SONY INDIA PRIVATE LIMITED,DELHI V. ACIT CIRCLE 22(2), DELHI

SA 235/DEL/2025

AI Insights

Sony India Pvt. Ltd. filed a stay petition against an outstanding tax demand assessed at INR 1,52,88,14,330 for the Assessment Year 2020-21. The demand arose from adjustments made by the Transfer Pricing Officer (TPO) and the Assessing Officer (AO) concerning international transactions and royalty payments to Associated Enterprises (AEs). The Tribunal considered previous judgments by the Delhi High Court in favor of the assessee regarding similar issues and decided to stay the demand, except for the portion related to Education Cess, which was mandated to be paid by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470108 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: misc
• Other Referred Cases: ITA No.551/2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: NAGESHWAR RAO; PARTH
• Keywords: Transfer pricing; International transaction; Retrospective amendment; Application of stay
• Section: 143(3)

Judgement Text

"S.A.No.235/Del/2025 [In ITA No.3851/Del/2024] Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “H-FRIDAY” BENCH: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER S.A.No.235/Del/2025 [In ITA No.3851/Del/2024] [Assessment Year : 2020-21] Sony India Pvt.Ltd. A-18, Mathura Road, Delhi-110044. PAN-AABCS1571Q vs ACIT Circle-22(2) Delhi APPELLANT RESPONDENT Appellant by Shri Nageshwar Rao, Adv. & Shri Parth, Adv. Respondent by Shri Sanjay Kumar, Sr.DR Date of Hearing 04.04.2025 Date of Pronouncement 04.04.2025 ORDER PER MANISH AGARWAL, AM : This Stay petition filed by the assessee for AY 2020-21 requesting for the grant of stay of outstanding demand of INR 1,52,88,14,330/-. 2. Brief facts of the case are that in the instant case, total income of the assessee was assessed at INR 3,40,85,69,551/- against the declared income by the assessee at INR 1,44,25,06,610/-. In the instant case, the AO has referred assessee’s case for determination for Arm’s Length Price (“ALP”) for international transactions undertaken with its Associated Enterprises (“AEs”) to the Transfer Pricing Officer (“TPO”) who made following adjustments in terms of the order dated 30.07.2023:- Amount of adjustment (INR) Basis of adjustment 1,72,63,00,000 Substantive adjustment on account of AMP expenditure alleging creation of marketing intangibles by the Applicant using intensity adjusted Transaction Net Margin Method (“TNMM”) approach. S.A.No.235/Del/2025 [In ITA No.3851/Del/2024] Page | 2 1,14,40,00,000 Protective adjustment on account of price paid by applicant to its AEs for the transaction of import of finished goods not being at arm’s length. 1,82,05,99,477 Adjustment on account of royalty payment made by applicant to its AEs not being at arm’s length 4,44,41,00,000 Protective adjustment in relation to the international transaction fro marketing and Market development functions based on Bright line Test (“BLT”) approach. 3. Finally, in the final order, the AO vide order dated 30.07.2024 has made following adjustments vide order passed under section 143(3) r.w.s. 144C(13) and 144B of the Act are as under:- Amount of adjustment (INR) Basis of adjustment 1,82,05,99,477 Adjustment on account of royalty payment made by Appellant to its AE not being arm’s length 13,15,00,000 Stock valuation 1,39,63,464 Disallowance of deduction of Education cess 4. Before us, the Ld.AR of the assessee submits that issue No.1 with respect to the adjustment of INR 1,82,05,99,477/- made towards adjustment on royalty payment made to its AEs has already been decided by the Hon’ble Delhi High Court in the case of assessee itself in ITA No.551/2023 for AY 2016- 17 vide order dated 30.09.2024 in its favour. He further submits that the issue of stock valuation where an adjustment of INR 13,15,00,000/- is made is also decided in favour of the assessee by the Hon’ble Jurisdictional High Court in terms of aforesaid order dated 30.09.2024. He thus submits that the balance of convenience in its favour as both the major issues are fully covered its own case by the decision of the Hon’ble Jurisdictional High Court. He further submits that the case of the assessee for other AY’s stood heard by the “H” Bench of the Tribunal on 03.04.2025 and order is awaited. However, due to paucity of time, the appeal for the year under consideration could not be heard and matter is finally adjourned to 27.05.2025. He submitted that since major issues are covered by the decision of the Jurisdictional High Court in the assessee’s own case, the assessee would every hope of getting relief in the S.A.No.235/Del/2025 [In ITA No.3851/Del/2024] Page | 3 pending appellate proceedings. He therefore, requested for the stay of outstanding demand. 5. On the other hand, Ld. Sr. DR for the Revenue requested for direction for deposit of 20% of the entire outstanding demand. However, he admitted the facts as narrated by the Ld. AR of the assessee. 6. We have heard the rival submissions and perused the material available on record. From the details filed by the assessee, it is observed that major additions are covered in favour of the assessee in terms of the judgement of Hon’ble Jurisdictional High Court in assessee own case for AY 2016-17 (supra). The third issue of disallowance of Education Cess is covered against the assessee as per the amendment made in Finance Act, 2022 with retrospective effect. The case of the assessee is listed for hearing on 27.05.2025. Keeping in view of the aforesaid factual position, we direct the assessee to pay the demand related to disallowance of Education Cess and stayed the balance outstanding demand in the case of the assessee for a period of 180 days or till the disposal of the appeal whichever is earlier. We further, direct the assessee not to take the adjournment on the date of hearing already fixed on 27.05.2025 and Paper Book to be filed in advance so that effective hearing of the case could be taken place. In case, the assessee seeks unnecessary adjournment, it may run the risk of vacation of stay. The assessee is also direct to provide the copy of Challan of tax paid in terms of the directions given above to the AO within 15 days from the receipt of this order. 7. In the result, the Stay Application filed by the assessee is allowed. Order pronounced in the open Court on 04th April, 2025. Sd/- Sd/- (MAHAVIR SINGH) VICE PRESIDENT * Amit Kumar * (MANISH AGARWAL) ACCOUNTANT MEMBER S.A.No.235/Del/2025 [In ITA No.3851/Del/2024] Page | 4 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "