VOLVO GROUP INDIA PRIVATE LIMITED,BANGALORE V. DCIT, CIRCLE 7(1)(1), BANGALORE

SA 80/BANG/2024

AI Insights

The case involves Volvo Group India Private Ltd., which filed a stay application concerning an assessment order for the year 2021-22. The assessee contested the transfer pricing adjustments made by the Deputy Commissioner of Income Tax, which significantly increased their declared income and tax demand. The main contention was the alleged error in the income computation by the CPC, which the assessee argued was based on incorrect facts. The tribunal, after considering the repeated adjournments taken by the assessee and the absence of a Section 154 application to rectify the alleged error, decided to grant a conditional stay to balance the interests of both parties.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24935 (ITAT-BANGALORE)
• Appeal Type: Stay Application
• Pronouncement Date: 03-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2021-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NEERAJ K. JAIN
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary; Application of stay
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER SP No.80/Bang/2024 [in ITA No.2519/Bang/2024] Assessment year : 2021-22 Volvo Group India Private Ltd., 65/2, Bagmane Parin, Bagmane Tech Park, C.V. Raman Nagar S.O., Bangalore North, Bangalore – 560 093. PAN: AAACV 6747N Vs. The Deputy Commissioner of Income Tax, Circle 7(1)(1), Bangalore. APPELLANT RESPONDENT Appellant by : Shri Neeraj K. Jain, Advocate Respondent by : Smt. Neha Sahay, Jt.CIT(DR)(ITAT), Bengaluru. Date of hearing : 31.01.2025 Date of Pronouncement : 03.02.2025 O R D E R Per Prakash Chand Yadav, Judicial Member The present stay application has been filed by the assessee in ITA No.2519/Bang/2024. 2. The brief facts of the case are that the assessee is a company engaged in manufacture of Volvo range of commercial vehicles (trucks and buses) based on the technology received from Volvo Group. It is a wholly owned subsidiary of Volvo Lastvagnar Aktiebolag. SP No.80/Bang/2024 Page 2 of 4 3. For the assessment year 2021-22, the Applicant filed return of income declaring income of Rs. 1,86,57,28,260 against which assessment under Section 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 (\"the Act\") was completed vide order dated 25.10.2024 at total income of Rs.2,74,26,46,168. The assessment was made after making additions/ disallowances on account of the following:- (i) Transfer Pricing adjustment of Rs, 26,78,75,481 on account of international transaction of Software Development Service Segment. (ii) Transfer Pricing adjustment of Rs. 2,39,70,693 on account of international transaction of Information Technology Enabled Services Segment. (iii) Transfer Pricing adjustment of Rs 50.53,557 on account of Interest on delayed receivables. (iv) Transfer Pricing adjustment of Rs 55,87,86,933 on account of Manufacturing segment. (v) Transfer Pricing adjustment of Rs 2,06,93.297 on account of Purchase support services. (vi) Transfer Pricing adjustment of Rs 5,37,947 on account of Interest on ECB. 4. The assessment order was passed by the assessing officer under section 143(3) r.w.s 144C(13) of the Income Tax Act computing the total income of the applicant at Rs. 2,74,26,46,168 with a total demand of Rs. 43,09,98,565 including interest of Rs. 13,48,42,310. Assessee has filed appeal against this order. 5. The impugned appeal of the assessee has already got listed before the ITAT on previous occasions, 4 times, on these dates the SP No.80/Bang/2024 Page 3 of 4 assessee has taken adjournments. Be that as it may, in the backdrop of above facts the main contention of the assessee is that assessee is having a prima facie case and hence absolute stay of the outstanding demand may be granted to the assessee. 6. The assessee further contended that there is an apparent error in the computation made by the CPC on 25.10.2024 due to which an amount of Rs.33,96,92,444 has been wrongly added to the income of the assessee on the basis of wrong premise of the facts. 7. The ld. DR appearing on behalf of the revenue pointed out as under:- (a) The assessee has not filed any 154 application in respect of the alleged error committed by the CPC while processing the return. (b) The appeal of the assessee is already on board and assessee has taken adjournments time and again. So absolute stay cannot be granted to the assessee. (c) The DR further argued that to protect the interest of revenue 20% of the outstanding demand as on date may kindly be directed to the assessee to be deposited. 8. In the rejoinder, the ld. counsel for the assessee has consented to give a security of 20% of the outstanding demand de hors the alleged error of Rs.33.96 crores. 9. We have heard the rival submissions and perused the material on record. We observe that so far as the mistake committed by CPC while processing the return of Income the contention of the assessee is prima facie correct. However, it is also a fact that till date no 154 application has been filed by the assessee, for which omission the counsel for the SP No.80/Bang/2024 Page 4 of 4 assessee failed to justify the Bench with cogent reason. Be that as it may be to safeguard the interest of the revenue, we are of the view that assessee would submit a bank guarantee of 20% of outstanding demand which is approx. Rs.9 crores for getting the stay of the outstanding demand. Therefore, we grant stay till 180 days from the date of this order, or till the disposal of the appeal, whichever is earlier, subject to the condition that the assessee shall furnish a bank guarantee to the satisfaction of the ld. AO for amount of Rs.9 crores being 20% of the outstanding demand. 10. In the result, the stay petition of the assessee is allowed as indicated above. Pronounced in the open court on this 3rd day of February, 2025. Sd/- Sd/- ( WASEEM AHMED ) ( PRAKASH CHAND YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore, Dated, the 3rd February, 2025. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "