Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 6188 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Transfer Pricing) Appeal
Pronouncement Date
01-05-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2014-2015
Appeal Filed On
08-02-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P. BOAZ , ACCOUNTANT MEMBER SP NO.43/BANG/2019 [IN I T (TP) A NO. 3086/BANG/2018] ASSESSMENT YEAR : 2014 - 15 JDA SOFTWARE PVT. LTD., TOWER A, MANTRI COMMERCIO, OUTER RING ROAD, BELLANDUR, BANGALORE 560 103. PAN: AAACI 7334Q VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(1), BANGALORE. APPLICANT RESPONDENT APPLICANT BY : SHRI T. SURYANARAYANA, ADVOCATE RE SPONDENT BY : SHRI DR. SHANKAR PRASAD, ADDL.CIT DATE OF HEARING : 15.02 .2019 DATE OF PRONOUNCEMENT : 15 . 0 2 . 201 9 O R D E R PER N V VASUDEVAN, VICE PRESIDENT THIS IS A PETITION FOR GRANT OF STAY OF OUTSTANDI NG DEMAND OF A SUM OF RS.29,03,96,990/- ARISING OUT OF THE ORDER OF ASSES SMENT RELATING TO ASSESSMENT YEAR 2014-15. 2. THE OUTSTANDING DEMAND ARISES OUT OF THE FOLLOWI NG ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE DECLARED BY THE ASSESSEE VIZ., (I) TP ADJUSTMENT OF RS.56,39,12,153 MADE TO THE SWD SE RVICES SEGMENT; SP NO.43/BANG/2019 PAGE 2 OF 7 (II) TP ADJUSTMENT OF RS.3,63,45,676 MADE TO THE INTERES T ON DELAYED TRADE RECEIVABLES FROM THE AES OF THE ASSESSEE; (III) NON-GRANT OF DEDUCTION CLAIMED FOR PAYMENTS DISALLO WED U/S. 40(A)(I) OF THE ACT DURING AY 2012-13; AND (IV) SHORT GRANT OF TAX DEDUCTED AT SOURCE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE COMPARABLE COMPANIES CHOSEN FOR THE PURPOSE OF COMP ARISON BY THE TPO HAVE ALL BEEN HELD TO BE NOT COMPARABLE IN SEVERAL DECISIONS AND IF THOSE COMPARABLE COMPANIES ARE EXCLUDED THEN THERE WOULD BE NO ADDITION CONSEQUENT TO DETERMINATION OF ARMS LENGTH PRICE U /S. 92 OF THE INCOME TAX ACT, 1961 [THE ACT]. IT WAS ALSO SUBMITTED THA T THE TRANSFER PRICING ADJUSTMENT MADE TO INTEREST ON DELAYED RECEIVABLES WOULD NOT STAND IN THE LIGHT OF THE DECISION OF THE BANGALORE BENCH OF THE ITAT IN THE CASE OF TALLY SOLUTIONS (P) LTD. VS. ACIT (2016) 73 TAXMANN.COM 5 4 (BANG-TRIB) WHEREIN IT WAS HELD THAT DELAYED RECEIPT OF RECEIVABLES FRO M THE ASSOCIATED ENTERPRISE CANNOT BE CONSIDERED AS INTERNATIONAL TR ANSACTION. IT WAS FURTHER SUBMITTED THAT THE DISALLOWANCE U/S. 40(A)(IA) CANN OT BE SUSTAINED BECAUSE THE DISALLOWANCE OF THE SUM WAS A DISALLOWANCE MADE IN AY 2013-14 AND THE CLAIM MADE FOR DEDUCTION IN AY 2014-15 IS ONLY ON THE BASIS OF ACTUAL PAYMENT DURING THE RELEVANT PREVIOUS YEAR AND THERE FORE THE ADDITION WAS UNJUSTIFIED. THERE WAS NO EXPENDITURE DEBITED IN PR OFIT AND LOSS ACCOUNT WHICH WAS CLAIMED AS DEDUCTION SO AS TO WARRANT INV OCATION OF SEC.40(A)(IA) OF THE ACT. 4. