TaxTMI 
TaxTMI 
2019 (11) TMI 265
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the assessee has already made payment of substantial amount of outstanding demand and, in this regard, he submitted following table highlighting the position of outstanding demand in each of the years:- A. As per last order (Amt. in Rs.) S No Particulars AY 2010-11 AY 2011-12 AY 2012-13 AY 2013-14 1 Tax payable after TDS and Selfassessment tax 33,21,47,203 36,58,59,992 37,36,30,568 38,61,19,079 2 Total demand outstanding including interest 47,23,56,951 55,85,86,885 50,05,25,305 67,22,32,594 3 Pre-deposit (Post final asst order) 17,89,00,000 20,50,00,000 19,50,00,000 13,70,00,000 4 Balance demand outstanding (2)-(3) 29,34,56,961 35,35,86,885 30,55,25,305 53,52,32,594 5 % of pre-deposit out of total demand (3)/(2) 37.87% 37.87% 38.96% 20.38% 6 % of pre-deposit out of total demand (Average) 33.48% 7 % of pre-deposit on tax component of total demand (3)/(1) 53.86% 56.03% 52.19% 35.48% 8 % of pre-deposit on tax component of total demand (Average) 49.39% Note: TDS to the tune of Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w vehicles is down. It was also submitted that there is a Liquidity crunch across Non Banking Finance Companies (NBFC's) which has led to virtually stoppage of funding for commercial vehicles and construction equipment. It was submitted that the sales of the Assessee in automobile segment fell and Year-to-date sales as on August 2019 fell less to Rs. 1952.8 crore compared to Rs. 2,328.5 crore in August 2018. There was a dip in sale of 16%. As a result, the Year-to-date operating income as on August 2019 was Rs. 86.80 crore when compared to Rs. 179.1 crore in August 2018. It was pointed out that the dip in operating income of 51% due to reduction in sales and the present quantities are being sold by giving additional discounts. To tackle the liquidity crunch in working capital, inventory level were reduced from Rs. 1,038.9 crore in December 2018 to Rs. 887.7 crore in August 2019 Working capital loan as on 30th September 2019 was Rs. 605 crore from banks and other group companies. It was submitted that the Monthly interest payout on account of the borrowings is approximately Rs. 5.5 crore every month. It was submitted that the Crisis in the CV industry is expected to continue in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... recovery of taxes can be enforced. The chart so filed is reproduced below:- CHART OF ISSUES FOR STAY S. No. Particulars AY 2010-11 AY 2011-12 AY 2012-13 AY 2013-14 Re: Transfer Pricing issues 1 Transfer pricing adjustment in Manufacturing Segment 57,14,67,743 29,37,99,626 24,70,87,519 138,89,26,903 GIST OF ARGUMENTS Transfer Pricing adjustment in Manufacturing Segment * Difference in Import Content of Raw Materials. It was submitted that during the years under consideration, the applicant has import significant amount of raw material as against very low content of raw material in the case of the comparable companies selected by the TPO. It was submitted that the transfer pricing adjustment was deleted after making comparability adjustment on account of difference in the value of import contents in the following cases:. [ Skoda Auto India (P) Ltd. v. ACIT (30 SOT 319) (Pune), Toyota Kirloskar Motors Pvt. Ltd. v. ACIT, Bangalore (ITA No. 828/Bang/2010), Doowon Automotive Systems India Private Limited vs. DCIT (ITA No. 692/Mds/2016), Demag Cranes & Components (India) Pvt. Ltd. v. DCIT, Pune in ITA No.120/PN/201 1, Put....
