M/s. Acer India Private Limited, Bangalore V. Deputy Commissioner of Income Tax, Circle-1(1)(2), Bangalore

SA 215/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6085 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 5 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: 2012-2013
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY VORA SENIOR
• Keywords: Recovery proceedings; Transfer pricing; Double taxation relief; International transaction
• Section: 40(a)(ia)

Judgement Text

SP.215 & 216/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER STAY PETITION NOS.215 & 216/BANG/2018 (IN I.T(TP).A NO.502/BANG/2017 & 2837/BANG/2017) (ASSESSMENT YEARS : 2012-13 & 2013-14) M/S. ACER INDIA P. LTD, NO.13, 6 TH FLOOR, EMBASSY HEIGHTS, MAGRATH ROAD, EXT TO HOSMAT HOSPITAL, BENGALURU 560 025 .. APPLICANT PAN : AACCA1237A V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -1(1)(2), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. AJAY VORA, SENIOR ADVOCATE REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT HEARD ON : 07.09.2018 PRONOUNCED ON : 11.09.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT TWO STAY PETITIONS ARE FILED BY THE AS SESSEE FOR GRANT OF STAY WITH RESPECT TO THE OUTSTANDING AMOUN T IN RESPECT OF THE FOLLOWING AMOUNTS : SP.215 & 216/BANG/2018 PAGE - 2 A. Y. 2012-13 RS.104,14,88,850 A. Y. 2013-14 RS. 79,54,12,563 02. IN THIS REGARD IT WAS SUBMITTED THAT FOR AY 201 2-13, PRINCIPLE COMPONENT OF ADJUSTMENT IS ON ACCOUNT OF ADDITION M ADE BY THE AO OF RS.2,13,92,48,086/- TOWARDS AMP ADJUSTMENT AND T HE REMAINING AMOUNT WITH RESPECT TO THE ADDITION MADE ON ACCOUNT OF 40(A)(IA) OF THE ACT. IT WAS VEHEMENTLY SUBMITTED THAT THE ISSU E OF AMP THOUGH WAS DECIDED BY THE TPO AND CONFIRMED BY THE AUTHORI TIES BELOW IS CONTRARY TO THE VARIOUS DECISIONS PASSED BY THE HON BLE DELHI HIGH COURT ION THE FOLLOWING MATTERS 1. MARUTI SUZUKI INDIA LIMITED V CIT [2016] 381 ITR 117 (DELHI) 2. CIT(LTU) V WHIRLPOOL OF INDIA LTD [2016] 381 ITR 15 4 (DELHI) 3. ESSILOR INDIA PRIVATE LIMITED (ITA NO. ITA NO.29/BANG/14 & 227/BANG/15) 4. DCIT V NIKE INDIA PRIVATE LIMITED (ITA NO. 232/BANG/2014 & 260/BANG/2014) 5. BAUSCH AND LOMB EYECARE (INDIA) V ACIT [2016] 381 I TR 227 (DELHI) 6. SONY ERICSON MOBILE COMMUNICATION INDIA (P.) LTD. [2015] 374 ITR 118 (DEL) 7. HONDA SIEL POWER PRODUCTS LIMITED V DCIT (ITA NO. 346/DEL/2015) IT WAS SUBMITTED THAT THERE WAS NO INTERNATIONAL TR ANSACTION AS THE EXPENDITURE INCURRED BY THE ASSESSEE WAS FOR THE PU RPOSES OF SP.215 & 216/BANG/2018 PAGE - 3 PROMOTING ITS OWN BRAND AS WELL AS END PRODUCT USER . IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS HAVING ECONOMIC OWN ERSHIP OF THE TANGIBLES CREATED BY SPENDING THE AMOUNT ON AMP. W ITH RESPECT TO THE SECOND COMPONENT OF THE ADDITION MADE BY THE TP O ON 40(A)(IA), IT WAS SUBMITTED THAT THOUGH THERE IS A JURISDICTIONAL HIGH COURT JUDGMENT IN THE MATTER OF CIT V. SAMSUNG ELEC TRONICS CO. LTD [345 ITR 494], HOWEVER IN THE PRESENT CASE THE FACTS OF THE PRESENT CASE ARE DIFFERENT FROM THE FACTS