY AND THEREFORE, THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE ON THE AFORESAID PAYMENTS U/ S. 195 OF THE ACT. ANOTHER QUESTION INVOLVED IS WITH REGARD TO RATE AT WHICH THE ASSESSEE OUGHT TO HAVE DEDUCTED TDS. IN TERMS OF SECTION 20 6AA OF THE ACT, THE REVENUE HAS APPLIED HIGHER RATE OF TDS. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE OUTSTA NDING DEMAND ARISING FOR ALL THE FOUR YEARS AND THE PAYMENTS MAD E BY THE ASSESSEE TOWARDS THE OUTSTANDING DEMAND IS AS FOLLOWS: TABLE SHOWING DETAILS OF TAX DEMAND FOR EACH YEAR A LONG WITH PAYMENT DETAILS ASSESSMENT YEARS 2012-13 2013-14 2014-15 2015-16 2016-17 TOTAL TAX DEMAND 36,54,357 64,87,046 1,55,56,192 1,45,14,847 4,08,21,295 8,10,33,736 INTEREST U/S. 201(1A) 28,84,128 43,65,117 86,15,495 64,03,055 1,28,14,537 3,50,82,333 TOTAL DEMAND 65,38,485 1,08,52,162 2,41,71,688 2,09,17,902 5,36,35,832 11,61,16,069 TAX PAID BEFORE CIT(A) ORDER 8,33,964 13,84,160 32,22,892 27,89,054 66,78,336 1,49,08,406 TAX PAID POST CIT(A) ORDER IN THE MONTH OF MARCH 4,16,982 6,92,080 16,11,446 13,94,527 33,39,168 74,54,203 TAX PAID AFTER FILING STAY PETITION I.E. ON 29.03.2019 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000 TAX PAID TILL DATE 22,50,946 30,76,240 58,34,338 51,83,581 1,10,17,504 2,73,62,609 BALANCE DEMAND 42,87,539 77,75,922 1,83,37,350 1,57,34,321 4,26,18,328 8,87,53,460 : 3 : STAY PETITION NOS. 130 TO 134/BANG/2019 PARTICULARS AMOUNT TAX DEMAND (EXCLUDING INTEREST) 8,10,33,736 TOTAL DEMAND PAID TILL DATE 2,73,62,609 PERCENTAGE OF DEMAND PAID 33.77% 4. IT IS THE STAND OF THE LD. COUNSEL FOR THE ASSES SEE THAT IDENTICAL ISSUE THAT ARISES FOR CONSIDERATION IN THE CASE OF THIS ASSESSEE, AROSE FOR CONSIDERATION IN THE CASE OF EXOTIC FRUITS (P) LTD. , VS. ITO (2013) [40 TAXMANN.COM 348] (BANGALORE-TRIB) AND THIS TRIB UNAL HELD THAT THE PAYMENT-IN-QUESTION CANNOT BE CHARACTERIZED AS FTS. THE ASSESSEE ALSO DEMONSTRATED BEFORE US THE EXISTENCE OF FINANC IAL HARDSHIP BY FILING BALANCE SHEET OF THE ASSESSEE AS ON 31-03-20 19. RELIANCE WAS ALSO PLACED BY THE LD. COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIT VS. PAN ALFA AUTOELCTRIK LTD., [49 TAXMANN.COM 412] (DEL), WHEREIN COMMISSIO N PAID FOR PROCURING EXPORT ORDERS WAS HELD TO BE NOT IN THE N ATURE OF FTS. 5. LD.DR OPPOSED THE PRAYER FOR GRANT OF STAY AND S UBMITTED THAT IN THE EVENT OF GRANT OF STAY, SUBSTANTIAL OUTSTANDING DEMAND SHOULD BE DIRECTED TO BE PAID AS A CONDITION FOR GRANT OF STA Y. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. TAKING INTO CONSIDERATION THE EXISTENCE OF PRIMA-FACIE CASE, BALANCE OF CONVENIENCE AND RELATIVE HARDSHIP, WE ARE OF THE VI EW THAT IT WOULD BE JUST AND APPROPRIATE TO GRANT AN ORDER OF STAY OF R ECOVERY OF OUTSTANDING DEMAND FOR A PERIOD OF SIX MONTHS FROM TO-DAY I.E., ON 26-04-2019 OR TILL THE DISPOSAL OF THE APPEAL, WHICHEVER IS EARLI ER. ASSESSEE IS : 4 : STAY PETITION NOS. 130 TO 134/BANG/2019 HOWEVER, DIRECTED TO PAY A SUM OF RS. 50 LAKHS TOWA RDS OUTSTANDING DEMAND IN THE FOLLOWING MANNER: AMOUNT (RS) 1. 25 LAKHS ON OR BEFORE 31-05-2019 2. 25 LAKHS ON OR BEFORE 30-06-2019 6.1. THE APPEAL IS DIRECTED TO BE FIXED OUT OF TURN FOR HEARING ON 03- 07-2019. SINCE THE DATE OF HEARING OF THE CASE WAS ANNOUNCED IN THE OPEN COURT, NO NOTICES OF HEARING WILL BE SENT TO T HE PARTIES. 7. IN THE RESULT, ALL THE STAY PETITIONS ARE ALLOWE D TO THE EXTENT INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF APRIL, 2019 SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEV AN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 26 TH APRIL, 2019 TNMM : 5 : STAY PETITION NOS. 130 TO 134/BANG/2019 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 ASSISTANT REGISTRAR, ITAT, BANGALORE