2024 (11) TMI 813 - AT - Income Tax

Stay the demand sought of assessment order passed u/s 143 (3) r.w.s. 144C - AR submitted that assessee is a wholly owned subsidiary of Multi-Accord Limited, a Hong Kong based company which holds 99.99% of share capital of the assessee - HELD THAT - We observed that the issue under consideration is more or less covered by various decisions of Hon ble Delhi High Court and other High Courts. We also observed that assessee has already remitted 20% of the total outstanding demand and relevant bank challan is already filed in the form of paper book. Considering the above facts on record and balance of convenience is in favour of the assessee, we are inclined to grant stay for a period of 180 days from the date of this order or till the date of disposal of present appeal, whichever is earlier, subject to the rider that the assessee shall not take unnecessary adjournment to prolong the appeal otherwise stay order would cease to operate. The case of the assessee is also posted for hearing on 16.12.2024 along with other pending appeals which are posted on the same date. Since the date of hearing is announced in the open court, there is no requirement for issue of separate notice.

Summary

Issues:
Stay application to suspend tax demand under assessment order u/s 143(3) r.w.s. 144C of the Income-tax Act, 1961 by Vivo Mobile India Private Limited.

Analysis:
The Applicant, Vivo Mobile India Private Limited, filed a stay application seeking to suspend a tax demand of Rs. 1,41,76,68,830 arising from an assessment order passed under section 143(3) read with section 144C of the Income-tax Act, 1961. The assessment resulted in a total income of Rs. 3,80,99,66,633 after making transfer pricing addition on AMP of Rs. 8,18,71,60,000. The Applicant declared a loss of Rs. 4,37,71,93,367 in its return of income. The Assessing Officer raised a total tax demand of Rs. 1,41,76,68,830 after adjustments for tax credits and refunds. The Applicant, a wholly owned subsidiary of a Hong Kong company, contested the association with Vivo Mobile Communication Co. Ltd. (VMCC) and the applicability of transfer pricing adjustments on AMP expenditure, citing the Maruti Suzuki case and arguing against the application of the bright-line test for benchmarking AMP expenditure.

The Applicant highlighted that the Assessing Officer had rejected the stay application despite the Applicant depositing 20% of the outstanding demand. The Applicant relied on legal precedents and the shareholding structure to support its case against the transfer pricing adjustment on AMP expenditure. The Revenue objected to granting a total stay.

After considering the arguments and reviewing the record, the Tribunal noted that the issue was addressed in decisions of the Delhi High Court and other High Courts. Acknowledging the 20% deposit made by the Applicant and the balance of convenience, the Tribunal granted a stay for 180 days or until the appeal's disposal, with a condition against unnecessary adjournments. The stay order would cease if the appeal was unduly prolonged. The case was scheduled for a hearing on a specific date along with other pending appeals, eliminating the need for a separate notice.

In conclusion, the Tribunal allowed the stay application on specified terms, emphasizing the time limit and the condition regarding adjournments. The decision was pronounced in open court after the conclusion of the hearing on October 18, 2024.