Date Of Order 21-11-2017 W.p v. The Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA, BENGALURU. DATED THIS THE 21[st]DAY OF NOVEMBER 2017. BEFORE THE HON'BLE Dr.JUSTICE VINEET KOTHARI (WRIT PETITION No.52737/2017 (TIT) BETWEEN: M/S. KAYPEE ELECTRONICS& ASSOCIATES PVT LTDPLOT No.302 & 303SOMPURA INDUSTRIAL AREA|I SIAGE, NIDAVANDA VILLAGE |SOMPURA HOBLI, NELAMANGALA TALUK|BENGALURU RURAL DISTRICT - 562111(REPRESENTED BY ITS MANAGING DIRECTORSHRI. N.V. RAMANA MURTHYAGED ABOUT 52 YEARS9/O SRI KOTILINGAM NAIDV)_. PRHTITIONBR(BY SRI. CHYTHANYA K.K. ADV..,) AND:THR DEPUTY COMMISSIONER OF INCOME TAXCIRCLE -4 (1) (1), 2 KFLOORBMTC BUILDING, 80 FEET ROAD|KORAMANGALA, BENGALURU —- 500090. .. RESPONDENT (BY SRI. JEEVAN J. NEERALGI, ADV.,) THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE|CONSTITUTION OF INDIA PRAYING TO QUASH As FAR AS THEPETITIONER IS CONCERNED BY AN APPROPRIATE WRIT OR!ORDER IN THR NATURE OF CBRRTIORARI OR OTHEBRWISIMPUGNED ORDER OF STAY, DTD.0.11.2017 OF THE HON'BLE|TRIBUNAL|IN|SP|NO.239/BANG/2017—(IT(TPA Date of Order 21-11-2017 W.P.No.52737/2017 M/s. Kaypee Electronics & Associates Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax 2/7 NO.2063/BANG/2017) FOR THE ASSESSMENT YEAR 2013-14.VIDE ANNEX-A & ETC., THIS W.P. COMING ON FOR ORDERS THIS DAY, THE|COURT MADE THR FOLLOWING :- ORDER Mr. Chythanya K.K.Adv. tor PetitionerMr. Jeevan J. Neeralgi,Adv. for Respondent — 1. The petitioner-assessee has filed this petitionagainst the interlocutory order passed by the IncomeTax Appellate Tribunal (‘the Tribunal’ for short) ‘C’Bench, Bengaluru, rejecting the stay application filed bythe petitioner in the pending appeal before it for theAssessment Year 2013-14. 2. The learned Tribunal by its impugned orderdated06.11.2017againsttheDemandoT Rs.95,04,375/-on account of the adjustment ofRoyalty payment ofRs.2,29,39,967/-on the basis otf|Arm’s Length Price (ALP) has granted the relief to theextent of remaining amount of the said Demand ofRs.95 lakhs not been recovered, subject to the payment Date of Order 21-11-2017 W.P.No.52737/2017 M/s. Kaypee Electronics & Associates Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax 3/7 oT|Rs.50 lakhsby the petitioner-assessee on or before00.11.2017fixing the final hearing of the appeal itselfOT]14.12.2017which falls shortly hereafter.| 3. While passing the said interlocutory order,allowing the stay application of assessee to a partialextent, the learned Tribunal has observed in para-1 ofthe order itself that the main issue involved in the said|appeal has already been decided against the petitioner-assessee for the preceding assessment year and learnedcounsel for the petitioner also fairly submitted that theappeal against that order for preceding year has alreadybeen preferred before this Court under Section 260A ofthe Income Tax Act, 1961, which is pending. 4. However, what the learned counsel for thepetitioner-assessee Mr.Chythanya urged before theCourt is that in paragraph-2 of the impugned order, thelearned Tribunal itself observed that besides the main|eround already decided against the petitioner-assessee Date of Order 21-11-2017 W.P.No.52737/2017 M/s. Kaypee Electronics & Associates Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax 4/7 in the previous year there,“there are incidental groundsraised for this assessment year. If these grounds of|appeal are allowed in favour of the assessee-company,|there may be substantial reduction in the demand raised.Keeping in view this submission, we_ stay)collection of stay of demand, subject to demand of Rs.50lakhs on or before 30[th]November 2017”. 