OF THE JU RISDICTIONAL HIGH COURT JUDGMENT IN THE MATTER OF SAMSUNG ELECTRONICS CO. LTD. IN THE PRESENT CASE, END USER IS THE BENEFICIARY OF TH E SOFTWARE AND THE SOFTWARE WERE NOT PURCHASED BY THE ASSESSEE. IT W AS SUBMITTED THAT THE SUBSEQUENT AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2010, BY VIRTUE OF WHICH, EXPLANATION TO SECTION 40(A)(IA) O F THE ACT, WAS INTRODUCED AND BY VIRTUE OF WHICH ADDITION WAS REST RICTED TO 30% OF THE DISALLOWED AMOUNT. IT WAS ALSO SUBMITTED THAT IN RESPECT OF THE EARLIER AMENDMENT TO SECTION 40(A)(IA), HONBLE DEL HI HIGH COURT IN CIT V. ANSAL LAND MARK TOWNSHIP P. LTD [61 TAXMANN. COM 45] HAD DECIDED THE ISSUE AND HELD THAT THE AMENDMENT IS RE TROSPECTIVE IN NATURE. HENCE IT WAS URGED THAT SAME VIEW BE TAKEN IN THIS REGARD ALSO AND BENEFIT SHOULD BE ENDURED IN FAVOUR OF THE ASSESSEE. FINALLY IT WAS SUBMITTED THAT IN VIEW OF THE PROVIS IONS OF DTAA BETWEEN INDIA AND MALASIA, THE ASSESSEE SHOULD NOT BE DISCRIMINATED AS A RESIDENT AND NON-RESIDENT AND THEREFORE THE BE NEFIT IN THIS AMENDMENT SHOULD BE GIVEN TO THE ASSESSEE. THE LD. AR FURTHER RELIED UPON THE JUDGMENTS OF VARIOUS HIGH COURTS IN ACIT V. EPSON INDIA P. LTD, [301 CTR 242] AND FLIPKART INDIA P. L TD V. ACIT [79 TAXMANN.COM 159]. SP.215 & 216/BANG/2018 PAGE - 4 03. PER CONTRA, THE LD. DR HAS SUBMITTED THAT THE I SSUE RAISED BY THE ASSESSEE ARE FACTUAL IN NATURE , ON THESE FACTS IT CANNOT BE SUBMITTED THAT THE ASSESSEE HAD MADE OUT A PRIMA FA CIE CASE, THESE FACTS ARE REQUIRED TO BE HEARD IN DETAIL AND THEREA FTER IT IS TO BE DECIDED WHETHER THE ASSESSEE IS ENTITLED TO RELIEF OR NOT. 04. AT THIS POINT OF ARGUMENT THE BENCH HAS ENQUIRE D FROM THE LD. SENIOR ADVOCATE APPEARING ON BEHALF OF THE ASSESSE E AS TO THE ASSESSEE IS HAVING FINANCIAL HARDSHIP THAT MAY BE C AUSED TO THE ASSESSEE IF IT IS DIRECTED TO PAY REASONABLE AMOUN T AND FURTHER ASSESSEE IS HAVING AN IMMEDIATE DANGER FROM THE AO FOR ATTACHMENT OF THE ACCOUNT ETC., TO THIS, IT WAS SU BMITTED BY THE LD AR THAT THERE WAS NEITHER A FINANCIAL HARDSHIP NOR THAT THERE WAS URGENT RECOVERY PROCEEDINGS INITIATED BY THE AO BY ISSUING GARNISHEE ORDER AGAINST THE ASSESSEE.. IN FACT AO O RALLY ASKED THE ASSESSEE TO DEPOSIT THE ARREARS OF OUTSTANDING TAX DEMAND IN EQUAL MONTHLY INSTALMENTS OF RS.3 CRORES EACH . FURTHER THE BENCH ASKED THE LD. AR ABOUT THE WILLINGNESS OF THE ASSESSEE TO DEPOSIT A SUM OF RS.22 CRORES AGAINST THE OUTSTANDING DEMAND OF BOTH THE ASSESSMENT YEARS TO THE EXTENT OF RS.104.41 CRORES AND RS.79 C RORES. TO THIS THE LD. AR HAS SHOWN HIS WILLINGNESS TO DEPOSIT THE REA SONABLE AMOUNT. 06. