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Income Tax Appellate Tribunal - Delhi

Pitney Bowes Software India Pvt. Ltd., ... vs Addl. Cit, Special Range- 7, New Delhi on 3 August, 2018

                                    1                       S. A No. 532/Del/2018



                   IN THE INCOME TAX APPELLATE TRIBUNAL
                        DELHI BENCH: 'I-2' (FRIDAY) NEW DELHI

               BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER
                                      AND
                 MS SUCHITRA KAMBLE, JUDICIAL MEMBER
                         S. A NO. 532/Del/2018
                                   In
                    (ITA No. 5052/DEL/2018 ( A.Y 2014-15)

     Pitney Bowes Software India Pvt. Vs     Addl. CIT(A)
     Ltd.                                    Special Range-7,
     709-710, Ansal Chambers, Bhikaji        New Delhi
     Cama Place, New Delhi
     AAECM9134E                              (RESPONDENT)
      (APPELLANT)


                Appellant by      Sh. Neeraj Jain, Adv, Sh.
                                  Ramit katyal, Adv
                Respondent by     Sh. Surender Pal, Sr. DR

                  Date of Hearing             03.08.2018
                  Date of Pronouncement       03.08.2018



                                   ORDER

PER SUCHITRA KAMBLE, JM

This Stay Application is filed by the assessee against the outstanding demand of Rs. 5,07,86,930/- raised by the Revenue.

2. The Ld. AR submitted that the assessee has filed the appeal whereby challenging the order dated 29.06.2018 passed u/s 143(3) r.w.s. 144C of the Income Tax Act, 1961. The Ld. AR further submitted that the assessee has prima facie case on merit. The Ld. AR submitted that the returned income of the assessee is Rs. 23,38,87,640/-. But the Assessment was completed at total 2 S. A No. 532/Del/2018 income of Rs.30,27,06,160/- after making addition on account of (i) difference in the arm's length price of the international transaction of provision of software development services amounting to Rs.6,87,36,868/- and (ii) Notional interest on outstanding receivables amounting to Rs.81,649/-. The Ld. AR submitted that the assessee in the relevant previous year entered into the international transactions of provision of software development services amounting to Rs.1,39,67,35,089/- For the purpose of applying TNMM assessee considered 6 comparables. Since the operating profit to operating cost ratio of the assessee at 14.09% is higher than the average operating profit margin of the comparable companies at 7.96%, therefore, the international transaction undertaken by the assessee with its associated enterprises is considered to be arm's length price. The TPO rejected the assessee's comparables by following various qualitative and quantitative filters and included the comparables which were rejected by the assessee in its TP study. The TPO made adjustment of Rs.9,72,62,095/- to the arm's length price of international transaction of provision of software development services. Thus, the entire issue has not been looked into by the TPO/AO as per the submissions of the Ld. AR. The DRP vide directions dated 14.05.2018 directed the TPO to exclude 3 comparables from the list of final comparable companies and further directed to allow working capital adjustment. Accordingly, the Assessing Officer vide order dated 29.06.2018 reduced the transfer pricing adjustment on account of provision of software development services to 6,87,36,868. Therefore, the Ld. AR submitted the adjustment made by the TPO is not proper for the grounds contested in the appeal filed against the order of the Assessing Officer. Thus, the Ld. AR submitted that the assessee has good case on merit. Therefore, the Ld. AR requested to grant stay of the outstanding tax demand of Rs. 5,07,86,930/- and further requested to grant early hearing.

3. The Ld. DR opposed this stay application.

4. We have heard both the parties. We are of the view that this is a fit case for granting stay and early hearing. The assessee has a prima facie case on merit. Therefore, we are inclined to grant stay for six months (180 days) or till the disposal of appeal whichever is earlier with the direction to deposit Rs.50,00,000/- (Rupees Fifty Lakhs only) by 15.09.2018. If the assessee failed to comply with the directions then the stay will automatically get vacated. The assessee is advised not to take adjournment of hearing of appeal otherwise the stay will automatically get vacated. We are also granting early hearing in the main appeal being ITA No. 5052/Del/2018. The registry is directed to place appeal for hearing on 18.10.2018. Dasti of the order be given to both the parties.

5. In result, the stay application is allowed.

Order pronounced in the Open Court on 03rd August, 2018.

     Sd/-                                                      Sd/-
(N. K. BILLAIYA)                                         (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER                                         JUDICIAL MEMBER


Dated:          03/08/2018
R. Naheed



Copy forwarded to:

1.                            Appellant
2.                            Respondent
3.                            CIT
4.                            CIT(Appeals)
5.                            DR: ITAT


                                                      ASSISTANT REGISTRAR

                                                        ITAT NEW DELHI
                           4                              S. A No. 532/Del/2018




Date of dictation                                    03.08.2018

Date on which the typed draft is placed before the 03.08.2018 dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. 3.08.2018 PS/PS Date on which the final order is uploaded on the 3.08.2018 website of ITAT Date on which the file goes to the Bench Clerk 3.08.2018 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order