X X X X Extracts X X X X
X X X X Extracts X X X X
....68 from Pg.39 to 46 of case laws paper book - 1] and AY 2009-10 [Para 4 to 4.1 from Pg.67 to 68 of Case laws paper book - 1]. 5. Double disallowance of depreciation on goodwill 5,81,96,805 - - - The above claim of depreciation on goodwill was disallowed by the AO on the ground that the same was not claimed in the return of income. Having held so, he proceeded to make a separate disallowance in the computation of income even though the same was not claimed in the return of income [Page No. 5 of stay paper book - 1]. It is submitted that as no claim was made by the Petitioner in the return of income, separate disallowance cannot be made and any such action is tantamount to double disallowance. It is brought to the attention of the Hon'ble Tribunal a rectification application in this regard was filed before the AO dated 16.02.2015 [Page No. 150 to 151 of stay paper book - 1] and the same is still pending. 6. Disallowance of depreciation on assets acquired from Ingersoll Rand 12,46,88,907 7,91,28,750 6,05,23,354 4,64,66,019 GIST OF ARGUMENTS Covered in favour of the Petitioner by the decision of Hon'ble ITAT fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eduction of tax at source, wherever applicable [Pg.176 of stay paper book - 1 and Pg 366 of stay paper book - II]. The Petitioner makes the claim of such expenditures in the year in which the liability is crystallised (i.e on receipt of bills) and payments are made to the respective parties after deduction of tax at source [Submission before the AO along with sample bills and sample journal entries from Page No. 342 to 359 of stay paper book - 1 and Pg 511 to 515 of stay paper book - II]. It is submitted that the contentions of the Assessing Officer cannot be upheld for the followingHowever, the Assessing Officer disallowed the entire expenditure in the years under consideration when payments were made inter-alia for the reason that (i) once the provision is reversed at the beginning of the year, the same ceases to be for the purpose of business and therefore, cannot be allowed under section 37 of the Act; (ii) the application of section 40(a)(ia) of the Act is only upon an expenditure falling in the ambit of business expenditure and since these expenditure are not business expenditure. provisions of section 40(a)(ia) of the Act would not be applicable; and (iii) the same ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....td.: 46 SOT 437 (Del.) "Provided that where in respect of any such sum, tax has been deducted in any subsequentd. Without prejudice, even if it is assumed that the liability was crystallised in the year in which provisions were created, the same are to be allowed in the year in which the payments are made and the tax is deducted at source. As per the 1st proviso to section 40(a)(ia) as was applicable for the years under consideration, if the tax is not deducted at source in the year in which the expenditure was incurred but is deducted in the subsequent assessment year, then such expenditure shall be allowed as a deduction in computing the income of the previous year in which the tax has been paid. Even in the instant case, as the expenditure was not claimed in the year in which the services were received, but in the subsequent AY where tax was deducted at source. then the same is to be allowed in the years under consideration. For ready reference, the 1st proviso to section 40(a)(ia) as was applicable for the years under consideration reads as under: "Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee shall be put to hardship badly affecting its working capital position. The Ld A.R also placed a copy of decision rendered by Hon'ble Delhi High Court in the case of Maruti Suzuki Ltd (347 ITR 47)(Delhi). In the above said case, the facts were that against an order passed u/s 144C/143(3), the assessee filed a stay application before the AO u/s 220(6) and also filed a stay application before the Tribunal. The Tribunal passed an interim order directing "status quo". Despite the interim order, the AO passed an order u/s 245 (without giving prior notice) and adjusted refunds against the demand. Before the Tribunal, the department accepted that the 245 refund adjustment was not proper and said a proper order would be passed. The AO then passed an order u/s 220(6) in which he held that the adjustment of refunds was in order on the ground that (i) an adjustment of refunds was not a "recovery" and (ii) though some issues were covered in favour of the assessee, the decision had not become final as the department was in appeal. The Tribunal then passed a stay order in which it accepted the AO's stand that an adjustment of refund was not a "recovery". It was also held that action u/s 245 wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is also not a good ground to not to stay demand or to allow adjustment u/s 245; (v) The respondents are officers of the State and the Law requires that they perform their duties with utmost objectivity and fairness, while keeping in mind the sanctity of the role and function assigned to them which at times requires tough steps. On facts, the conduct and action of the Revenue in recovering the disputed tax in respect of additions on issues which are already covered against them by the earlier orders of the ITAT or CIT (A) is unjustified and contrary to law. Directions issued to refund the tax. 8. The above decision lays down two propositions which are relevant in the present case, viz., (i) The term "recovery" is comprehensive and includes adjustment thereby reducing the demand; (ii) It will be specious & illogical for the Revenue to contend that if an issue is decided in favour of the assessee giving rise to a refund in an earlier year, that refund can be adjusted u/s 245, on account of the demand on the same issue in a subsequent year. 9. The Ld A.R thus submitted that the assessee has a prima facie case, the balance of convenience is in favour of granting the stay.....