2018 (9) TMI 1460 - AT - Income Tax

Stay of demand - Additions towards transfer pricing adjustments - assessee to prove prima facie case, financial hardship and prove balance of convenience - Held that - The assessee was required to demonstrate the prima facie case and balance of convenience and financial hardship for the purposes of making out a case for grant of interim stay. Considering the totality of facts and circumstances, the bench direct the assessee to deposit a sum of ₹ 21 crore as condition of stay. The Bench has arrived at a sum of ₹ 21 crores, taking into account the total demand in both the years, excluding the interest element and after reducing the amount already paid by the assessee. If ₹ 21 crores is paid the total tax demand remaining unpaid would come to around ₹ 42 crores. - Amount allowed to be deposited in installments. If the assessee pays the above said amount of ₹ 21 crores within the time frame stated herein above then the balance Tax amount shall not be enforced by the Revenue by taking any steps whatsoever. This stay shall be in operation for a period of 180 days or till the disposal of the appeal whichever is earlier.

Summary

Issues:
Stay petitions for outstanding tax amounts for AY 2012-13 and AY 2013-14.

Analysis:
The assessee filed two stay petitions seeking relief for outstanding tax amounts for AY 2012-13 and AY 2013-14. The primary issue for AY 2012-13 was the addition made by the AO towards AMP adjustment and 40(a)(ia) of the Act. The assessee argued that the AMP issue was contrary to decisions by the Hon'ble Delhi High Court in various cases. It was contended that there was no international transaction as the expenditure was for promoting the assessee's brand and end product user. Additionally, the assessee claimed economic ownership of tangible assets created through AMP spending. Regarding the 40(a)(ia) addition, the assessee differentiated the case from a jurisdictional High Court judgment and sought benefit under the Finance Act's amendment. The assessee also invoked the DTAA between India and Malaysia to avoid discrimination. Various High Court judgments were cited in support.

The Revenue argued that the issues raised were factual and required detailed examination to determine if the assessee had a prima facie case for relief. The bench inquired about financial hardship and immediate danger from the AO, to which the assessee responded that there was no financial hardship or urgent recovery proceedings. The bench proposed a reasonable deposit by the assessee, which the assessee agreed to. The Tribunal emphasized the need for the assessee to establish a prima facie case, financial hardship, and balance of convenience to warrant interim stay.

After considering submissions, the bench directed the assessee to deposit ?21 crores as a condition of stay, taking into account the total demand for both years and amounts already paid. The payment schedule was outlined, and compliance would prevent enforcement of the remaining tax amount for 180 days or until appeal disposal. The Tribunal set hearing dates and imposed conditions, including timely submission of documents and no undue adjournments. Violation would lead to vacation of the stay. The order was pronounced, granting the stay petitions to the specified extent.

In conclusion, the Tribunal granted the stay petitions subject to the assessee's compliance with the deposit conditions and procedural requirements, emphasizing the temporary nature of the stay and the need for timely proceedings without expressing any opinion on the case's merits.