2018 (3) TMI 1815 - AT - Income Tax

Grant of stay - assessee has submitted that the refund is due for assessment year 2015-16 and another refund due in case of an amalgamated company - HELD THAT - We are of the opinion that the assessee has a prima facie case and a conditional stay can be granted. Accordingly, we grant the stay of demand on the following conditions 1. The assessee shall pay a sum of ₹ 15 crores on or before 31.3.2018 2. The refund of ₹ 28 crores due in the name of amalgamating company shall be promptly paid to the Revenue in the name of the assessee company as and when received. 3. The registry is directed to fix the cases for out of turn hearing on 07.05.2018. The non fulfillment of conditions of stay hereinabove, or unjustified seeking of adjustments by the assessee would render this stay cancelled.

Summary

Issues Involved:
Stay of outstanding demand of tax and interest for assessment years 2011-12, 2012-13, and 2013-14; Prima facie case for deduction u/s. 10A for three units in assessment year 2011-12; Selection of comparables in transfer pricing adjustment for assessment years 2012-13 and 2013-14; Refund due for assessment year 2015-16; Refund due in case of an amalgamated company; Technical difficulties in adjusting refund with outstanding demand; Grant of stay of demand with conditions.

Analysis:

1. Stay of Outstanding Demand:
The assessee sought a stay of outstanding demand of tax and interest for assessment years 2011-12, 2012-13, and 2013-14. The total assessed tax for these years amounted to ?2,14,27,36,020. The assessee claimed a refund due for assessment year 2015-16 and another refund due in the case of an amalgamated company, reducing the outstanding amount to ?72,70,29,157.

2. Prima Facie Case for Deduction u/s. 10A:
For assessment year 2011-12, the primary issue was the grant of deduction u/s. 10A for three units. The counsel of the assessee argued that the issue was covered in favor of the assessee based on the Tribunal's decision in the assessee's own case. Regarding assessment years 2012-13 and 2013-14, the issue revolved around the selection of comparables in transfer pricing adjustment.

3. Selection of Comparables in Transfer Pricing Adjustment:
The Departmental Representative contended that the Assessing Officer's selection of comparables in assessment year 2014-15 would lead to a substantial deduction in the demand for the current years if the same comparability standard was followed. The representative argued against the use of very high turnover comparables, stating that courts have ruled against comparing companies with significantly different turnovers.

4. Refund Due and Technical Difficulties:
The Departmental Representative highlighted technical difficulties in adjusting a refund claimed by the assessee, amounting to ?28,21,77,258, which was due in the name of an amalgamating company with a different PAN number. The representative proposed that the payment be made within 60 days and requested the assessee to make the payment accordingly.

5. Grant of Stay with Conditions:
After hearing both parties, the Tribunal concluded that the assessee had a prima facie case and granted a conditional stay of demand. The conditions included the payment of ?15 crores by a specified date, prompt payment of the refund due in the name of the amalgamating company, and fixing the cases for out-of-turn hearing. Failure to fulfill the conditions would result in the cancellation of the stay.

6. Conclusion:
The Tribunal granted a stay of demand for 180 days from the date of the order, subject to the specified conditions. The stay petitions were disposed of accordingly, with the order pronounced on 13.03.2018.