M/s Filtrex Technologies Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

SA 55/BANG/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6190 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 17 day(s)
• 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: 13-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS SUYAVANSHI
• Keywords: Transfer pricing; International transaction; Application of stay; TDS

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH- A BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER S.P.NO.54 & 55/BANG/2019 IN I.T.A. NO.2162/BANG/2017 & 3330/BANG/2018 (ASSESSMENT YEAR : 2013-14 & 2014-15) M/S.FILTREX TECHNOLOGIES PRIVATE LIMITED, 36/4, RAGHAVENDRA NAGAR, NEAR RING ROAD, 4 TH CROSS, HRBR LAY OUT, BANGALORE-560043. PAN AAACF4091P VS. DEPUTY/ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), BANGALORE. APPELLANT/PETITIONER RESPONDENT/RESPONDENT PETITIONER BY : SHRI.MAHAVEER JAIN, CA. RESPONDENT BY : SHRI VIKAS SUYAVANSHI, ADDL.CIT ( DR) DATE OF HEARING : 27.2.2019. DATE OF PRONOUNCEMENT : 27.2.2019. O R D E R PER SHRI N.V. VASUDEVAN, VICE PRESIDENT : THESE ARE APPLICATIONS FILED BY THE ASSESSEE PRAYIN G FOR AN ORDER OF STAY OF RECOVERY OF OUTSTANDING DEMAND OF RS.7,49,66.7 90 & RS.13,96,89,910/- ARISING OUT OF THE ORDER OF ASSESSM ENT PASSED BY THE RESPONDENT U/S.143(3) READ WITH SEC.144C(13) OF THE INCOME TAX ACT, 1961 (ACT) FOR AY 2013-14 & 2014-15. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF MANUFACTURE OF CARBON BLOCK CARTRIDGES USED FOR REMOVING HARMFUL CON TAMINANTS FROM 2 DRINKING WATER. THE OUTSTANDING DEMAND ARISES OUT OF THREE ADDITIONS MADE IN THE ASSESSMENT BY THE AO, VIZ., (I) ADDITION ON ACCOUNT OF ADJUSTMENT TO ARMS LENGTH PRICE (ALP) OF AN INTERNATIONAL TRANSA CTION OF INCURRING PAYMENT OF ROYALTY AND MANAGEMENT FEE TO ASSOCIATED ENTERPRIS ES; (II) ADDITION ON ACCOUNT OF DISALLOWANCE OF FOREX LOSS RELATING TO ROYA LTY AND MANAGEMENT FEE PAYMENT, (III) DISALLOWANCE OF EXPORT COMMISSION AND (IV) DISALLOWANCE OF TDS ON TESTING CHARGES. 3. THE MAJOR PORTION OF THE OUTSTANDING DEMAND IS O N ACCOUNT OF ADDITION CONSEQUENT TO DETERMINATION OF ARMS LENGTH PRICE (A LP) IN RESPECT OF INTERNATIONAL TRANSACTION U/S.92 OF THE INCOME TAX A CT, 1961. IT IS THE PLEA OF THE ASSESSEE THAT IDENTICAL ISSUE IN ASSESSEES OWN CASE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AND THEREFORE THE ASSESSEE HAS A PRIMA FACIE CASE. IT WAS SUBMITTED THAT PAYME NT OF OUTSTANDING DEMAND WOULD CAUSE FINANCIAL HARDSHIP TO THE ASSESSE E. 5. THE LEARNED DR SUBMITTED THAT THE ASSESSEE SHOU LD BE ASKED TO PAY SUBSTANTIAL AMOUNT EQUAL TO 50% OF THE OUTSTANDING DEMAND AS A CONDITION FOR GRANT OF ANY ORDER OF STAY. 6. WE HAVE GIVEN A CAREFUL TO THE RIVAL SUBMISSIONS . THE OUTSTANDING DEMAND FOR BOTH THE ASSESSMENT YEARS AND THE REFUNDS DUE TO THE ASSESSEE IN OTHER AYS AND THE PAYMENTS ALREADY MADE BY THE A SSESSEE TOWARDS OUTSTANDING DEMAND IS GIVEN IN A CHART ANNEXED TO T HIS ORDER. PERUSAL OF THE SAME WOULD SHOW THAT THE OUTSTANDING DEMAND FOR TAXE S IS A SUM OF RS.14 CRORES. THE ASSESSEE HAS ALREADY PAID A SUM OF RS.1 ,12,45,047 TOWARDS OUTSTANDING DEMAND. THOUGH THE ASSESSEE CLAIMS THA T A SUM OF RS.5,10,53,780 IS DUE AS REFUND FOR VARIOUS AYS AS PE R THE SHEET ANNEXED TO 3 THIS ORDER, THE AO HAS ACCEPTED REFUNDS DUE ONLY TO THE EXTENT OF 3,51,67,000 AND A FURTHER SUM OF RS.1,08,00,000/- BEING REFUND FOR AY 2010-11 ADJUSTED TOWARDS OUTSTANDING DEMAND FOR AY 2014-15. 7. KEEPING IN MIND THE EXISTENCE OF PRIMA FACIE CASE , BALANCE OF CONVENIENCE AND RELATIVE HARDSHIP, WE ARE OF THE VIEW THAT THER E SHOULD BE AN ORDER OF STAY OF RECOVERY OF OUTSTANDING DEMANDS FOR BOTH AY 20 13-14 & 2014-15 FOR A PERIOD OF 6 MONTHS FROM TODAY OR TILL DISPOSAL OF TH E APPEALS OF THE ASSESSEE WHICHEVER IS EARLIER. THE ASSESSEE IS DIR ECTED TO PAY A SUM OF RS.1,40,00,000/- TOWARDS OUTSTANDING DEMAND IN THE FOLLOWING MANNER: (I) RS.1 CRORE ON OR BEFORE 15.3.2019 (II) RS.40,00,000/- ON OR BEFORE 15.4.2019. THE APPEAL OF THE ASSESSEE FOR AY 2013-14 IS ALREADY POSTED FOR HEARING ON 29.4.2019 AND THE APPEAL OF ASSESSEE FOR AY 2014-15 I S POSTED ON 25.6.2019. BOTH THE APPEALS ARE BEFORE A BENCH. THE HEARING OF THE APPEAL FOR AY 2014-15 IS ADVANCED TO 29.4.2019 TO BE HEARD ALONG WITH APPEAL FOR AY 2013- 14. 8. IN THE RESULT, THE STAY APPLICATION IS ALLOWED TO THE EXTENT INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF FEBRUARY, 2019. SD/- SD/- (JASON P.BOAZ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DT. 27.2.2019. VMS ENCL: ANNEXURE. 4 COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.