Palred Technologies Limited (Formerly ... vs Assessee

Palred Technologies Ltd., (Formerly vs. Asst. Commissioner of Income-tax, known as Four Soft Ltd., ), Circle - 16(2), Hyderabad Hyderabad.

PAN - AAACF 4464 A (Applicant) (Respondent)

Assessee by : Shri Ravi Bharadwaj Revenue by : Shri Ramakrishna Bandi

Date of hearing 27-03-2015 Date of pronouncement 27-03-2015

ORDER PER SAKTIJIT DEY, J.M.:

Assessee has filed this stay application seeking stay recovery of outstanding demand of Rs. 2,08,71,266 pertaining to AY 2010-11.

2. Ld. AR submitted before us, major portion of the demand arises due to transfer pricing adjustment made by TPO. Ld. AR submitted, TPO has selected certain companies which are not at all comparable to assessee. Ld. AR submitted, if three of the comparable companies, namely, i) ComPu Learn Tech India Ltd., ii) E infochips Bangalore Ltd. and iii) Kals Information Systems Ltd. (seg.) are excluded assessee's margin will be within arm's length. He further submitted, as far as the determination of ALP on corporate guarantee is concerned, in assessee's own case for AY 2007-08, the TPO has determined the ALP at 0.75% whereas in the impugned AY, the ALP on corporate guarantee has been taken at 2%, hence, if 0.75% rate is applied the demand will be substantially reduced. He submitted, as far as bad 2 S.A. No. 16/Hyd/2015 Palred Technologies Ltd.

debts are concerned, though, DRP directed AO to verify the issue on the basis of documents to be submitted by assessee, but, assessee due to some unavoidable circumstances could not produce relevant documents before AO as a result of which disallowance was sustained. He submitted, in any case of the matter, bad debts having been written off in the books of account, no disallowance could be made. Ld. AR submitted, as assessee is having a strong prima-facie case, recovery of the outstanding demand may be stayed.

3. Ld. DR, on the other hand, strongly objected to grant of absolute stay.

4. We have considered the submissions of the parties. The arguments advanced by assessee on the merits of the additions made will have to be gone into at the time of hearing of the corresponding appeal of assessee. At this stage, after considering the prima-facie case and balance of convenience and also taking note of the fact that assessee has no such financial hardship, we are not in favour of granting absolute stay. However, we are inclined to grant conditional stay to assessee by directing it to pay 20% of the outstanding demand on or before 31 st March, 2015. On payment of the amount as directed, balance outstanding demand will remain stayed for a period of six months or till the disposal of corresponding appeal of assessee, whichever is earlier.

5. We make it clear, if assessee fails to make the payment as directed hereinbefore, the stay granted will automatically be vacated and the entire outstanding demand shall be liable for recovery from assessee.

3 S.A. No. 16/Hyd/2015 Palred Technologies Ltd.

6. In the result, S.A. filed by assessee is partly allowed.

Pronounced in the open court on 27/03/15 upon conclusion of hearing.

Sd/- Sd/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Hyderabad, Dated: 27 th March, 2015 kv

Copy to:- 1) Palred Technologies Ltd., Plot No. 2, 8-2-703/2/B,

Road No. 12, Banjara Hills, Hyderabad - 500 034.

2) ACIT Circle 16(2), 6 th Floor, Aayakar Bhavan, Hyderabad.

3) The DRP, Hyderabad 4) DIT (International Taxation), Hyderabad 5) The Departmental Representative, I.T.A.T., Hyd.