IN INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI, [BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI D.S SUNDER SINGH, ACCOUNTANT MEMBER] S.P.No.206 Mds 2016 [in I.T.A.No.2613 Mds 2016] Assessment year : 2012-13 M s Foxteq Services India Vs. Dy. Commissioner of Pvt. Ltd Income-tax No.28, (North Phase) Corporate Circle 2(1) Thiru-vi-ka Industrial Estate Chennai Ekkaduthangal, Gundy Chenai 600 032 [PAN AAACF 9033 B] (Petitioner ) (Respondent) Petitioner by : Shri Deepak Chopra, Advocate Respondent by : Shri Duraipandian, JCIT Date of Hearing : 16-09-2016 Date of Pronouncement : 16-09-2016 O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER assessee filed present stay petition praying for stay of recovery of outstanding demand of `5,79,60,880 - for assessment year 2012-13. :- 2 -: SP No.206 16 2. Shri Deepak Chopra, ld. Counsel for assessee submitted that assessee is engaged in diversified activities like sale of computer related components, spares and accessories as well as warranty after sales service and repair services. While determining Arm s Length Price, Transfer Pricing Officer as well as Dispute Resolution Panel erroneously included certain companies which are functionally not comparable to that of assessee. ld. Counsel further submitted that assessee selected Transactional Net Margin Method as most appropriate method to substantiate its international transactions. However, Assessing Officer rejected selection made by assessee and adopted resale price method. assessee has submitted details of working capital adjustment for differences in working capital position between assessee and comparables. However, same was rejected by DRP by observing that details filed by assessee was not verifiable as supporting source material was not available. According to ld. Counsel, all details filed by assessee are verifiable. Therefore, ld. Counsel submitted that appeal of assessee has to be allowed by this Tribunal or at best, it can be remitted back to file of TPO to verify working capital adjustment provided by assessee. Therefore, there is prima-facie case for grant of stay. ld.AR also submitted copy of order in S.P.No.23 Mds 2016 dated :- 3 -: SP No.206 16 5.2.2016 granting stay by this Tribunal for assessment year 2011-12 on same facts. 3. On other hand, Shri Duraipandian, ld. Departmental Representative opposed stay petition. He submitted that resale price method was correctly adopted by TPO for determining ALP. He further submitted that assessee was not making in value added services except distributing product. According to ld. DR, Department is also having fair chances of succeeding in appeal. 4. We have heard rival submissions and perused material on record. Admittedly, assessee selected TNM method as most appropriate method for determining ALP. However, TPO rejected method selected by assessee and adopted resale price method. assessee claims that all details of working capital adjustment were furnished before TPO. However, DRP observed that details furnished by assessee are not verifiable since supporting source material was not furnished by assessee. fact remains that working capital adjustment needs to be verified on basis of material available on record. Therefore, we are of opinion that there is prima-facie case for grant of stay. Accordingly, recovery of outstanding demand for assessment year 2012-13 is hereby stayed for period of six :- 4 -: SP No.206 16 months from today on condition that assessee shall deposit sum of ` 25 lakhs on or before 30.9.2016 and assessee should not seek adjournment as and when case if fixed for hearing . If assessee fails to deposit ` 25 lakhs on or before 30.9.2016, stay shall stand automatically vacated without any further reference to this Tribunal. 5. In result, stay petition stands allowed. Order pronounced in open court on 16th September, 2016, at Chennai. Sd - Sd - (DUVVURU RL REDDY) (D.S.SUNER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 16th September, 2016 RD Copy to: 1. Petitioner 4. CIT 2. Respondent 5. DR 3. ( ) CIT(A) 6. GF M/s Foxteq Services India Pvt. Ltd v. Dy. Commissioner of Income-tax, Corporate Circle 2(1), Chennai