VIRINCHI LIMITED,HYDERABAD V. DCIT., CIRCLE-8(1), HYDERABAD

SA 1/HYD/2025

AI Insights

The case involves M/s. Virinchi Limited, which filed a stay application against the recovery of an outstanding demand of Rs.4.50 Crores. This demand arose from an assessment order passed under sections 143(3), 144C(13), and 144B of the Income Tax Act, 1961, concerning the assessment year 2021-22. The demand was based on the Transfer Pricing Officer's (TPO) determination of the Arm's Length Price (ALP) of international transactions at Nil, which was contested by the assessee as arbitrary and invalid. The assessee argued that similar transactions in previous years did not attract adjustments. The Tribunal considered the recurring nature of the transactions and the absence of prior adjustments, finding a prima facie case in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472716 (ITAT-HYDERABAD)
• Appeal Type: Stay Application
• Pronouncement Date: 07-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P. MURALI MOHAN RAO
• Keywords: Transfer pricing; International transaction; Application of stay
• Section: 144C

Judgement Text

" आआआआ आआआआआआ आआआआआआ, आआआआआआआआ आआआ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER S.A. No.1/Hyd/2025 (In आ.अपी.सं /ITA No.1185/Hyd/2024 (निर्धारण वर्ा/Assessment Year:2021-22) M/s. Virinchi Limited, Hyderabad. PAN:AAACV6672N Vs. Dy. Commissioner of Income Tax, Circle 8(1), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri P. Murali Mohan Rao, C.A. रधजस् व द्वधरध/Revenue by:: Shri Srinath Sadanala, SR-DR सुिवधई की तधरीख/Date of hearing: 07/02/2025 घोर्णध की तधरीख/Pronouncement: 07/02/2025 आदेश/ORDER PER SHRI VIJAY PAL RAO : By way of this stay application, the assessee is seeking stay against the recovery of outstanding demand of Rs.4.50 Crores arising from the assessment order passed u/s.143(3) r.w.s. 144C (13) r.w.s. 144B of the Income Tax Act, 1961 (“the Act”). 2. The Learned Authorised Representative has submitted that this demand in question, has been raised in view of the determination of Arm’s Length Price (ALP) of the international transactions at Nil by the Transfer Pricing Officer (TPO). He has further submitted that in the preceding years for A.Y. 2016-17 onwards, there was no adjustment made on account of this recurring international transactions whichare in the nature of payment S.A. No.1/Hyd/2025 2 made by the assessee to the Associated Enterprises (AEs) against the services rendered by the AEs. But only for this year, the TPO has proposed the adjustment by determining the ALP at Nil which is highly arbitrary and invalid. The Ld. AR has thus contended that the assessee is having a good prima facie case on merits. He has further submitted that the assessee has also deposited a sum of Rs.50 lakhs vide challan dated 28.01.2025, a copy of the same is placed before the bench. He has pointed out that 20% of the total outstanding demand comes to Rs.90 lakhs and pleaded that the assessee be allowed to pay the balance amount of Rs.40 lakhs on or before 05.03.2025 as the appeal of the assessee is listed for hearing on 18.03.2025. Thus the Ld. AR has prayed that the recovery against the balance demand be stayed till the disposal of the appeal of the assessee. 3. On the other hand, the Learned Department Representative has opposed to the stay against the recovery of the outstanding demand in question and submitted that the assessee shall pay the entire outstanding tax demand. 4. We have considered the rival submissions as well as relevant material on record. The revenue has not disputed that the TPO has made the adjustment in respect of the international transactions by determining the ALP at Nil for the first time for the year under consideration. Whereas this international transaction is a recurring transaction for the last several years and there was no adjustment made by the TPO/A.O. in the preceding assessment years. Thus it is clear that the assessee is having a good arguable case on merits. The assessee has already paid a sum of Rs.50 lakhs vide challan dated 28.01.2025 and also promised to pay Rs.40 lakhs on or before 05.03.2025 to make the total payment against the outstanding demand equivalent to 20%. Accordingly, in the facts and circumstances of the case, we incline to direct the Assessing Officer not to take any coercive S.A. No.1/Hyd/2025 3 action for recovery of the outstanding demand for a period of 90 days from the date of this order subject to the condition that the assessee shall pay a further amount of Rs.40 lakhs on or before 05.03.2025. The appeal of the assessee is fixed for hearing on 18.03.2025 which shall be listed in the category of stay granted matter. The date of hearing of the appeal is made known to the parties and therefore, no separate notice shall be given in this regard and no adjournment of hearing shall be sought by the parties on that date. The parties shall file paper book if any, well in advance with a copy to the other party. 5. In the result, the stay application is allowed in the above terms. Order pronounced in the open Court on conclusion of hearing on 7th Feb., 2025. Sd/- Sd/- (MANJUNATHA G) (VIJAY PAL RAO) ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad. Dated:07.02.2025. * Reddy gp Copy of the Order forwarded to : 1. M/s. Virinchi Limited, C/o P. Murali & Co., C.As, 6-3-655/2/3, Somajiguda, Hyderabad-500082 2. DCIT, Circle 8(1), Hyderabad. 3. Pr. CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard File. BY ORDER, "