Income Tax Appellate Tribunal - Bangalore
M/S. Google India Private Limited, ... vs The Joint Commissioner Of Income Tax, ... on 20 November, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
"B''BENCH : BANGALORE
BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND
SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER
SP No.293/Bang/2019
(In ITA No.2301/Bang/2019)
Assessment years : 2015-16
M/s Google India Pvt. Ltd., Vs. TheJt. Commissioner of Income-tax,
No.3, RMZ Infinity Tower-E, Spl. Range-3,
4th Floor, Old Madras Road, Bengaluru
Bengaluru.
PAN - AACCG 0527 D
APPELLANT RESPONDENT
Appellant by : Shri Deepak Chopra, Shri Anmol Anand, Ms. PriyaJandan
- Advocates
Respondent by : Shri Kumar, Addl. CIT
Date of hearing : 08.11.2019
Date of Pronouncement : 20.11.2019
ORDER
PerB.R. Baskaran,Accountant Member The assessee has filed this stay application seeking stay of outstanding demand of Rs.1275.56 lakhs raised upon the assessee for asst. year 2015-16.
2. The Ld A.R submitted that the principal portion (tax component) of the demand outstanding for this year is 822.35 crores. He submitted that major addition made in this year pertains to disallowance made u/s 40(a)(i) of the Act for non- deduction of TDS from certain payments. He submitted that, identical disallowances were made u/s 40(a)(i) of the Act in the S.P No.293/Bang/2019 Page 2 of 11 earlier years also for non-deduction of tax at source. He submitted that the demand was also raised upon the assessee u/s 201 of the Act for non-deduction of TDS. The Ld A.R submitted that the assessee has made part payment of TDS amount of earlier years to the tune of Rs.105 crores, during the year under consideration. The Ld A.R further submitted that the assessee is entitled to deduction of expenditure relatable to TDS amount so paid during the year under consideration in terms of sec.40(a)(i) of the Act, which works out to Rs.1050 crores. He further submitted that the assessee has got prima facie case in respect of two other additions, as they are covered by the orders passed by the Tribunal in the earlier years. Before us, the Ld A.R furnished a working sheet showing the position of outstanding "tax portion" of demand, if his contentions narrated above are accepted. The said chart is enclosed as Annexure-A to this order.
3. Explaining further, the ld AR submitted that the AO has determined the total income of the assessee at Rs.2859.52 crores. The major addition is the disallowance made u/s 40(a)(i) of the Act in respect of payment made to M/s Google Ireland Ltd(GIL) for purchase of online advertisement space without deducting tax at source. The other additions, inter alia, included additions relating to attribution of additional profit of Rs.21.39 crores and transfer pricing adjustment of Rs.961.68 crores. He submitted that the AO had made addition towards attribution of additional profits in asst. year 2008-09 also and the same was deleted by the Tribunal by its order dated 11/5/2018. The AO has also made addition towards transfer pricing adjustment in asst. years 2009-10 to 2012-13 and S.P No.293/Bang/2019 Page 3 of 11 the Tribunal has remitted the matter to the file of AO for examining it afresh in the earlier years. The ld AR submitted that facts relating to these two issues are identical in nature and hence the orders passed by the Tribunal in the earlier years in respect of the above said two additions should be followed during the current year. In that case, the total income shall be reduced to Rs.1876.43 crores and the outstanding principal portion of tax demand will be reduced to Rs.488.20 croers.
4. The ld AR further submitted that the addition relating to sec. 40(a)(i) of the Act for non-deduction of tax at source is the major addition made during the year under consideration. He submitted that an identical addition was made in asst. years 2008-09 to 2012- 13 by the AO and it was also confirmed by the Tribunal. He submitted that proceedings u/s 201(1) was also initiated in those years and the assessee has paid taxes to the tune of Rs.105/- crores as detailed below in respect of payments made to M/s GIL.
12/3/2015 95 crores
15/11/2015 05 crores
25/11/2015 05 crores
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105 crores.
