Income Tax Appellate Tribunal - Ahmedabad
Shell Global Solutions International ... vs The Dcit, Intl. Taxn.-1,, Ahmedabad on 21 February, 2020
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'D' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER Stay Application Nos. 61 to 64/Ahd/2020 AYs. 2007-08 to 2010-11 ( in I.T.A. Nos. 1389, 1390, 1391 & 1392/Ahd/2019) M/s. Shell Global Solutions बनाम/ Deputy Commissioner International B.V. of Income-Tax, Vs. PO Box 5401, 2501 CM, The International Taxation -
Hague, The Netherlands 1, Ahmedabad थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAICS3589H (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri S. N. Soparkar, Sr. Adv. & Shri Mital Sangharajka, A.R. यथ क ओर से / Shri Vikram Singh Sharma, Sr. D.R. Respondent by :
सन ु वाई क तार ख / Date of 20/02/2020 Hearing घोषणा क तार ख /Date of 21/02/2020 Pronouncement आदे श/O R D E R PER PRADIP KUMAR KEDIA - AM:
The captioned stay applications have been preferred by the applicant assessee seeking stay of penalty demanded relating to AYs. 2007-08 to 2010-11.
2. By these Stay Applications dated 06.02.2020, the assessee seeks stay of outstanding demand of Rs.8,18,03,174/- in aggregate for four assessment years arising from imposition of penalty.
S . P . N o s . 6 1 t o 6 4 / Ah d / 2 0 [ M / s . S h e l l G l o b a l S o l u t i o n s I n t e r n a t i o n a l B . V . ] A. Y . 2 0 0 7 - 0 8 t o 2 0 1 0 - 1 1 - 2 -
3. In support of petition for stay, the learned Senior Counsel for the assessee at the outset referred to tabulated statement presented before the Joint Commissioner of Income Tax seeking stay which is reproduced hereunder:
AY Rectified Demand paid Outstanding Proposed Balance penalty (20% of demand (80% refund Penalty demand demand) of demand) adjustment demand 2007-08 90,23,333 18,00,000 72,23,333 25,67,749 46,55,584 2008-09 2,94,36,200 58,00,000 2,36,36,200 84,02,193 1 ,52,34,007 2009-10 2,96,11,544 59,00,000 2,37,11,544 84,28,976 1,52,82,568 2010-11 3,39,32,097 67,00,000 2,72,32,097 96,80,462 1,75,51,635 Total 10,20,03,174 2,02,00,000 8,18,03,174 2,90,79,380 5,27,23,794
4. Making reference to the above tabulations, the learned Senior Counsel submitted that total penalty demanded all the four stay applications stands at Rs.10,20,03,174/-. Against the aforesaid penalty, the assessee has paid 20% demand thereof amounting to Rs.2.02 Crores. As against the remaining demand, the total refund of excess tax paid to the tune of Rs.2.90 Crores is under the command of the department pending its credit to the account of the assessee. Learned Senior Counsel accordingly submitted that the Revenue is already compensated in the vicinity of 47% of the total demand. In the circumstances, the assessee should not be treated as 'assessee in default' for recovery of balance demand while adjudication of penalty imposed is pending.