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO BROUGH T TO OUR NOTICE THAT A SUM OF RS.9,67,99,412/- BEING REFUND OF DUE FOR A Y 2006-07 HAS ALREADY BEEN ADJUSTED TOWARDS THE OUTSTANDING DEMAND. THIS HAS BEEN CONFIRMED BY THE AO IN THE LETTER DATED 13.2.2019 FILED BEFOR E US, BUT THE FIGURE STATED BY HIM IN HIS LETTER AS ADJUSTMENT IS RS.9,19,41,95 0/-. IN THIS LETTER HE HAS ALSO ACCEPTED THAT THE CLAIM OF THE ASSESSEE FOR RE FUND DUE FOR AY 2004-05 SP NO.43/BANG/2019 PAGE 3 OF 7 OF RS.2,46,74,201/- REQUIRES TO BE VERIFIED. THE D ETAILS WITH REGARD TO REFUND DUE FOR AY 2004-05 AND OTHER REFUND DUE FOR AY 2006-07 (OTHER THAN THE REFUND OF RS.9,67,99,412/-) ARE AS FOLLOWS :- FOR AY 2004-05 (I) AN ORDER GIVING EFFECT ('OGE') TO THE ORDER OF THE COMMISSIONER OF INCOME TAX APPEALS [CIT(A)] FOR AY 2004-05 (ENCLOSED HEREWITH AND MARKED AS ANNEXURE 5 ) WAS PASSED ON 6 SEPTEMBER 2013. THIS ORDER WAS MADE AVA ILABLE TO THE COMPANY IN 2017. THE TAX REFUND DETERMINED V IDE THE SAID ORDER WAS INR 79,769,867. (II) IN A NOTE TO THE OGE FOR AY 2004-05, IT WAS STATES THAT OUT OF THE REFUNDS OF INR 79,769,867 DETERMINED FOR AY 2004- 05. INR 24,674,201 WOULD BE ADJUSTED AGAINST THE OUTSTANDING DEMAND FOR AY 2007-08. E VEN AFTER SPECIFIC MENTION IN THE OGE FOR AY 2004-05, NO ADJUSTMENTS U /S 245 OF THE ACT WAS MADE AGAINST THE OUTSTANDING DEM AND FOR AY 2007-08 . (III) NO ADJUSTMENT FOR REFUNDS OF AY 2004-05 HAS BEEN MA DE AGAINST THE OUTSTANDING DEMAND FOR AY 2007-08 AND T HE COMPANY IS STILL ELIGIBLE TO CLAIM A REFUND OF INR 3,26,38,305 FOR AY 2004-05 (WORKINGS TABULATED IN T HE ENSUING PARAGRAPHS). FOR AY 2007-08 OGE TO HON'BLE ITAT'S ORDER I) THAT AN OGE TO THE ORDER OF HON'BLE ITAT FOR AY 2007-08 WAS PASSED VIDE ORDER DATED 20 MARCH 2017. THE TAX REFUND DETERMINED VIDE THE SAID ORDER FOR AY 2007-08 WAS I NR 90,042,090. II) NO ADJUSTMENT WAS MADE U/S 245 FOR THE AMOUNT O F INR 24,674,201 PERTAINING TO REFUNDS OF AY 2004-05 IN T HE OGE FOR AY 2007-08. ACCORDINGLY, CREDIT OF INR 24,674,2 01 PERTAINING TO THE REFUNDS ADJUSTED FROM AY 2004-05 WAS ALSO NOT GRANTED BY YOUR GOODSELF IN THE OGE FOR AY 2007- 08 AND THE SAME SHALL BE GRANTED IN AY 2004-05 ITSE LF. SP NO.43/BANG/2019 PAGE 4 OF 7 THE ASSESSEE HAS TABULATED BELOW THE SUMMARISED WOR KINGS FOR THE NET REFUND OF INR 32,638,305. PARTICULARS REFERENCE AMOUNT [INR] TAX PAYABLE AS PER OGE FOR AY 2004-05 1 13,261,924 LESS: TOTAL TAX PAID 2 85,039,889 TOTAL REFUND RECEIVABLE FOR AY 2004-05 3=1-2 71, 777,965 LESS :INTEREST U/S 244A OF THE ACT ON 3 (FROM JANUARY 2007 TO MAY 2009) 4 3,845,958 TAX REFUNDABLE FOR AY 2004-05 BEFORE ADJUSTMENT OF REFUNDS 5=3-4 67,932,007 ADD: INTEREST UNDER SECTION 244A OF THE ACT - TILL DECEMBER 2017 6 29,500,181 LESS: ADJUSTMENT TOWARDS DEMAND OF AY 2013-14 IN JANUARY 2018 7 (66,929,100) TAX REFUNDABLE 8=5+6+7 30,503,089 ADD: INTEREST UNDER SECTION 244A OF THE ACT (FROM JAN. 2018 TO FEB. 2019) 9 2,135,216 NET TAX REFUNDABLE FOR AY 2004-05 8+9 32,638,305 FOR AY 2006-07 IN THE CASE OF JDA SOFTWARE INDIA PR IVATE LIMITED (SINCE MERGED WITH THE COMPANY) I) AN OGE TO THE ORDER OF HON'BLE ITAT, HYDERABAD F OR AY 2006-07 DATED 27 JANUARY 2016, WAS PASSED VIDE ORDER DATED 30 MARCH 2017. II) FURTHER WHILE COMPUTING THE REFUND OF INR 983, 141 IN THE OGE, CREDIT FOR INR 5,785,812 WHICH WAS