VIRENDRA M GAIDHANE,MUMBAI V. ITO, WARD 2(3)(1), MUMBAI

SA 5/MUM/2025

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Royal Canin India Pvt. Ltd. filed a stay application against an outstanding demand of Rs.15,71,78,821/- for the Assessment Year 2021-22, primarily due to transfer pricing adjustments made by the Taxation Officer (TPO) and upheld by the Dispute Resolution Panel (DRP). The adjustments included a nil Arm's Length Price (ALP) for franchisee fees and a 50% ALP for Intra Group Services, later modified to nil by the DRP. The Tribunal found the issue of franchisee fees covered in favor of the assessee by a previous decision and thus not requiring any payment. However, for the Intra Group Services adjustment, the Tribunal required a 20% deposit of the demand pending the appeal's decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 40057 (ITAT-MUMBAI)
• Appeal Type: Stay Application
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2022-2023
• Other Referred Cases: A.Y. 2016-17
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL SAWANT
• Assessee Lawyers: K M GUPTA; VIRTUE
• Keywords: Transfer pricing; Application of stay

Judgement Text

" Page | 1 S.A. No.34/Mum/2025 In ITA No.6816/Mum/2024 IN THE INCOME TAX APPELLATE TRIBUNAL “J” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, V.P. AND SHRI N.K. BILLAIYA , AM S.A. No. 34/MUM/2025 [ITA No.6816/Mum/2024] Vs. A.Y. 2021-22 Royal Canin India Pvt. Ltd., 1401 & 1402, F Wing, 14th Floor, Lotus Corporate Park, CTS No.185/A, Graham Firth Compound, Western Express Highway, Goregaon (East). Assistant Commissioner of Income-tax, Circle 3(1)(1), Aayakar Bhavan, M.K. Road, Mumbai-400020 (Appellant) (Respondent) PAN AADCR 4417J Assessee by Shri KM Gupta, (Virtually Present) Shri Pushkaraj Bhangepatil (Sr. DR) Revenue by Shri Swapnil Sawant, Sr. DR Date of hearing 28.02.2025 Date of pronouncement 28.02.2025 O R D E R The Captioned Application, has been filed by the assessee seeking stay on recovery of outstanding demand amounting to Rs.15,71,78,821/-pertaining to Assessment Year 2021-22. 2. Learned counsel appearing for the assessee submitted that the major part of the demand arises out of couple of transfer pricing Page | 2 S.A. No.34/Mum/2025 In ITA No.6816/Mum/2024 adjustments made by the Departmental Authorities to the Arm’s Length Price (ALP) declared by the assessee. He submitted, the TPO has determined ALP of franchisee fee as NIL whereas, in respect of Intra Group Services he has determined ALP at 50% of the claim made by the assessee. He submitted, while considering the objections of the assessee, the DRP has upheld TPO’s decision in respect of franchisee fee. Whereas, modifying the order of the TPO in respect of Intra Group Services, the DRP has treated the ALP at NIL. Learned counsel submitted, the issue relating to franchisee fee is squarely covered in favour of the assessee in view of the decision of the Tribunal in assessee’s case in A.Y. 2016-17. He submitted, in respect of the other addition, the assessee is willing to pay 20% of the demand. He also submitted that in respect of addition made on account of corporate issue the assessee would pay the tax liability of Rs.7,18,950/-. 3. Learned D.R. opposed grant of absolute stay. 4. We have considered rival submissions and perused the materials on record. On going through facts and material available before us, we are convinced that the dispute relating to variation made on account of franchisee fee is a covered issue in favour of the assessee by virtue of the order passed by the Tribunal in assessee’s own case in Assessment Year 2016-17. Therefore, the assessee cannot be asked to pay any amount on account of such demand. However, in so far as transfer pricing adjustment made on account of Intra Group Services, the issue has to be decided on merits at the time of hearing of appeal. At this stage, we direct the assessee to deposit 20% of demand of Rs.5,58,46,951/-pertaining to T.P. adjustment on account of Intra Group Services. The assessee is also directed to pay tax liability of Rs.7,18,939/- arising out of corporate issue. These payments should be made by the assessee by 15.03.2025. Subject to the payment as directed above, recovery of balance outstanding demand shall remain stayed for a period of 180 days from the date of this order or till the Page | 3 S.A. No.34/Mum/2025 In ITA No.6816/Mum/2024 disposal of corresponding appeal, whichever is earlier. We are informed, the appeal is fixed for hearing on 24.04.2025. We direct the parties to make endeavors to conclude the hearing on the date fixed without taking any adjournment. 5. Stay Application is partly allowed Order pronounced in the open court on 28/02/2025. Sd/- Sd/- Sd/- Sd/- (N.K. Billaiya ) (Saktijit Dey ) (Accountant MEMBER) (VICE PRESIDENT) Mumbai, Dated: 28.02.2025 Aks/- Copy of the Order forwarded to : The Appellant, The Respondent, The CIT, The DR ITAT & Guard File BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai "