TMI Blog2010 (11) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... is a foreign company incorporated under the laws of U.S.A. It is engaged in the manufacturing of high performance chemicals for use in transportation and industrial lubricants. The company performs research and development, testing, production of intermediates, blending of intermediates and finished products for sale of distribution. The assessee being resident of U.S.A., DTAA between U.S.A. and India is applicable. The assessee has 50% share holding (as per assessee's submission is 49%) with balance 50% (as per assessee's submission 51%) being held by IOCL in Lubrizol India Pvt. Ltd. (for short "LIPL"), a joint venture between the assessee and IOCL. LIPL manufactures various products in India under license and technology transfer agreement dated 1st April 2000. The assessee is being paid a consideration for providing technical services and for the rights in manufacturing technology, formulation technology and patents rights. Total technical fees of Rs. 14,48,32,150 has been paid during the year and the same has been offered as royalty in the return of income filed on 8th December 2006. The case was referred for transfer pricing analysis, however, as per the order dated 27th Octob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India 9967892 x 5% = 498395 USD 5. This order was passed after issuing the draft order to the assessee and the objections being considered by the Disputes Resolution Panel-II, Mumbai, vide their order dated 29th September 2010. Against the assessment order, the assessee preferred appeal before the Tribunal. 6. In the present stay petition, the assessee has, inter-alia, submitted that the DRP has neither discussed nor given its finding on some of its grounds raised by the assessee viz. Arms Length payment by agent ought to extinguish further liability of the principal even if P.E. is alleged. Further, there is incorrect levy of interest under section 234B. The assessee's submission is that the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of Director of Income Tax Taxation) v/s Morgan Stanley and Co. INC., (2007) 292 ITR 416 (SC), wherein it has been held that once the transfer pricing analysis is undertaken, there is no further need to attribute profits to P.E. which is an associated enterprise, and has been remunerated on an arm's length basis taking into account all the risk taking functions of the multinational enterprise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... October 2010, and, therefore, there is no urgency in the matter. He further submitted that the assessee ought to have resorted to administrative machinery of the Department for seeking stay instead of coming directly before the Tribunal. 10. In the rejoinder, the learned CIT(A) referred to the guidelines framed by the Tribunal in pursuance to the meeting held between the representatives from the Department and the representatives from the ITAT Bar Association before the Tribunal. In the said guidelines, it has been laid down that the bench is not to insist on the rejection letter either from the Assessing Officer or from the CIT(A). He further referred to the decision of the Tribunal in the case of M/s. KEC International Limited V/s ACIT, Stay Petition No.13/Mum./2010, vide order dated 12th February 2010, wherein the Tribunal has taken note of the observations made by a co-ordinate bench of the Tribunal in the case of B.N. Nobis and Co. v/s JCIT, 71 TTJ 153, which reads as follows:- "5. Before parting with the matter, we may make some observations on Revenue's objection, relying on Hon'ble Supreme Court's observations in Dunlop's case (supra), to the stay petition on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear case is made out that not only that an assessee has a strong prima facie case but also that there is a serious threat of infringement to petitioner's rights guaranteed under Chapter III of the Constitution. On the other hand, Tribunal's jurisdiction is akin to that of an appellate Court under the CPC, as observed in CIT vs. Hajarimal Nagji and Co. (1962) 46 ITR 1168 (Bom) and in New Indian Assurance Co. Ltd. vs. CIT (1957) 31 ITR 844 (Bom), and right to appeal before the Tribunal is provided in the statute itself. Therefore, observations of Hon'ble Supreme Court in the context of grant of stay in writ proceedings do not have the binding force on, or even direct relevance to, the principles governing grant of stay during these appellate proceedings. In this context, we are reminded of the observations of Hon'ble Supreme Court, in Mumbai Kamgar Sabha vs. Abdulbhai Faizullbhai AIR 1976 SC 1455, that......... "It is trite, going by Anglophonic principles, that a ruling of superior Court is binding in law. It is not of spiritual sanctity but is of ratio-wise luminosity within the edifice of facts where the judicial lamps plays the legal flame. Beyond those walls and de hors t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alifying, consideration in entertaining a stay application, besides considerations like existence of strong prima facie case, balance of convenience and possibilities of Revenue's rights of recovery being prejudiced by waiting till the outcome of appeals. In this view of the matter, we are unable to sustain the objection raised by the Revenue." 11. We have heard the rival submissions, perused the orders of the lower authorities and the materials available on record. Having regard to the facts and circumstances of the case, we are of the opinion that since the assessee has prima-facie arguable case, it would be in the interest of justice to stay the demand raised by the Revenue subject to the following conditions that:- i) the assessee will deposit 25% of the total outstanding demand by 23rd December 2010; and for the balance amount, the assessee will furnish security to the satisfaction of the Assessing Officer; and ii) the assessee will not seek adjournment on the date fixed for hearing on any ground, else, the stay order will get vacated. 12. Registry is directed to fix the appeal out of turn on 17th January 2011, for final disposal on merit. No separate notice wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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