Income Tax Appellate Tribunal - Hyderabad
Electronic Arts Games India Private ... vs Acit, Circle-17(1), Hyd, Hyderabad on 24 March, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
S.A. No. 57/Hyd/2017
(in ITA No. 444/Hyd/2017
Assessment Year : 2012-13)
Electronic Arts Games (India) Pvt. vs. Asst. Commissioner of Income-tax,
Ltd., Hyderabad. Circle - 17(1), Hyderabad.
PAN - AABCJ 4279Q
(Applicant) (Respondent)
Assessee by : Smt. Karishma R. Phatarphekar
Revenue by : Smt. Suman Malik
Date of hearing : 24-03-2017
Date of pronouncement : 24 -03-2017
ORDER
PER S. RIFAUR RAHMAN, A.M.:
This Stay application has been filed by the assessee seeking stay of recovery of outstanding demand of Rs. 2,13,01,839/-.
2. Brief facts of the case are that EA India, a wholly owned subsidiary of Electronic Arts (India Holdings) Inc., (EA India Holdings), is engaged in providing contract software development services, back office marketing support services, corporate Information Technology (IT) support services and marketing support services to its AEs (AEs.). The assessee filed its return of income on November 30, 2012, the case was selected for scrutiny. Since the assessee has entered international transactions with its AEs, the AO referred the matter to DCIT (Transfer Pricing) - 3. The TPO has selected 13 comparables and arrived at Arm's Length Margin at 16.29% after giving a relief of 3.76% on account of working capital 2 S.A. No. 57/Hyd/2017 Electronic Arts Games (India) Pvt. Ltd.
adjustment. Based on the directions of TPO, income of the assessee was assessed at Rs. 13,70,33,650/-.
3. Ld. AR of the assessee submitted that TPO has selected five companies, which are high turnover companies having turnover of more than 1000 crores, which cannot be comparables considering the fact that assessee's turnover is only 77.39 crores. He submitted that in the earlier AY, the Hon'ble ITAT has deleted the above companies as non-comparable companies due to high turnover. She placed a copy of the order on record. She submitted that assessee has a prima-facie case in its favour before the Tribunal considering the fact that high turnover companies are deleted from the comparable companies in earlier AY, by that effect, the arithmetic mean margin of the comparables will be within the comparable limits of the assessee company. She prayed further that against the total demand of Rs. 3.79 crores, assessee has already paid Rs. 1.66 crores and also she brought to our notice that for the AY 2010-11, assessee has got favourable order from ITAT. Therefore, assessee is yet to get consequential order, out of which it will receive refund which may also be adjusted against the outstanding demand. In view of the above observations, the AR of the assessee prayed for stay for the recovery of the outstanding demand.
4. The ld. DR, on the other hand, objected to grant of stay to the assessee.
5. Considered the rival submissions and perused the material facts on record. As the assessee appears to have prima facie case in its favour before the Tribunal and has paid about 40% of the demand out of the total demand raised, the balance of convenience is in favour of the assessee to grant stay of recovery of outstanding demand. Therefore, we are inclined to grant stay of recovery of outstanding demand for a period of 180 days from the date of this 3 S.A. No. 57/Hyd/2017 Electronic Arts Games (India) Pvt. Ltd.
order or till the disposal of the corresponding appeal, whichever is earlier.
6. In the result, S.A. filed by assessee is allowed.
Pronounced in the open court on 24 th March, 2017,
Sd/- Sd/-
(P. MADHAVI DEVI) (S. RIFAUR RAHMAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 24 th March, 2017.
kv
Copy to:-
1) Electronic Arts Games (India) Pvt. Ltd., Plot No. 17,
7 th Floor, Vega Block, Ascendas IT Park, Madhapur, Hyderabad - 500 081.
2) ACIT, Circle - 17(1), 9 th Floor, Signature Towers, Kondapur, Hyderabad- 500 084.
3) DRP, Hyderabad
4) The Departmental Representative, I.T.A.T., Hyd.
5) Guard File