4. However, what the learned counsel for thepetitioner-assessee Mr.Chythanya urged before theCourt is that in paragraph-2 of the impugned order, thelearned Tribunal itself observed that besides the main|eround already decided against the petitioner-assessee Date of Order 21-11-2017 W.P.No.52737/2017 M/s. Kaypee Electronics & Associates Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax 4/7 in the previous year there,“there are incidental groundsraised for this assessment year. If these grounds of|appeal are allowed in favour of the assessee-company,|there may be substantial reduction in the demand raised.Keeping in view this submission, we_ stay)collection of stay of demand, subject to demand of Rs.50lakhs on or before 30[th]November 2017”. Oo. The learned counsel for the petitioner thereforesubmitted that the appeal before the learned Tribunalbeing directed against the order passed by the TransferPricing Officer (TPO) is the first appeal and the firstappeal lies before the ITAT directly and not before theCIT (Appeals), where as per the CBDT Instructions, theusual norms is that only 20% of the demand is allowedto be paid subject to the final decision of the appealitself. Therefore, he submitted that the petitioner-assessee would be ready and willing to deposit evenmore ateRs.30 lakhson or before30.11.2017aS| Date of Order 21-11-2017 W.P.No.52737/2017 M/s. Kaypee Electronics & Associates Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax 5/7 againstRs.50 lakhsdirected by the learned Tribunal,subject to final decision of the appeal itself and thepetitioner-assessee would cooperate and will not seekany adjournment before the Tribunal on14.12.2017>the date fixed for final hearing of the appeal itself. 6. Normally this Court would not like to interferewith the exercise of discretion by the learnted Tribunalwhile passing the interlocutory order and the directionof the learned Tribunal to deposit Rs.sO lakhs againstthe demand of Rs.95 lakhs approx, cannot be said to beunfair use of exercise of its discretion, even if the.payment of the said amount, going by the thumb rule of00% is adopted. However, it appears to this Court thatsince the difference between the cut off date for'payment of Rs.oO lakhs on00.11.2017and the date of.hearing on14.12.2017of the appeal itself is bareminimum of 15 days, an indulgence can be granted tothe petitioner though not as a matter of right. Date of Order 21-11-2017 W.P.No.52737/2017 M/s. Kaypee Electronics & Associates Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax 6/7 7. The observation of the learned Tribunal that theother incidental grounds may result in substantialreduction in demand raised, though indicates that aprima-faciecase of the assessee exists but the extent ofthat could not naturally have been deferred andcomputed precisely by the learned Tribunal. Theadjudication and determination of such incidentalesrounds would also depend upon the final decision ofthe learned Tribunal itself after hearing both the sides. 8. Therefore, as of now, it is in the realm of onlyguess work as to how much relief the assessee will orwill not ultimately get when the learned Tribunaldecides the appeal only on 14.12.2017. Since the gap oftime period between the two dates as aforesaid is onlyabout lo days, this Court is inclined to grantindulgence to the petitioner-assessee, as this Court feelsthat the interest of revenue will not be _ seriouslprejudiced, if the payment of balance amount may await Date of Order 21-11-2017 W.P.No.52737/2017 M/s. Kaypee Electronics & Associates Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax 7/7 the final decision of the Tribunal for a period of 15 days—INOTE. 8. Therefore, as of now, it is in the realm of onlyguess work as to how much relief the assessee will orwill not ultimately get when the learned Tribunaldecides the appeal only on 14.12.2017. Since the gap oftime period between the two dates as aforesaid is onlyabout lo days, this Court is inclined to grantindulgence to the petitioner-assessee, as this Court feelsthat the interest of revenue will not be _ seriouslprejudiced, if the payment of balance amount may await Date of Order 21-11-2017 W.P.No.52737/2017 M/s. Kaypee Electronics & Associates Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax 7/7 the final decision of the Tribunal for a period of 15 days—INOTE. 9. Accordingly, this petition is disposed of with aslight modification in the impugned interlocutory orderpassed by the learned Tribunal by substituting theAmount ofRs.30 lakhsin place ofRs.50 lakhsin the.order.dated06.11.2017passedbythelearnedTribunal. No further modification is required or madein the said order. It is made clear that this will not be otany kind of precedent for the case of the petitioner-assessee himself or any other case. No order as to costs. Srl. od/-| JUDGE