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He submitted that the TDS rate applicable to royalty payment is 10% and accordingly, the above said payments shall relate to royalty payment of Rs.1050 crores made in the earlier years. The Ld A.R submitted that, in terms of provisions of sec.40(a)(i) of the Act, the assessee shall be entitled to a deduction of Rs.1050 crores S.P No.293/Bang/2019 Page 4 of 11 during the year under consideration, i.e., the year in which the TDS amount was paid. Accordingly, if deduction of Rs.1050/- crores is allowed, then the total income shall be reduced to Rs.826.43 crores and the principal portion ofdemand will come down to Rs.131.31 crores.
5. The ld AR further submitted that the Department had levied penalty in asst. years 2008-09 and 2009-10 and the penalty has since been deleted by the Tribunal. The total refund due tothe assessee on account of order passed by the Tribunal deleting the penalty is Rs.82.65crores (including interest u/s 244A of the Act). Further, a sum of Rs.9.57 crores (including interest) is due to the assessee for AY 2008-09 under Regular assessment proceedings. Thus, the total refund amounts due to the assessee are Rs.92.22 crores. The Ld A.R submitted that, if the above said refund amounts are adjusted against the remaining demand of Rs.131.31 crores, then the balance amount payable by the assessee shall workout to 39.09 crores only, which shall constitute less than 5% of the principal portion of demand. Accordingly, the ld AR submitted that the interests of revenue is almost fully protected and accordingly he prayed that assessee should be granted complete stay from collection of outstanding demand.
6. The Ld CIT-DR, on the contrary, submitted that various submissions made by the Ld A.R require verification at the end of the assessing officer, mainly, with regard to the parity of facts on the additions made during the year under consideration. She further submitted that the payment of Rs.105 crores made by the S.P No.293/Bang/2019 Page 5 of 11 assessee in the earlier years is an ad-hoc payment made towards outstanding demand and,in any case, the assessee is contesting its liability to deduct TDS in those years. Hence it cannot be considered as remittance of TDS amount as contemplated in sec.40(a)(i) of the Act. She also submitted that it is not clear as to whether the refund amount of Rs.92 crores have been quantified by the AO. Accordingly, the Ld CIT-DR submitted that the assessee should not be granted complete stay.
7. We heard rival contentions and perused the record. The Ld A.R submitted that the additions made by the AO, inter alia, includes following two additions:-
Attribution of Profit - Rs. 21.39 crores
Transfer Pricing adjustment - Rs.961.68 crores
According to Ld A.R, addition relating to Attribution of Profit was made in AY 2008-09 in the hands of the assessee and the same has been deleted by the Tribunal. It was further submitted that the AO had also made addition towards transfer pricing adjustment in AY 2009-10 to 2012-13 and the matter has been remanded to the file of the AO. According to Ld A.R, the facts are identical and hence the Tribunal shall follow its earlier orders in this year also and hence the tax liability relating to the above said additions should be stayed.
8. Though the contentions of the Ld A.R in respect of these two additions shall be examined at the time of hearing of main appeal, yet, we are of the view that there is prima facie case in favour of the assessee in so far as the above said two additions are concerned.
S.P No.293/Bang/2019 Page 6 of 119. The Ld A.R also submitted that the assessee has already paid a sum of Rs.105.00 crores during the financial year under consideration, towards the demand raised u/s 201(1) of the Act in the earlier years. He submitted that in terms of sec.40(a)(i), the assessee is entitled for deduction of corresponding expenditure during the year under consideration, meaning thereby, the assessee shall be entitled to seek deduction of Rs.1050/- crores. We notice that proviso to sec.40(a)(i), which reads as under, support the case of the assessee:-
"Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as deduction in computing the income of the previous year in which such tax has been paid."
