Tribunal Grants Stay for Tax Demand Extension, Upholds Transfer Pricing Argument The Tribunal granted the stay application for extension of stay against the recovery of the balance outstanding demand related to Assessment Year 2012-13. ...
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Tribunal Grants Stay for Tax Demand Extension, Upholds Transfer Pricing Argument
The Tribunal granted the stay application for extension of stay against the recovery of the balance outstanding demand related to Assessment Year 2012-13. The Tribunal found merit in the applicant's argument regarding transfer pricing adjustments and allowed the stay for 180 days or until the appeal's disposal, whichever is earlier. The Tribunal held that the amended provisions of section 254(2A) could not be applied to the case of an extension of stay. The order was pronounced on May 27, 2020, with instructions for an expedited appeal hearing and no unnecessary adjournments.
Issues: Stay application for extension of stay against recovery of outstanding demand; Stay application seeking stay of balance outstanding demand relating to Assessment Year 2012-13.
The applicant filed a stay application for extension of stay against the recovery of outstanding demand and also sought a stay of the balance outstanding demand related to Assessment Year 2012-13. The applicant, an Indian subsidiary of a foreign company, argued that transfer pricing adjustments made were based on incomparable entities. The applicant emphasized its turnover and compared it with similar companies, asserting that excluding certain companies would align the margins within acceptable limits. The revenue department opposed the extension of stay, citing the requirement for the applicant to pay 20% of the outstanding demand as per the Finance Act, 2020. The applicant contended that the amended provision of section 254(2A) was not applicable as it was an extension of stay, not a grant of stay.
The Tribunal, after hearing both parties, found merit in the applicant's case for extending the stay against the recovery of the balance outstanding demand. Citing precedents, the Tribunal allowed the stay for a period exceeding 365 days, as established in previous judgments. Regarding the application of the amended provisions of section 254(2A) of the Act, the Tribunal held that these provisions could not be applied to the present case of an extension of stay. Consequently, the recovery of the outstanding demand was stayed for 180 days or until the appeal's disposal, whichever is earlier. The appeal was scheduled for an expedited hearing, and both parties were instructed not to seek unnecessary adjournments. Therefore, the stay application filed by the applicant was granted, and the order was pronounced on May 27, 2020.
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