M/s Essilor India Pvt Ltd , Bangalore V. Assistant Commissioner of Income Tax Circle-2(1)(2), Bangalore

SA 29/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6173 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 23-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Earning of tax free income; Application of stay
• Section: 14A; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER SP NO.29/BANG/2019 [IN ITA NO.3228/BANG/2018] ASSESSMENT YEAR : 2014-15 M/S ESSILOR INDIA PVT. LTD., PRESTIGE TRADE TOWERS, 10 TH FLOOR, 46, PALACE ROAD, HIGH GROUNDS, SAMPANGI RAMA NAGAR, BENGALURU-560 001. PAN AAACE4623 J. VS. THE ASST.. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1)(2), BENGALURU. APPELLANT RESPONDENT APPLICANT BY : SHRI SANDEEP C, C.A RESPONDENT BY : SHRI RN SIDDAPPAJI, ADDL. CIT (DR) DATE OF HEARING : 22.02.2019 DATE OF PRONOUNCEMENT : 22.02.2019 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS STAY APPLICATION FILED BY THE ASSESSEE PRA YING FOR AN ORDER OF STAY OF RECOVERY OF OUTSTANDING DEMAND OF A SUM OF RS.18,49,58,180/- ARISING OUT OF THE ORDERS OF ASSESSMENT AND THE ORD ER OF FIRST APPELLATE AUTHORITY IN RELATION TO ASST. YEAR 2014-15. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF TRADING IN OPHTHALMIC LENSES, OPTICAL METERS AND PROCESSING OF SEMI-FINISHED OPHTHALMIC LENSES. THE OUTSTANDING DEMAND ARISES O UT OF 4 ADDITIONS MADE BY THE AO AND CONFIRMED BY THE CIT(A) TO THE I NCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. THE SAME IS DEPICTED IN ANNEXURE TO CHART. SP NO.29/BANG/2019 PAGE 2 OF 4 3. THE LD COUNSEL BROUGHT TO OUR NOTICE THAT AS FAR AS ISSUENO.1 IN THE CHART ANNEXED TO THIS ORDER, VIZ., ADDITION ON ACCO UNT OF DETERMINATION OF ARMS LENGTH PRICE IN RESPECT OF INTERNATIONAL TRANS ACTION U/S 92 OF THE INCOME TAX ACT, 1961 (ACT), THIS TRIBUNAL IN EARLIE R ASST. YEARS HAS ALREADY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 4. AS FAR AS ISSUE NO.2 WHICH IS A DISALLOWANCE U/S 14A OF THE ACT, LD COUNSEL FOR THE ASSESE POINTED OUT THAT THE DISALLO WANCE U/S 14A CANNOT EXCEED THE EXEMPT INCOME AND THIS POSITION OF LAW IS NOW WELL SETTLED. THE LD COUNSEL HAS TABULATED IN NOTE 1 GIVEN IN TH E CHART THAT IF THE AFORESAID 2 ADDITIONS WHICH ARE PRIMARILY TO BE DEC IDED IN FAVOUR OF THE ASSESSEE BASED ON THE EARLIER ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE AND WELL SETTLED POSITION OF LAW, THEN THE OUTSTAN DING DEMAND OF TAXES(EXCLUDING INTEREST) WILL STAND DEDUCED TO RS. 2,21,51,547/-. THE LD COUNSEL FOR THE ASSESEE BROUGHT TO OUR NOTICE THAT IN IDENTICAL CIRCUMSTANCES, THIS TRIBUNAL IN ASSESSES OWN CASE FOR ASST. YEAR 2013-14 IN S.P NO.3041/BANG/2017 IN IT(TP)A NO.2905/BANG/20 17 ORDER DATED 9/3/2018 GRANTED STAY OF RECOVERY OF OUTSTANDING DE MAND IN RESPECT OF ISSUES THAT WERE ALREADY COVERED IN FAVOUR OF THE A SSESSEE. 5. THE LD DR ON THE OTHER HAND OPPOSED THE PRAYER F OR GRANT OF STAY AND SUBMITTED THAT IN THE EVENT OF STAY BEING GRANT ED, THE ASSESSE SHOULD BE ASKED TO PAY SUBSTANTIAL AMOUNT TOWARDS OUTSTAND ING DEMAND. 6. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIV AL SUBMISSIONS. THE ADMITTED POSITION IS THAT ISSUE NO.1 WITH REGARD TO TRANSFER PRICING ADJUSTMENT HAS ALREADY BEEN DECIDED IN FAVOUR OF TH E ASSESEE IN ASSESSEES OWN CASE IN THE EARLIER ASSESSMENT YEAR BY THE TRIBUNAL AND IN RESPECT OF ISSUE NO.2 WITH REGARD TO DISALLOWANCE U /S 14A OF THE ACT, THE SETTLED LEGAL POSITION THAT THE EXPENDITURE DISALLO WED U/S.14A OF THE ACT SP NO.29/BANG/2019 PAGE 3 OF 4 CANNOT EXCEED THE EXEMPT INCOME EARNED BY THE ASSES SEE. CONSEQUENTLY, THE DEMAND OF RS.12,08,87,696/- WHICH INCLUDES THE TAX COMPONENT OF THE OUTSTANDING DEMAND (EXCLUDING INTE REST) WILL STAND REDUCED TO RS.2,21,51,547/-. 7. KEEPING IN MIND THE EXISTENCE OF A PRIMA FACIE CASE, BALANCE OF CONVENIENCE AND HARDSHIP, WE ARE OF THE VIEW THAT I T WOULD BE JUST AN APPROPRIATE TO GRANT AN ORDER OF STAY ON RECOVERY O F OUTSTANDING DEMAND FOR A PERIOD OF 6 MONTHS FROM TODAY OR TILL DISPOSAL OF THE APPEAL OF THE ASSESSEE WHICHEVER IS EARLIER. THE ASSESSEE IS DIR ECTED TO PAY A SUM OF RS.1 CRORE ON OR BEFORE 10/3/2019 AND ANOTHER SUM O F RS.1 CRORE ON OR BEFORE 20/3/2019. THE APPEAL WHICH WAS ALREADY FIXE D FOR HEARING ON 25/6/2019 IS ADVANCED TO BE HEARD ON 7/3/2019. THE APPEALS OF THE ASSESSEE FOR ASST. YEAR 2011-12 & 2013-14 HAVE ALRE ADY BEEN FIXED FOR HEARING BEFORE C BENCH. THIS APPEAL I.E IT(TP)A NO.3320/BANG/2018 FOR AY 2014-15 WHICH IS IN B BENCH IS DIRECTED TO BE CLUBBED AND POSTED FOR HEARING ON 7/3/2019 ALONG WITH THE APPEALS OF THE A SSESSEE FOR ASST. YEAR 2011-2 TO 2013-14 BEFORE THE C BENCH AND ALL THE THREE APPEALS WILL COME UP FOR HEARING ON 7.3.2019 BEFORE THE HONBLE C B ENCH. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT ALL THE I SSUES ARISING IN ALL THESE APPEALS ARE IDENTICAL AND THEREFORE IT WOULD BE APP ROPRIATE TO CLUB HEARING OF ALL THE APPEALS TOGETHER AND THEREFORE THE APPEA LS ARE CLUBBED FOR BEING HEARD TOGETHER. SP NO.29/BANG/2019 PAGE 4 OF 4 7. IN THE RESULT, STAY PETITION IS ALLOWED ON THE T ERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2019 . SD/- SD/- ( JASON P BOAZ ) ( N.V. VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 22 ND FEBRUARY, 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 ASST. REGISTRAR, ITAT, BANGALORE