5. Adverting to the merits of penalty imposed, the learned Senior Counsel pointed out that the assessee is a company incorporated in and a tax resident of The Netherlands. Certain transfer pricing adjustments were made in relation to the services rendered to the Associated Enterprises wherein the department has alleged 'base erosion'. The Ahmedabad Tribunal followed the decision of the Special bench constituted before Kolkata ITAT in the case of Instrumentarium Corporation vs. ADIT ITA No. 1548 and 1549/Kol/2009. The Special bench decided the issue of 'base erosion' against the tax payer. The Ahmedabad Tribunal has applied the principles rendered by the special bench and adjudicated the issue against the assessee in the quantum proceedings. The matter has been carried before the Hon'ble High Court by the assessee herein and the High Court was pleased to admit the appeal of the assessee in quantum proceedings vide S . P . N o s . 6 1 t o 6 4 / Ah d / 2 0 [ M / s . S h e l l G l o b a l S o l u t i o n s I n t e r n a t i o n a l B . V . ] A. Y . 2 0 0 7 - 0 8 t o 2 0 1 0 - 1 1 - 3 -
order dated 03.04.2018 R/Tax Appeal No. 448 of 2017 & Ors. The learned Senior Counsel, in the circumstances, pointed out that the issue is apparently highly debatable and the matter was initially referred to the Special Bench to address the debate and now admitted before the Jurisdictional High Court for adjudication. It was submitted in the context that the assessee has made adequate disclosure of all material facts in the quantum proceedings and therefore, there is no case for furnishing of any inaccurate particulars of income by the assessee. In the circumstances, it was stated that where the quantum issue itself is highly debatable and where the relevant facts are fully disclosed, the penalty is not justifiable even on facts. The learned Senior Counsel accordingly submitted that additional recovery of outstanding penalty, in the circumstances, would cause grave prejudice to the business interests of the assessee and consequently, sought direction for the stay of recovery of penalty demand to the extent of Rs.5,27,23,794/- for all the four assessment years in question. In the same vain, the adjustment of tax refund to the tune of Rs.2,90,79,380/- was volunteered and consented.
6. The learned DR for the Revenue, on the other hand, strongly opposed the said applications filed by the assessee. The learned DR submitted that stay of outstanding demand is not justified at all and deserves to be rejected and the assessee may, at best, be granted relief by way of some installments for payment of remaining tax outstanding.
7. On careful consideration of rival submissions as well as the material aspects of the case which are relevant to ascertain the balance of convenience, such as, prima facie case of assessee on merit as argued, considerable liability already discharged by the assessee, we are of the view that mitigating circumstances exist in the present case for stay of outstanding demand to the extent of Rs.5,27,23,794/-. The AO shall be entitled to adjust the refund of excess tax claimed to be under the control of the department to the tune of Rs.2,90,79,380/-.
8. Having regard to the facts noted above towards partial stay of penalty as well as debatable aspect involved in the present case, we are inclined to entertain the stay applications and exercise our discretion in favour of the assessee for stay of recovery of balance outstanding of Rs.5,27,23,794/- tabulated above for a period of six months or till the disposal of the appeal of the assessee by the Tribunal, whichever is earlier. S . P . N o s . 6 1 t o 6 4 / Ah d / 2 0 [ M / s . S h e l l G l o b a l S o l u t i o n s I n t e r n a t i o n a l B . V . ] A. Y . 2 0 0 7 - 0 8 t o 2 0 1 0 - 1 1 - 4 -
9. The Registry is directed to fix the relevant penalty appeals for AYs. 2007-08 to 2010-11 for out of turn hearing on 23/04/2020 as announced in the Open Court and informed to the representatives of both the sides. No separate notice of hearing would thus be required to be served. The parties will file all the requisite documents, such as, paper-book etc. well in advance for expeditious disposal of appeal.
10. The stay granted is also subject to the condition that the assessee will fully co- operate in speedy disposal of the appeal and will not seek any adjournment on any grounds whatsoever save and except wholly unavoidable and bonafide circumstance preventing the assessee from participating in appellate proceedings before the Tribunal. The stay granted hereinabove may stand vacated together with associated benefit of out of turn hearing of the appeal in the event of failure to comply with the directions set out above.
