VOITH PAPER FABRICS INDIA LIMITED,FARIDABAD V. .ASSESSMENT UNIT, INCOME TAX DEPARTMENT (JAO- DCIT, CIRCLE 1, FARIDABAD), FARIDABAD

SA 509/DEL/2024

AI Insights

The case involves Voith Paper Fabrics India Limited, which filed a stay application against an outstanding tax demand assessed by the Income Tax Department, Faridabad. The demand arose from transfer pricing adjustments related to international transactions of purchasing goods and paying commissions, which were contested by the assessee. The Tribunal considered the balance of convenience and the merits of the case, noting the assessee's good arguable case and the existence of pending refunds with the department. The hearing for the corresponding appeal was scheduled for January 21, 2025.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 30328 (ITAT-DELHI)
• Duration Of Justice: 4 day(s)
• Appeal Type: Others
• Pronouncement Date: 13-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2021-2022
• Appeal Filed On: 09-12-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Keywords: Transfer pricing; International transaction; Application of stay
• Section: 143(3); 144C

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘FRIDAY-I’’ : NEW DELHI) BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI BRAJESH KUMAR SINGH, ACCOUTANT MEMBER SA No. 509/Del/2024 Arising out of ITA No. 5351/Del/2024 Asstt. Year: 2021-22 Voith Paper Fabrics India Limited, vs. Assessment Unit, Income Tax Faridabad Department, JAO-DCIT, Circle-1 Faridabad (PAN: AABCP0441Q) ( Applicant) ( Respondent ) Applicant by : Sh. Ajay Vohra, Sr. Adv.; Sh. Neeraj Jain, Adv.; Shri Ramit Katyal, CA & Ms. Richa Agarwal, CA Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR. Date of Hearing 13.12.2024 Date of Pronouncement 13.12.2024 ORDER PER MAHAVIR SINGH, VICE PRESIDENT This Stay Application under Rule 35A of the Income Tax Appellate Tribunal Rules, 1963 has been preferred by the assessee, seeking stay of outstanding demand of Rs. 1,98,14,580/- which includes interest, pertaining to assessment year 2021-22. It was submitted by the Ld. AR that the applicant filed return of income on 14.3.2022, declaring total income of Rs. 35,32,65,092/- and the assessment was 2 completed u/s. 143(3) r.w.s. 144C of the Act, assessing the total income of the applicant at Rs. 40,62,62,480/- after making adjustment on account of Transfer pricing addition of Rs. 2,40,90,000/- in relation to international transaction of purchase of goods and transfer pricing addition of Rs. 2,68,21,782/- in relation to international transactions of payment of commission. It was the further contention that TPO rejected the entity level benchmarking undertaken by the applicant in its transfer pricing study and instead, sought to benchmark the transaction of import of finished goods independently, applying Resale Price Method and arrived at a set of 7 comparable with gross profit margin of 38.28%. It was further submitted that the transaction of purchase of traded goods undertaken by the applicant ought to be benchmark applying TNMM method, as the transaction of purchase of finished goods is inter connected with the entire business operation of the applicant company. He further submitted that in this case the operating margin of the applicant are significantly by the TPO, no transfer pricing adjustment is warranted in the case of the applicant. In view of the above, he requested for grant of stay of the demand in dispute and in the meantime, early hearing in the corresponding appeal may be granted. 2. Ld. DR opposed the request of the Ld. AR and requested to direct the assesse to pay more amount i.e. atleast Rs. 40 lacs towards the outstanding demand in dispute. 3. To rebuttal this contention, Ld. AR has submitted that refund of 2 years are still pending with the department and requested to direct the Department to adjust Rs. 40 lacs from the refund lying with the department. 4. We have carefully considered the rival submissions and perusing the records, we find that so far as the merits of the addition is concerned, the same would be examined in the full blown hearing while determining the appeal of the assessee. So however, so far as it is necessary to consider the balance of convenience and other related assertions qua the instant stay application is concerned, we find that the assessee has a good arguable case before the Tribunal, and in any case considering the fact that already pending refund of two years are lying with the 3 Department. Considering the entirety of circumstances, we deem it fit and proper to preclude the Assessing Officer from taking any coercive measures to collect the disputed demand, till the disposal of the corresponding appeal or 06 months from today, whichever is earlier and also direct him to adjust Rs. 40 lacs from the determined refund and in any case it is found that there is no determined refund lying with the department, Rs. 40 lacs should be paid by the assessee immediately. 5. So far as the corresponding appeal of the assessee is concerned, the same is directed to be fixed before the regular Bench on 21.01.2025 for hearing, a date consented by both the sides. 6. Resultantly, the Stay Application is allowed as above. Order Pronounced in the Open Court on 13/12/2024. Sd/- Sd/- (BRAJESH KUMAR SINGH) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT SRBhatnagar Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT Assistant Registrar "