2014 (6) TMI 433 - AT - Income Tax

Stay application - Transfer pricing adjustment Held that - The balance of convenience is towards the assessee as he has pleaded of having a prima facie case in-as-much as the comparable relied upon by the Revenue has been held to be a merchant banker - even the order shall have no bearing whatsoever on the merits of the case of the parties in appeal, though it is a fit case for grant of stay, which is granted by a stay for a period of six months or the disposal of its appeal by the tribunal, whichever is earlier Stay granted.

Summary

Issues: Stay Application in relation to assessment under Income Tax Act, 1961 for A.Y. 2009-10

Issue 1: Stay Application and Principal Issue
The Stay Application (SA) was filed by the Assessee concerning its appeal before the tribunal for the assessment year 2009-10 under the Income Tax Act, 1961. The principal issue revolved around a transfer pricing adjustment made in the assessment, specifically comparing the Assessee with M/s. Motilal Oswal Investment Advisors Private Limited. The Assessee argued that Motilal Oswal, being a merchant banker, was not comparable as the Assessee was solely engaged in investment advisory services. Reference was made to a similar case involving Carlyle India Advisors Private Limited, where the comparison with Motilal Oswal was also deemed inappropriate due to differing activities. The Assessee requested a stay on the outstanding demand amounting to Rs.80.73 lacs, including interest, until the appeal hearing.

Issue 2: Arguments and Decision
The Authorized Representative for the Assessee presented arguments emphasizing the lack of comparability between the Assessee and Motilal Oswal, supported by the absence of segmental reporting for Motilal Oswal's relevant activities. It was noted that a significant portion of the demand had already been paid by the Assessee. On the contrary, the Departmental Representative contended that the lower authorities' orders were well-considered. The tribunal, after hearing both parties and examining the material, clarified that the decision on the stay application was solely based on the balance of convenience. Despite stating that the order would not affect the case's merits, the tribunal granted a stay for six months or until the appeal's disposal, whichever came first. The Assessee was cautioned against seeking adjournments without valid reasons, as such actions would lead to the stay being vacated.

Issue 3: Decision
The tribunal concluded by allowing the stay application, providing relief to the Assessee. The order was pronounced on May 30, 2014, with the condition that the stay would be in effect for six months or until the appeal's resolution, subject to the Assessee's compliance with the conditions set regarding adjournments.