The Ld D.R submitted that the assessee is also contesting the demand raised upon it u/s 201(1) of the Act also. However, the fact remains that the assessee has paid a sum of Rs.105 crores towards its TDS liability demanded u/s 201(1) of the Act and hence the above said proviso shall support of the claim of the assessee, if the above said payments were made against the demand raised u/s 201(1) of the Act for non-deduction of tax at source. Accordingly, we are of the view that, subject to verification of the submissions of the assessee, there is prima facie case in respect of this claim also.
10. Accordingly, the Tax portion of demand shall be reduced to Rs.131.31 crores, if above said claim of the assessee is accepted.
S.P No.293/Bang/2019 Page 7 of 1111. The assessee has also submitted that a sum of Rs.92.22 crores is due to the assessee by way of refunds as detailed below and accordingly it was submitted that the revenue should be ordered not to enforce demand to the extent of refunds due to the assessee.
Assessment year Nature of proceeding Refund due
2008-09 Regular assessment 6.84 crores
244A interest 2.73 crores
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9.57 crores (A)
======
2008-09 Penalty 23.31 crores
244A interest 8.21 crores
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31.52 crores (B)
======
2009-10 Penalty 38.45 crores
244A interest 12.68 crores
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51.13 crores (C)
======
Total (A) + (B) + (C) = 92.22 crores
However, as submitted by Ld D.R, this claim of the assessee requires verification at the end of the Assessing officer. It is also not clear as to whether the consequential orders have been passed and the refund amounts have been quantified. Accordingly, we direct the AO to verify the above said claims of the assessee, determine the refunds due to the assessee and adjust refund amounts against the demand raised under regular assessment proceedings for AY 2015-16.
S.P No.293/Bang/2019 Page 8 of 1112. If the above said refund amounts of Rs.92.22 crores (if found to be correct by AO) is adjusted, then tax portion of demand outstanding shall work out to Rs.39.09 crores.
13. We have noticed earlier and also pointed by Ld D.R that the various claims put forth by the assessee require verification at the end of the AO. It may not be feasible at this stage to verify all those claims. Accordingly, after considering the existence of prima facie case against major additions, the deduction claimed u/s 40(a)(i) of the Act, the claim for refunds etc., we are of the view that the balance of convenience is in favour of granting partial stay to the assessee. Accordingly, we direct the assessee to pay a sum of Rs.15.00 crores (Rupees Fifteen crores) towards outstanding demand within a period of one month from the date of receipt of order by the assessee. Subject to the payment of above amount, we direct the revenue not to enforce collection of outstanding demand for a period of six months from the date of this order or till the date of disposal of appeal, whichever period expires earlier. We also make it clear that the assessee shall not seek adjournment on the date of hearing without reasonable cause, failing which the present stay order shall be subjected to review by the division bench hearing the appeal.
S.P No.293/Bang/2019 Page 9 of 1114. In the result, the stay petition of the assessee is partly allowed.
Order pronounced in the Open Court on 20th November, 2019.
Sd/- Sd/-
(Pavan Kumar Gadale) (B.R Baskaran)
Judicial Member Accountant Member
Bangalore,
Dated, 20th November, 2019.
/ vms /
Copy to:
1. The Applicant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR, ITAT, Bangalore.
6. Guard file
By order
Asst. Registrar, ITAT, Bangalore.
S.P No.293/Bang/2019
Page 10 of 11
1. Date of Dictation .............................................
2. Date on which the typed draft is placed before the dictating Member .........................
3. Date on which the approved draft comes to Sr.P.S ...................................
4. Date on which the fair order is placed before the dictating Member ....................
5. Date on which the fair order comes back to the Sr. P.S. .......................
6. Date of uploading the order on website...................................
7. If not uploaded, furnish the reason for doing so ................................
8. Date on which the file goes to the Bench Clerk .......................
Dictation note enclosed
9. Date on which order goes for Xerox &endorsement..........................................
10. Date on which the file goes to the Head Clerk .........................
11. The date on which the file goes to the Assistant Registrar for signature on the order .....................................
12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order ...............................
13. Date of Despatch of Order.
.....................................................
14. Dictation note enclosed ................................................
S.P No.293/Bang/2019 Page 11 of 11