The Principal Commissioner Of Income Tax, Gurgaon v. Comverse Network Systems India Pvt. Ltd., Gurgaon

ITA-118-2018 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-118-2018 (O&M) Date of Decision: 31.7.2018 The Principal Commissioner of Income Tax, Gurgaon ...Appellant. Versus Comverse Network Systems India Pvt. Ltd., Gurgaon ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE AVNEESH JHINGAN. PRESENT: Mr. Tajender K. Joshi, Sr. Standing Counsel for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 8.9.2017 (Annexure A-II) passed by the Income Tax AppellateTribunal, Delhi Bench 1-2, New Delhi (hereinafter referred to as “theTribunal”) in Stay Application No. 490/DEL/2017 in ITA No.6704/DEL/2015, claiming the following substantial questions of law:- 1.Whether the Hon'ble ITAT has acted incontravention of the Second Proviso of Section254(2A) of the Income Tax Act, 1961, as thecombined period of stay has exceeded 365 days?contravention of the Second Proviso of Section254(2A) of the Income Tax Act, 1961, as thecombined period of stay has exceeded 365 days?2.Whether the order of the ITAT be treated as voidab initio in light of Third Proviso to Section 254(2A) of the Income Tax Act, 1961, which providesab initio in light of Third Proviso to Section 254(2A) of the Income Tax Act, 1961, which provides -2- that stay of demand stands vacated after expiry of aperiod of 365 days, even if delay in disposal ofappeal is not attributable to the assessee? 2.A few facts necessary for adjudication of the instant appeal asnarrated therein may be noticed. The assessee-respondent filed its return ofincome on 24.11.2011 for the assessment year 2011-12 declaring income at` 17,60,17,290/-. The case was selected for scrutiny and notice underSection 143(2) of the Act was issued. A reference was made to the TransferPricing Officer to determine the Arm's Length Price who vide order dated29.1.2015 passed under Section 92CA(3) of the Act assessed TransferPricing Adjustments of ` 14,98,66,534/-. The Assessing Officer vide draftorder dated 16.2.2015 assessed the total income of the assessee at` 32,58,83,820/- by making addition of ` 14,98,66,534/- on account ofTransfer Pricing Adjustments. Against the said order, the assesseeapproached the Dispute Resolution Panel who vide order dated 30.9.2015restricted the Transfer Pricing Adjustment to ` 10,90,69,493/- by revisingthe earlier adjustment of ` 3,74,50,109/- in sales and post support segmentto ` 2, 37,55,953/- and deleted the Transfer Pricing Adjustment on accountof provision of software development services of ` 2,71,02,885/-.Thereafter, the Assessing Officer vide assessment order dated 30.11.2015assessed the income of the assessee at ` 28,50,86,780/- and raised a demandof ` 7,43,96,230/-. Feeling aggrieved, the assessee filed an appeal beforethe Tribunal. The assessee had also filed rectification application before theAssessing Officer for credit of the prepaid taxes. The Assessing Officerallowed the said rectification application and reduced the demand from ITA-118-2018 -3- adjusted and remaining balance demand of ` 4.06 crores was raised. Alongwith the appeal, the assessee also filed Stay Application No. 627/Del/2015.The stay was granted on 6.1.2016 till 9.2.2016 and further this stay wasextended till 26.4.2016 or 180 days from the date of the order whicheverexpires early. Further, the stay was extended from time to time. Lastly theapplication was allowed and stay was extended for six months or till thedisposal of the appeal whichever is earlier vide order dated 8.9.2017.According to the learned counsel, the decision of the Tribunal is not inaccordance with law as it is contrary to the second and third provisos toSection 254(2A) of the Act. Hence, the present appeal. 3. We have heard learned counsel for the appellant-revenue. ITA-118-2018 -3- adjusted and remaining balance demand of ` 4.06 crores was raised. Alongwith the appeal, the assessee also filed Stay Application No. 627/Del/2015.The stay was granted on 6.1.2016 till 9.2.2016 and further this stay wasextended till 26.4.2016 or 180 days from the date of the order whicheverexpires early. Further, the stay was extended from time to time. Lastly theapplication was allowed and stay was extended for six months or till thedisposal of the appeal whichever is earlier vide order dated 8.9.2017.According to the learned counsel, the decision of the Tribunal is not inaccordance with law as it is contrary to the second and third provisos toSection 254(2A) of the Act. Hence, the present appeal. 3. We have heard learned counsel for the appellant-revenue. 4. The matter is no longer res integra. While interpreting theprovisions of Section 35C(2A) of the Central Excise Act, 1944 which is parimateria to section 254(2A) of the Act, this Court in STA No.15 of 2015(Commissioner of Central Excise, Rohtak vs. M/s Voice Telesystem)decided on 20.1.2016 after considering the relevant case law on the pointconcluded that wherever the appeal could not be decided by the Tribunaldue to pressure of pendency of cases and delay in the disposal of the appealis not attributable to the assessee in any manner, the interim protection cancontinue beyond 365 days in deserving cases. Reference was made to thejudgment of the Apex Court in Commissioner of Customs & Central Excise,Ahmedabad vs. Kumar Cotton Mills Pvt. Limited, (2005) 180 ELT 434.Further, this Court in ITA No.5 of 2016(Principal Commissioner ofIncome Tax, Gurgaon v. Carrier Air Conditioning and RefrigerationLimited) decided on 25.4.2016 and ITA No.57 of 2016 (PrincipalCommissioner of Income Tax, Gurgaon v. M/s Jindal Steel and Power ITA-118-2018 Ltd., Hisar) decided on 9.5.2016, adjudicating identical issue interpretingSection 254(2A) of the Act following the judgment in M/s VoiceTelesystem's case (supra) had held similar view. 5. Accordingly, we do not find any error in the impugned orderpassed by the Tribunal. Thus, no substantial question of law arises. Theappeal stands dismissed. (AJAY KUMAR MITTAL) JUDGE July 31, 2018(AVNEESH JHINGAN)gbs JUDGE Whether Speaking/ReasonedYesWhether ReportableYes