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE ASSESSEE IS REQUIRED TO PROVE THE PRIMA-FACIE CASE FOR GRANT OF STAY IN ITS FAVOUR. IN THE PRESENT CASE, THERE ARE NUMBER OF JUDGMENTS IN FAVOUR OF THE ASSESSEE WITH RESPECT OF AMP. HOWEVER SP.215 & 216/BANG/2018 PAGE - 5 WHETHER THERE ARE EXIST INTERNATIONAL TRANSACTIONS OR NOT AND WHETHER THE EXPENDITURE INCURRED BY THE ASSESSEE IN THE FOR M OF AMP HAS RESULTED IN TANGIBLE BENEFIT TO ITS AES OR NOT ARE REQUIRED TO BE EXAMINED, FOR WHICH DETAILED HEARING IS REQUIRED. I T WAS ALSO INFORMED DURING THE COURSE OF HEARING THAT ON EARLI ER OCCASION THE DRP HAS DELETED THE ADDITION MADE ON ACCOUNT OF AMP FOR THE EARLIER YEAR 2011-12 AND THE REVENUE IS IN APPEAL B EFORE THE TRIBUNAL. HOWEVER FOR THE PURPOSES OF STAY, THE ASS ESSEE IS REQUIRED TO PROVE PRIMA FACIE CASE, FINANCIAL HARDSHIP AND P ROVE BALANCE OF CONVENIENCE LIES IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE. 07. IN OUR VIEW THE ASSESSEE WAS REQUIRED TO DEMON STRATE THE PRIMA FACIE CASE AND BALANCE OF CONVENIENCE AND FIN ANCIAL HARDSHIP FOR THE PURPOSES OF MAKING OUT A CASE FOR GRANT OF INTERIM STAY. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES , THE BENCH DIRECT THE ASSESSEE TO DEPOSIT A SUM OF RS. 21 CRORE AS CO NDITION OF STAY. THE BENCH HAS ARRIVED AT A SUM OF RS.21 CRORES, TAK ING INTO ACCOUNT THE TOTAL DEMAND IN BOTH THE YEARS, EXCLUDING THE I NTEREST ELEMENT AND AFTER REDUCING THE AMOUNT ALREADY PAID BY THE A SSESSEE. IF RS.21 CRORES IS PAID THE TOTAL TAX DEMAND REMAINING UNPAID WOULD COME TO AROUND RS.42 CRORES. THEREFORE THE BENCH D IRECTED THE ASSESSEE TO DEPOSIT RS.21 CRORES. AS THE ASSESSEE HAS SHOWN BONAFIDE WILLINGNESS TO PAY RS.21 CRORES, THEREFORE WE DIRECT THE ASSESSEE TO PAY THE SAME, IN THE FOLLOWING PATTERN : RS.6 CRORES ON OR BEFORE 30.09.2018 RS.5 CRORES ON OR BEFORE 31.10.2018 RS. 5 CRORES ON OR BEFORE 30.11.2018 SP.215 & 216/BANG/2018 PAGE - 6 RS.5 CRORES ON OR BEFORE 31.12.2018 8. IF THE ASSESSEE PAYS THE ABOVE SAID AMOUNT OF RS.21 CRORES WITHIN THE TIME FRAME STATED HEREIN ABOVE TH EN THE BALANCE TAX AMOUNT SHALL NOT BE ENFORCED BY THE RE VENUE BY TAKING ANY STEPS WHATSOEVER. THIS STAY SHALL BE IN OPERATION FOR A PERIOD OF 180 DAYS OR TILL THE DISPOSAL OF TH E APPEAL WHICHEVER IS EARLIER. 9. THE REGISTRY HAD ALREADY FIXED THE MATTER FOR HEAR ING ON 16.10.2018 FOR AY 2012-13 AND ON 25.09.2018 FOR AY 2013-14, HENCE NO NEW DATES ARE REQUIRED TO BE GIVE N. 10. WE WOULD LIKE TO ADD AS A CONDITION OF STAY THAT T HE ASSESSEE SHALL FILE PAPER BOOKS / DOCUMENTS BEFORE NDOH AFTER SUPPLYING THE SAME TO THE REVENUE AND IT IS F URTHER DIRECTED THAT THE ASSESSEE SHALL NOT TAKE ANY UNDUE ADJOURNMENT IN THE MATTER. IN CASE ANY OF THE TERM S AND CONDITIONS IS VIOLATED THEN THE STAY GRANTED BY THE TRIBUNAL SHALL BE DEEMED TO HAVE BEEN VACATED. NO SEPARATE NOTICE OF HEARING SHALL BE GIVEN TO THE PARTIES AS THE DATE O F 16.10.2018 FOR AY 2012-13 AND ON 25.09.2018 FOR 2013-14 ARE KN OWN TO THE PARTIES. NEEDLESS TO SAY NOTHING STATED HEREIN ABOVE SHALL BE CONSIDERED AS AN EXPRESSION ON MERITS OF THE CAS E AND IS ONLY PRIMA FACIE OBSERVATIONS OF THE BENCH. SP.215 & 216/BANG/2018 PAGE - 7 11. THE STAY PETITIONS ARE ALLOWED TO THE ABOVE MENTIONED EXTENT. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH DAY OF S EPTEMBER 2018. SD/- SD/- (JASON P. BOAZ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBE R BENGALURU DATED : 11.09.2018 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.