WWSTAY SERVICES INDIA PRIVATE LIMITED,BANGALORE V. .DCIT, CIRCLE-7(1)(1), BANGALORE

SA 73/BANG/2024

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WW Stay Services India Private Ltd. filed a stay petition against the recovery of an outstanding demand of Rs. 78,59,679/- for the assessment year 2017-18, which arose from an assessment order that significantly increased their assessed income. The company argued that more than 20% of the demand had already been recovered through adjustments of refunds from subsequent assessment years, and thus, they were entitled to a stay of the remaining demand. The main legal issues revolved around the correct identification of the tested party in transfer pricing and procedural concerns such as the absence of a document identification number in the communication. The tribunal considered the merits of the case and the compliance with the Board Instruction regarding the payment of disputed demand.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470104 (ITAT-BANGALORE)
• Duration Of Justice: 11 day(s)
• Appeal Type: Others
• Pronouncement Date: 09-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 28-11-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VENKATESH V.
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Transfer pricing; Depreciation; Application of stay
• Section: 143(3)

Judgement Text

"SP No.73/Bang/2024 WW Stay Services India Private Limited, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER SP No. 73/Bang/2024 (Arising out of ITA No. 455/Bang/2022 Assessment Year: 2017-18 WW Stay Services India Private Ltd. No. 29, 1st Floor, empire Infantry Bangalore North Bangalore 560 001 Karnataka PAN NO : AAECG5887C Vs. DCIT Circle-7(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri Padam Chand Khincha, A.R. Respondent by : Sri Venkatesh V., D.R. Date of Hearing : 06.12.2024 Date of Pronouncement : 09.12.2024 O R D E R PER PRASHANT MAHARISHI, VICE PRESIDENT: This stay petition is filed by WW Stay Services India Private Ltd. (“the assessee/petitioner”) for assessment year 2017-18 for stay of recovery of outstanding demand of Rs. 78,59,679/- arising out of assessment order dated 28.3.2022 passed by the National Faceless Appellate Centre (“the AO”) u/s 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (“the Act”), wherein returned income of the assessee at Rs. 40,37,070/- was assessed at Rs. 3,54,23,536/- resulting into the demand payable of Rs. 1,36,53,645/-. This amount is disputed in ITA No. 455/Bang/2022, which is filed on 27.5.2022. 2. The assessee sought stay of demand submitting that a sum of Rs. 57,93,960/- has already been recovered by ld. AO by adjustment SP No.73/Bang/2024 WW Stay Services India Private Limited, Bangalore Page 2 of 3 of refunds for AY 2021-22 to 2023-24 and therefore, now the outstanding demand is only Rs. 78,59,679/-, which is required to be stayed. The main contention is that out of the outstanding demand of Rs. 1,36,53,645/-, more than 20% has been recovered by the ld. AO and therefore assessee is entitled to stay of demand. It was further stated that in the appeal, the assessee raised the ground amongst other of absence of document identification number. The other ground is with respect to the transfer pricing adjustment of Rs. 3,13,76,126/- and other issue is with respect to the depreciation disallowance of Rs. 10,340/-. 3. The ld. A.R. submits that the assessee has taken the US Associated Enterprises as tested party, which is rejected by the ld. TPO and ld. DRP and considered the Indian entity as tested party, which is incorrect. Therefore, even on merit assessee has a strong case. It was further submitted that the Board Instruction dated 31.7.2017 provides that if 20% of the disputed demand is paid, then the balance amount deserves to be stayed. It was submitted that assessee has already paid 42.44% of the total demand and therefore, for the balance sum, the assessee has prayed for stay. 4. The ld. D.R. objected and submitted that the assessee does not deserve stay of demand on the merits. 5. We have carefully considered the rival contentions and perused the statement of facts placed before us. The facts clearly shows that the demand arising out of the assessment order is Rs. 1,36,53,645/- out of which assessee has already deposited a sum of Rs. 57,93,960/- which is 42.44% of the outstanding demand. One of the issues raised by the assessee is also with respect to the not mentioning the document identification number in the communication. On this issue, the appeal cannot be taken up for SP No.73/Bang/2024 WW Stay Services India Private Limited, Bangalore Page 3 of 3 hearing because revenue is seeking adjournment. Looking to the merits of the case, it is apparent that the issue of tested party where foreign AE or the assessee is a contentious issue. As the assessee has already deposited more than 20% of the disputed demand, we direct the ld. AO to keep the outstanding demand of Rs. 78,59,679/- in abeyance till the disposal of appeal or 180 days from the date of this order, whichever is earlier. The appeal of the assessee is fixed for hearing on 27.1.2025. 6. In the result, stay petition filed by the assessee is allowed as indicated above. Order pronounced in the open court on 9th Dec, 2024 Sd/- (Soundararajan K.) Judicial Member Sd/- (Prashant Maharishi) Vice President Bangalore, Dated 9th Dec, 2024. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "