Income Tax Appellate Tribunal - Hyderabad
Zuari Cement Limited, Kadapa vs Assessee on 16 January, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" : HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
Stay Application No.110/Hyd/2014
Arising out of
ITA.No.471/Hyd/2014 - Assessment Year 2009-10
Zuari Cement Limited
Kadapa - 516 311. vs. DCIT, Circle 2(1)
Andhra Pradesh. Tirupati.
PAN AAACZ1270E
(Appellant) (Respondent)
For Assessee : Mr. K.R. Vasudevan
For Revenue : Mr. Bandi Ramakrishna
Date of Hearing : 16.01.2015
Date of Pronouncement : 16.01.2015
ORDER
PER SAKTIJIT DEY, J.M.
In this stay application, assessee seeks stay of collection of the outstanding demand of Rs.25,11,88,270.
2. The learned A.R. submitted before us that the major addition amounting to Rs.41,60,00,000 and Rs.42,10,94,000 were on account of T.P. adjustment made by the TPO. The A.R. submitted that as far as the addition of Rs.41,60,00,000 towards disallowance for transfer of economic value of the Zuari trade mark to Ital-cementi trade mark is concerned, the DRP and TPO concluded that the new trade mark sub-licensed to the assessee is a co-branded and a hybrid one and the economic value of the old trade mark had got transferred to the new brand indirectly without a formal agreement. It was held by the DRP and TPO that transfer of 2 S.A.No.110/Hyd/2014 in ITA.No.471/Hyd/2014 Zuari Cement Limited, Yerraguntla, Kadapa.
economic value of the old trade mark which was developed by the assessee to the new trade mark owned by the A.E. has taken place by Piggy-backing on old trade mark, hence, the assessee should be compensated at arms length basis by the A.E. Accordingly, TPO made adjustment of Rs.41,60,00,000 by adding a mark-up of 10% of the AMP expenditure incurred by the assessee between F.Y. 2000-2001 to 2008-09. It was submitted that such computation of arms length price is foreign to the statutory provision and could not have been adopted by TPO and confirmed by the DRP.
3. As far as the addition of Rs.42,10,92,000 on account of disallowance of consultancy fee in connection with construction of a new manufacturing facilities is concerned, the learned A.R. submitted that the TPO was completely wrong in determining the arms length price of the payment as NIL in violation of statutory provisions. In respect of other additions also, the learned A.R. submitted that if such additions are considered on merit, none of them will survive. Further, it was submitted by the assessee that out of the total demand of Rs.52,78,37,410 raised in pursuance of the assessment order, assessee has already paid an amount of Rs.27,66,49,140 which covers almost 52% of the total demand including interest and 86.50% of the tax demand. He further submitted that refund of more than Rs.15 crore is also due to the assessee from the department which has not yet been refunded. The learned A.R. also submitted that the appeal of the assessee is also posted for hearing on 29.01.2015. In these circumstances, he prayed for grant of absolute stay.
3S.A.No.110/Hyd/2014 in ITA.No.471/Hyd/2014 Zuari Cement Limited, Yerraguntla, Kadapa.
4. The learned D.R. on the other hand, opposed grant of absolute stay.
5. We have heard the parties and perused the materials on record. At the time of grant of stay, we cannot go into the merits of the issues in appeal. However, contentions of the learned A.R. that assessee has paid 52% of the demand raised in the assessment and more than Rs. 15 crores of refund is also due to the assessee have not been controverted by learned D.R. It is also seen from record that corresponding appeal of assessee has already been posted for hearing on 29.01.2015 and learned A.R. also has undertaken before us that he will not seek any adjournment and will be ready for hearing of the appeal. Considering the prima facie case, balance of convenience and related facts and circumstances, we are inclined to grant stay of realization of outstanding demand to the tune of Rs.25,11,88,270 till expiry of six months from the date of this order or disposal of the appeal whichever is earlier. We make it clear that if assessee seeks adjournment of the appeal on the date fixed, the stay granted will automatically get vacated.
6. In the result, stay application of the assessee is allowed.
Order pronounced in the open Court on 16.01.2015 Sd/- Sd/-
(B.RAMAKOTAIAH) (SAKTIJIT DEY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, Dated 16th January, 2015
VBP/-
4
S.A.No.110/Hyd/2014 in ITA.No.471/Hyd/2014 Zuari Cement Limited, Yerraguntla, Kadapa.
Copy to
1. Zuari Cement Limited, Krishna Nagar, Yerraguntla, Kadapa, Andhra Pradesh. PIN 516 311
2. Dy. Commissioner of Income Tax, Circle 2(1), Tirupati.
3. Disputes Resolution Panel, 2nd Floor, I.T. Towers, 10-2-3, AC Guards, Hyderabad - 500 004.
4. Director of Income Tax, International Taxation, Income Tax Towers, 10-2-3, A.C. Guards, Hyderabad - 500 004.
5. The Commissioner of Income Tax-1, Hyderabad.
6. Addl. Commissioner of Income Tax (Transfer Pricing), Hyderabad - 500 004.
7. D.R. ITAT "A" Bench, Hyderabad.