11. Subject to above, all the Stay Applications stand allowed.
This Order pronounced in Open Court on 21/02/2020 Sd/- Sd/-
(MAHAVIR PRASAD) (PRADIP KUMAR KEDIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated 21/02/2020
True Copy
S. K. SINHA
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं*धत आयकर आयु,त / Concerned CIT
4. आयकर आयु,त- अपील / CIT (A)
5. 0वभागीय 3त3न*ध, आयकर अपील य अ*धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड9 फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपील य अ*धकरण, अहमदाबाद ।
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'D' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER Stay Application Nos. 61 to 64/Ahd/2020 AYs. 2007-08 to 2010-11 ( in I.T.A. Nos. 1389, 1390, 1391 & 1392/Ahd/2019) M/s. Shell Global Solutions बनाम/ Deputy Commissioner International B.V. of Income-Tax, Vs. PO Box 5401, 2501 CM, The International Taxation -
Hague, The Netherlands 1, Ahmedabad थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAICS3589H (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri S. N. Soparkar, Sr. Adv. & Shri Mital Sangharajka, A.R. यथ क ओर से / Shri Vikram Singh Sharma, Sr. D.R. Respondent by :
सन ु वाई क तार ख / Date of 20/02/2020 Hearing घोषणा क तार ख /Date of 21/02/2020 Pronouncement आदे श/O R D E R PER PRADIP KUMAR KEDIA - AM:
The captioned stay applications have been preferred by the applicant assessee seeking stay of penalty demanded relating to AYs. 2007-08 to 2010-11.
2. By these Stay Applications dated 06.02.2020, the assessee seeks stay of outstanding demand of Rs.8,18,03,174/- in aggregate for four assessment years arising from imposition of penalty.
S . P . N o s . 6 1 t o 6 4 / Ah d / 2 0 [ M / s . S h e l l G l o b a l S o l u t i o n s I n t e r n a t i o n a l B . V . ] A. Y . 2 0 0 7 - 0 8 t o 2 0 1 0 - 1 1 - 2 -
3. In support of petition for stay, the learned Senior Counsel for the assessee at the outset referred to tabulated statement presented before the Joint Commissioner of Income Tax seeking stay which is reproduced hereunder:
AY Rectified Demand paid Outstanding Proposed Balance penalty (20% of demand (80% refund Penalty demand demand) of demand) adjustment demand 2007-08 90,23,333 18,00,000 72,23,333 25,67,749 46,55,584 2008-09 2,94,36,200 58,00,000 2,36,36,200 84,02,193 1 ,52,34,007 2009-10 2,96,11,544 59,00,000 2,37,11,544 84,28,976 1,52,82,568 2010-11 3,39,32,097 67,00,000 2,72,32,097 96,80,462 1,75,51,635 Total 10,20,03,174 2,02,00,000 8,18,03,174 2,90,79,380 5,27,23,794
4. Making reference to the above tabulations, the learned Senior Counsel submitted that total penalty demanded all the four stay applications stands at Rs.10,20,03,174/-. Against the aforesaid penalty, the assessee has paid 20% demand thereof amounting to Rs.2.02 Crores. As against the remaining demand, the total refund of excess tax paid to the tune of Rs.2.90 Crores is under the command of the department pending its credit to the account of the assessee. Learned Senior Counsel accordingly submitted that the Revenue is already compensated in the vicinity of 47% of the total demand. In the circumstances, the assessee should not be treated as 'assessee in default' for recovery of balance demand while adjudication of penalty imposed is pending.
