2018 (10) TMI 1448 - AT - Income Tax

Stay of demand - TPA adjustment - Held that - As prayed in nutshell that assessee is willing to deposit ₹ 3.8 crore on or before 30.11.2018 and prayer was made to stay balance outstanding demand of tax and interest due thereon Stay the balance outstanding demand against the assessee with the condition that ₹ 3.8 crores will be deposited by the assessee to the Credit of Central Government on or before 30.11.2018, and paid challan will be produced by the assessee before the AO immediately therafter as a pre-condition for the stay of balance outstanding demand of tax and interest. On production of paid challan of ₹ 3.8 crore by the assessee before the AO , balance outstanding demand of tax and interest will be stayed for the period of 180 days or disposal of the appeals, whichever is earlier

Summary

Issues:
1. Stay application for outstanding demand of income tax and interest.
2. TP adjustment on account of AMP expenses.
3. Royalty additions.
4. Disallowance concerning adjustment on account of depreciation on capital work-in-progress.

Analysis:
1. The stay application was filed by the assessee seeking relief from the outstanding demand of income tax and interest amounting to ?13,54,01,261. The demand arose from a notice issued under section 156 of the Income-tax Act, 1961, based on an assessment order passed by the Assessing Officer. The assessee highlighted three main issues in dispute, leading to the demand. These issues included TP adjustment on account of AMP expenses, Royalty additions, and disallowance concerning adjustment on account of depreciation on capital work-in-progress.

2. Regarding the TP adjustment on account of AMP expenses, the assessee argued that a prima facie case was established in their favor based on previous tribunal orders. The assessee contended that the demand related to this issue should not be pressed. Similarly, the issue of Royalty additions was under consideration by the tribunal for an earlier assessment year, and the assessee claimed to have a strong case in their favor. The assessee expressed readiness to deposit a certain amount against this demand.

3. In relation to the third issue of disallowance concerning adjustment on account of depreciation on capital work-in-progress, the assessee proposed to deposit a specific amount by a specified date. The Tribunal, while considering the entire factual matrix of the case, decided to stay the balance outstanding demand subject to the condition that the specified amount would be deposited to the Credit of Central Government by the given deadline. The stay was granted for a specific period or until the disposal of the appeals, whichever is earlier.

4. The Tribunal emphasized that it had not commented on the merits of the issues in the appeal and stressed the importance of cooperation and timely proceedings. Any unwarranted adjournments could result in the vacation of the stay. The appeals were scheduled for a hearing on a specific date, and no separate notice was to be issued to the parties. The stay application was allowed in favor of the assessee based on the conditions and timelines specified by the Tribunal.