2016 (5) TMI 97 - AT - Income Tax

Stay of demand seeked - Transfer pricing adjustment - Held that - The ratio of the amount paid (to the total outstanding demand) ought to be justifiably computed by excluding the tax relatable thereto (i.e., issue (b)), which would reduce the overall percentage (47%) for the current year to a lower ratio. Again, the transfer pricing issue considered by the tribunal for the preceding year covers an income of ₹ 405.03 crores, as against the total disputed addition qua TP adjustments at ₹ 508.48 crores, so that no case on merits stands made before us by the assessee for the balance disputed sum of ₹ 103.45 cr. In our view, however, directing for payment may not be justified considering the favorable development (from the assessee s stand-point) of the decision in Tata Consultancy Services Limited (2015 (11) TMI 862 - ITAT MUMBAI), which would cover the transfer pricing adjustment in its entirety, besides the several decisions by the tribunal noted in the stay application toward the other (five) transfer pricing adjustments (for ₹ 103.45 cr.) made in assessment. We are also painfully conscious that huge sums (of the assessee) stand locked up in disputed payments, for which it is not responsible in any manner. In view of the above, in our considered view, the assessee deserves a stay without any further payment. The assessee shall not seek adjournment without justifiable cause. We decide accordingly.

Summary

Issues: Stay petition by the Assessee for outstanding demand of Rs. 184.37 crores for A.Y. 2009-10 under Income Tax Act, 1961. Disputed income includes disallowance of claim u/s. 80-IA, long term capital loss, and transfer pricing adjustments.

Analysis:
1. Background Facts and Stay Application: The Assessee filed a Stay Petition seeking to stay the outstanding demand of Rs. 184.37 crores for A.Y. 2009-10. The disputed income includes disallowance of claim u/s. 80-IA, long term capital loss, and transfer pricing adjustments totaling Rs. 978.40 crores. The Assessee's counsel argued that similar issues existed for previous years, and stay had been granted by the tribunal for those years. Notably, a recent decision by the Bombay High Court rendered certain transfer pricing adjustments invalid, which was relevant to the current case as well. The Assessee had paid a significant portion of the demand for the current year and previous years.

2. Arguments and Decision: The Departmental Representative acknowledged the Assessee's prima facie case but suggested a partial payment of Rs. 50 crores. The Assessee, on the other hand, highlighted the substantial tax liability already paid for previous assessments. The tribunal noted the Assessee's strong prima facie case and the balance of convenience in its favor. Despite a previous direction to pay Rs. 50 crores, the Assessee had paid only 46% of the outstanding demand. The tribunal found no merit in the Assessee's case regarding a specific issue and observed that the previous year's decision covered a significant portion of the disputed amount. Considering the favorable developments and the substantial funds locked up in disputed payments, the tribunal granted the stay without requiring further payment and instructed the Assessee not to seek adjournments without valid reasons.

3. Final Decision: The tribunal allowed the Assessee's stay application without necessitating additional payment, considering the circumstances and the favorable legal developments. The decision was pronounced in an open court on March 04, 2016.