PAID BY WAY OF ATTACHMENT OF THE BANK ACCOUNT OF THE COMPANY ON 11 FEBRUARY 2011 HAS NOT BEEN GRANTED. A COPY OF THE N OTICE UNDER SECTION 226(3) OF THE ACT SERVED ON UTI BANK LIMITED REQUIRING THE BANK TO REMIT INR 5,785,812 TO THE CR EDIT OF GOVERNMENT OF INDIA WAS FILED IN THIS REGARD. A COP Y OF THE BANK STATEMENT EXTRACT ISSUED BY AXIS BANK LTD. (FO RMERLY KNOWN AS UTI BANK LIMITED) ACKNOWLEDGING THE DEBIT OF INR 5,785,812 TO THE CREDIT OF GOVERNMENT OF INDIA IS ALSO STATED TO HAVE BEEN FILED BEFORE AO. SP NO.43/BANG/2019 PAGE 5 OF 7 POST CONSIDERING THE COLLECTION OF TAXES BY WAY O F BANK ACCOUNT ATTACHMENT, THE COMPANY SHALL BE ELIGIBLE F OR AN INCOME-TAX REFUND OF INR 9,672,473 (INCLUDING INTER EST U/S 244A OF THE ACT UPTO FEBRUARY 2019). THE ASSESSEE HAS TABULATED BELOW THE SUMMARISED WOR KINGS FOR THE NET REFUND OF INR 9,672,473. PARTICULARS AMOUNT [INR] DATE OF PAYMENT BEGINNING OF THE AY CURRENT DATE NO. OF MONTHS TOTAL INTEREST PAYABLE REFUND CONSEQUENT TO TDS AND SELF- ASSESSMENT TAX 608,756 1-APR-06 7-FEB-19 155 471,786 PAYMENT MADE ON 11 FEBRUARY 2011 5,785,812 11-FEB-11 7-FEB-19 97 2,806,119 TOTAL 6,394,568 3,277,905 TOTAL AMOUNT REFUNDABLE 9,672,473 5. THUS, THE TOTAL ADJUSTMENT ON ACCOUNT OF REFUND ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE ARE:- RS.9,67,99,412 REFUND FOR AY 2006-07 RS.3,26,38,305 REFUND FOR AY 2004-05 RS. 96,72,473 REFUND FOR AY 2006-07 THE TOTAL REFUND AVAILABLE FOR ADJUSTMENT IS THUS R S. 13,91,10,190/-, WHICH WOULD BE MORE THAN 50% OF THE OUTSTANDING TAX DEMAN D (TOTAL OUTSTANDING DEMAND RS.29,03,96,990 INTEREST COMPONENT OF THE SAID DEMAND SP NO.43/BANG/2019 PAGE 6 OF 7 RS.8,87,32,424). HE THEREFORE SUBMITTED THAT THE I NTERESTS OF THE REVENUE ARE SUFFICIENTLY SAFEGUARDED. 6. THE LEARNED DR OPPOSED THE PRAYER FOR GRANT OF S TAY AND SUBMITTED THAT IN THE EVENT OF STAY BEING GRANTED, THE ASSESS EE SHOULD BE ASKED TO PAY SUBSTANTIAL SUM TOWARDS OUTSTANDING DEMAND. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. TAKING INTO CONSIDERATION THE EXISTENCE OF PRIMA FACIE CASE, BA LANCE OF CONVENIENCE, RELATIVE HARDSHIP AND THE FACT THAT REFUNDS ARE ALR EADY DUE TO THE ASSESSEE WHICH WILL SAFEGUARD THE INTEREST OF THE REVENUE, W E ARE OF THE VIEW THAT IT WOULD BE JUST AND APPROPRIATE TO GRANT AN ORDER OF STAY OF RECOVERY OF OUTSTANDING DEMAND FOR A PERIOD OF 6 MONTHS FROM TH E DATE OF THIS ORDER, OR TILL DISPOSAL OF THE APPEALS OF THE ASSESSEE, WHICH EVER IS EARLIER. THE AMOUNTS AVAILABLE FOR ADJUSTMENT OUT OF THE REFUND WOULD COVER MORE THAN 50% OF THE OUTSTANDING DEMAND OF TAXES (EXCLUDING I NTEREST). THE APPEALS ARE ALREADY FIXED FOR HEARING ON 6.6.2019. SERVIC E OF NOTICE TO THE PARTIES IS DISPENSED WITH. 8. IN THE RESULT, THE STAY PETITION IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF FEBRUARY, 2019. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 15 TH FEBRUARY, 2019. / D ESAI S MURTHY / SP NO.43/BANG/2019 PAGE 7 OF 7 COPY TO: 1. APP ELL ANT 2 . RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.
Mehul