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TMI Blog2019 (11) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee before us, which has been extracted in the earlier part of the order, that more than 50% of the tax portion of the outstanding demand has been paid by the assessee in AY 2010-11 to 2012-13. We therefore grant stay of recovery of outstanding demand for these years for a period of six months from the date of this order; or till the disposal of appeals of these years, whichever period expires earlier. As far as AY 2013-14 is concerned, we find that only 35.48% of the outstanding tax portion has been paid by the assessee till date. We are of the view that it would meet the ends of justice, if the revenue is permitted to adjust a sum of ₹ 5.00 crores towards outstanding demand for AY 2013- 14 out of the refund arising to the assessee. Subject to the payment of tax by way of adjustment as aforesaid, there will be stay of recovery of outstanding demand for AY 2013-14 for a period of six months from the date of this order; or till the disposal of appeals of the Assessee, whichever period expires earlier. - SP Nos.267 to 270 And 272/Bang/2019 - - - Dated:- 14-10-2019 - SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tstanding (2)-(3) 29,34,56,961 35,35,86,885 30,55,25,305 53,52,32,594 5 % of pre-deposit out of total demand (3)/(2) 37.87% 37.87% 38.96% 20.38% 6 % of pre-deposit out of total demand (Average) 33.48% 7 % of pre-deposit on tax component of total demand (3)/(1) 53.86% 56.03% 52.19% 35.48% 8 % of pre-deposit on tax component of total demand (Average) 49.39% Note: TDS to the tune of ₹ 66,59,674 and ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 % of pre-deposit on tax component of total demand (Average) 65.68% Note: TDS to the tune of ₹ 66,59,674 and ₹ 11,19,969 were not allowed as credit by the Assessing Officer for AYs 2011-12 and 2013-14 respectively 3. The Ld A.R submitted that the payments made by the assessee till date works out to more than 50% of the tax portion of the outstanding demand in AY 2010-11 to 2012-13 and to 35.48% of the tax portion of the outstanding demand in AY 2013-14. 4. The Ld A.R further submitted that the financial position of the assessee is very tight due to recession in the automobile industry. He further submitted that though the assessee is having balance of about ₹ 50.00 crores in its bank accounts, yet the requirement of cash in the subsequent month is more than ₹ 58.00 crores. He further submitted that the sizeable amount of about ₹ 646 crores out of working capital fund is outstanding with GST department, which could only be adjusted against futu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HDFC Bank - Bangalore, Current account 27,98,60,793 Hongkong and Shanghai Banking Corp ( 5,97,59,061) State Bank of India, Residency Road 1,02,682 Citibank 71,76,152 HSBC - USD EEFC account 5,01,43,394 HSBC SEK EEFC A/c 10,58,094 Standard Chartered Bank-ECB Account (8,67,775) Total 53,04,34,825 a. Total demand outstanding (inc. interest) for AYs 2010-11 to 2013-14 - ₹ 138.82 crore b. Total demand outstanding (inc. interest) for AYs 2010-11 to 2013-14 if relief is given for covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 2013-14. The chart also explains as to how each of the issues set out in the chart was already subject matter of dispute before the Tribunal in the earlier assessment years and as to how the issues were decided in favour of the assessee. The chart so filed is placed on record and is not disputed by the parties that the issues have already been decided. It was submitted that in respect of issues that are already decided by the Tribunal in the earlier Assessment years in Assessee s own case, no demand for recovery of taxes can be enforced. The chart so filed is reproduced below:- CHART OF ISSUES FOR STAY S. No. Particulars AY 2010-11 AY 2011-12 AY 2012-13 AY 2013-14 Re: Transfer Pricing issues 1 Transfer pricing adjustment in Manufacturing Segment 57,14,67,743 29,37,99,626 24,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sons. (1906 of 2013) (Bom)] It is further submitted that for AY 2013-14 the TPO selected functionally dissimilar companies as comparable for the purpose of benchmarking analysis. 2 TP adjustment on account of provision of IT enabled services 6,99,85,529 5,02,42,947 13,16,21,551 - GIST OF ARGUMENTS Inappropriate selection of comparables It is submitted that the comparable companies selected by the TPO are not comparable to a captive ITES Service provider. 3. TP Adjustment on account of provision of Engineering Design services - 13,36,81,280 - - GIST OF ARGUMENTS Inappropriate selection of comparables It is submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r book - 1 ]. 