5. Adverting to the merits of penalty imposed, the learned Senior Counsel pointed out that the assessee is a company incorporated in and a tax resident of The Netherlands. Certain transfer pricing adjustments were made in relation to the services rendered to the Associated Enterprises wherein the department has alleged 'base erosion'. The Ahmedabad Tribunal followed the decision of the Special bench constituted before Kolkata ITAT in the case of Instrumentarium Corporation vs. ADIT ITA No. 1548 and 1549/Kol/2009. The Special bench decided the issue of 'base erosion' against the tax payer. The Ahmedabad Tribunal has applied the principles rendered by the special bench and adjudicated the issue against the assessee in the quantum proceedings. The matter has been carried before the Hon'ble High Court by the assessee herein and the High Court was pleased to admit the appeal of the assessee in quantum proceedings vide S . P . N o s . 6 1 t o 6 4 / Ah d / 2 0 [ M / s . S h e l l G l o b a l S o l u t i o n s I n t e r n a t i o n a l B . V . ] A. Y . 2 0 0 7 - 0 8 t o 2 0 1 0 - 1 1 - 3 -
order dated 03.04.2018 R/Tax Appeal No. 448 of 2017 & Ors. The learned Senior Counsel, in the circumstances, pointed out that the issue is apparently highly debatable and the matter was initially referred to the Special Bench to address the debate and now admitted before the Jurisdictional High Court for adjudication. It was submitted in the context that the assessee has made adequate disclosure of all material facts in the quantum proceedings and therefore, there is no case for furnishing of any inaccurate particulars of income by the assessee. In the circumstances, it was stated that where the quantum issue itself is highly debatable and where the relevant facts are fully disclosed, the penalty is not justifiable even on facts. The learned Senior Counsel accordingly submitted that additional recovery of outstanding penalty, in the circumstances, would cause grave prejudice to the business interests of the assessee and consequently, sought direction for the stay of recovery of penalty demand to the extent of Rs.5,27,23,794/- for all the four assessment years in question. In the same vain, the adjustment of tax refund to the tune of Rs.2,90,79,380/- was volunteered and consented.
6. The learned DR for the Revenue, on the other hand, strongly opposed the said applications filed by the assessee. The learned DR submitted that stay of outstanding demand is not justified at all and deserves to be rejected and the assessee may, at best, be granted relief by way of some installments for payment of remaining tax outstanding.
7. On careful consideration of rival submissions as well as the material aspects of the case which are relevant to ascertain the balance of convenience, such as, prima facie case of assessee on merit as argued, considerable liability already discharged by the assessee, we are of the view that mitigating circumstances exist in the present case for stay of outstanding demand to the extent of Rs.5,27,23,794/-. The AO shall be entitled to adjust the refund of excess tax claimed to be under the control of the department to the tune of Rs.2,90,79,380/-.
8. Having regard to the facts noted above towards partial stay of penalty as well as debatable aspect involved in the present case, we are inclined to entertain the stay applications and exercise our discretion in favour of the assessee for stay of recovery of balance outstanding of Rs.5,27,23,794/- tabulated above for a period of six months or till the disposal of the appeal of the assessee by the Tribunal, whichever is earlier. S . P . N o s . 6 1 t o 6 4 / Ah d / 2 0 [ M / s . S h e l l G l o b a l S o l u t i o n s I n t e r n a t i o n a l B . V . ] A. Y . 2 0 0 7 - 0 8 t o 2 0 1 0 - 1 1 - 4 -
9. The Registry is directed to fix the relevant penalty appeals for AYs. 2007-08 to 2010-11 for out of turn hearing on 23/04/2020 as announced in the Open Court and informed to the representatives of both the sides. No separate notice of hearing would thus be required to be served. The parties will file all the requisite documents, such as, paper-book etc. well in advance for expeditious disposal of appeal.
10. The stay granted is also subject to the condition that the assessee will fully co- operate in speedy disposal of the appeal and will not seek any adjournment on any grounds whatsoever save and except wholly unavoidable and bonafide circumstance preventing the assessee from participating in appellate proceedings before the Tribunal. The stay granted hereinabove may stand vacated together with associated benefit of out of turn hearing of the appeal in the event of failure to comply with the directions set out above.
11. Subject to above, all the Stay Applications stand allowed.
This Order pronounced in Open Court on 21/02/2020 Sd/- Sd/-
(MAHAVIR PRASAD) (PRADIP KUMAR KEDIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated 21/02/2020
True Copy
S. K. SINHA
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं*धत आयकर आयु,त / Concerned CIT
4. आयकर आयु,त- अपील / CIT (A)
5. 0वभागीय 3त3न*ध, आयकर अपील य अ*धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड9 फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपील य अ*धकरण, अहमदाबाद ।