7. Addition of Special Additional Duty of Customs / refund of Countervailing Duty credited to P L account but not accrued in the year 12,63,29,715 10,54,04,678 3,81,85,122 3,08,65,112 GIST OF ARGUMENTS Covered in favour of the Petitioner by the decision of Hon' ble ITAT for AY 2008-09 [Para No.25 to 27 from Pg. 18 to 20 of case laws paper book - 1]. It is further submitted that the difference between the amounts credited to P L a/c which is excluded for tax purpose in the return of income and the amounts offered to tax on receipt basis from AYs 2008-09 to 2014-15 were cumulatively offered to tax in AY 2015-16 [Page No. 156, 163 to 165 of stay paper book 1] and the same has been accepted by the Department vide Asst order dated 29.01.2019 for AY 2015-16 [Page No. 172 of stay paper book - 1]. 8. Disallowance of Expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reason that (i) once the provision is reversed at the beginning of the year, the same ceases to be for the purpose of business and therefore, cannot be allowed under section 37 of the Act; (ii) the application of section 40(a)(ia) of the Act is only upon an expenditure falling in the ambit of business expenditure and since these expenditure are not business expenditure. provisions of section 40(a)(ia) of the Act would not be applicable; and (iii) the same are prior period expenses which cannot be allowed in the year under consideration. The claim of expenditures were disallowed suo-moto by the Petitioner in the AY It is submitted that the contentions of the Assessing Officer cannot be upheld for the following reasons: a. The claim of expenditures were disallowed suo-moto by the Petitioner in the AY 2010-11 and 2011-12 for the reason that the same were not crystallised in those years. Having accepted the same in those years, the AO ought to have allowed the same in the years in which the liability was crystallised and payments were made after deduction of tax at source. Disallowing the same in the year of creation of provision and also in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure was incurred but is deducted in the subsequent assessment year, then such expenditure shall be allowed as a deduction in computing the income of the previous year in which the tax has been paid. Even in the instant case, as the expenditure was not claimed in the year in which the services were received, but in the subsequent AY where tax was deducted at source. then the same is to be allowed in the years under consideration. For ready reference, the 1st proviso to section 40(a)(ia) as was applicable for the years under consideration reads as under: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. e. Reliance in this regard is also placed upon the decision of the Bangalore Bench of the Tribunal in the case of IKA India Pvt Ltd vs ACIT: 101 taxmann.com 276 (Bang ITAT) [Page No.722 to 723 of case laws paper book - IV ] wherein it was held that even if the crystalli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10- 11 and 2012-13. He submitted that, if such adjustment is done, then the assessee shall be put to hardship badly affecting its working capital position. The Ld A.R also placed a copy of decision rendered by Hon ble Delhi High Court in the case of Maruti Suzuki Ltd (347 ITR 47)(Delhi). In the above said case, the facts were that against an order passed u/s 144C/143(3), the assessee filed a stay application before the AO u/s 220(6) and also filed a stay application before the Tribunal. The Tribunal passed an interim order directing status quo . Despite the interim order, the AO passed an order u/s 245 ( without giving prior notice ) and adjusted refunds against the demand. Before the Tribunal, the department accepted that the 245 refund adjustment was not proper and said a proper order would be passed. The AO then passed an order u/s 220(6) in which he held that the adjustment of refunds was in order on the ground that (i) an adjustment of refunds was not a recovery and (ii) though some issues were covered in favour of the assessee, the decision had not become final as the department was in appeal. The Tribunal then passed a stay order in which it accepted the AO s stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) Tribunal in favour of the assessee should not be ignored and have not become inconsequential . This is not a valid ground to ignore the decisions of the appellate authorities and is also not a good ground to not to stay demand or to allow adjustment u/s 245; ( v) The respondents are officers of the State and the Law requires that they perform their duties with utmost objectivity and fairness, while keeping in mind the sanctity of the role and function assigned to them which at times requires tough steps. On facts, the conduct and action of the Revenue in recovering the disputed tax in respect of additions on issues which are already covered against them by the earlier orders of the ITAT or CIT (A) is unjustified and contrary to law . Directions issued to refund the tax. 8. The above decision lays down two propositions which are relevant in the present case, viz., (i) The term recovery is comprehensive and includes adjustment thereby reducing the demand; (ii) It will be specious illogical for the Revenue to contend that if an issue is decided in favour of the assessee giving rise to a refund in an earlier year, that ref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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