THE PR. COMMISSIONER OF INCOME TAX CIT (A) vs. 24/7 CUSTOMER PVT LTD

PDF · subscribers
ITA/154/2020HC KarnatakaKAHC01015420202027 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the appeal with liberty granted to the Revenue to revive it, as prayed for by its counsel. The Court noted the submissions regarding the tax effect and the applicability of CBDT Circulars No. 09/2024 and 5/2024. Consequently, the substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the questions concerning the turnover filter, the RPT filter, or the treatment of provision for bad and doubtful debts. The operative direction was to dispose of the appeal with liberty to revive, rather than deciding the core issues.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income-Tax and the Assistant Commissioner of Income-Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated September 20, 2019, passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to the assessment year 2010-2011 and challenges the ITAT's decision in C.O.No.129/BANG/2015 (in IT(TP)A No.498/BANG/2015). The High Court admitted the appeal on October 14, 2020, to consider substantial questions of law. The assessee is 24/7 Customer Pvt. Ltd.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the Tribunal was correct in directing the Transfer Pricing Officer (TPO) to apply a turnover filter of INR 200 Crores and a 0% filter, confirming the Dispute Resolution Panel's order and ignoring the norms in Rule 10B of the Income Tax Rules. 2. Whether the Tribunal was correct in directing the TPO to apply a Related Party Transaction (RPT) filter of 15%, when a 25% RPT filter is generally adopted in Transfer Pricing cases nationwide. 3. Whether the Tribunal was correct in directing the TPO to consider provision for bad and doubtful debts as operating in nature without verifying if these were extraordinary items or included in the normal course of business over the years. The Revenue argued for the appeal to be heard on these substantial questions of law. The Assessee argued that the tax effect in this appeal is less than INR 2 Crores, and therefore, the appeal should not be entertained by the Revenue, citing CBDT Circular No. 09/2024 dated September 17, 2024, which binds the Revenue. The Revenue sought liberty to revive the appeal if the matter falls within the exceptions of Circular No. 09/2024 and Circular No. 5/2024 dated March 15, 2024.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2024:KHC:40417-DB ITA No. 154 of 2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO.154 OF 2020

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME-TAX, CIT (A) 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560095.

2.

THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(4) (1), PRESENT ADDRESS DCIT, CIRCLE -2(1) (1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560095.

…APPELLANTS (BY SRI.SUSHAL TIWARI, ADVOCATE)

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

- 2 -

NC: 2024:KHC:40417-DB ITA No. 154 of 2020

AND:

24/7 CUSTOMER PVT. LTD., EMBASSY GOLF LINKS BUSINESS PARK, CHALLAGHATTA VILLAGE, VARTHUR HOBLI, OFF INTERMEDIATE RING ROAD, BENGALURU-560071 PAN AAACZ 1014A

…RESPONDENT

(BY SMT. TANMAYEE RAJKUMAR, ADVOCATE)

THE ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 20.09.2019 PASSED IN C.O.NO.129/BANG/2015 (IN IT(TP)A NO.498/BANG/2015), FOR THE ASSESSMENT YEAR 2010-2011 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND ETC. THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

- 3 -

NC: 2024:KHC:40417-DB ITA No. 154 of 2020

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Heard the learned counsel Sri. Sushal Tiwari for the appellants/Revenue and Smt. Tanmayee Rajkumar, learned counsel for the respondent/assessee.

2.

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 20.09.2019 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.498/Bang/2015 for the assessment year 2010-11.

3.

This

Court,

admitted the appeal on 14.10.2020 to consider the following substantial questions of law: "1. Whether on the facts and in the circumstance of the case, the Tribunal is right in law in directing the Transfer Pricing Officer to apply Turnover filter of 200Cr and also apply =0% filter by confirming order

- 4 -

NC: 2024:KHC:40417-DB ITA No. 154 of 2020

passed by Dispute Resolution Panel ignoring the norms set out in Rule 10B of I.T. Rules?

2.

Whether on the facts an in the circumstances of the case, the Tribunal is right in law in directing the to apply RPT filter of 15% when application of 25% RPT is appropriate as per general practice adopted in Transfer Pricing cases across the Country?

3.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing TPO to consider provision for bad and doubtful debts as operating in nature without checking, if these expenses are merely an extraordinary items and are included in the normal course of business over the years?"

4.

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue.

- 5 -

NC: 2024:KHC:40417-DB ITA No. 154 of 2020

5.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

6.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

SMJ List No.: 4 Sl No.: 29

More judgments on Section 260-A

All 2,570 judgments and leading authorities on Section 260-A →

Recent GST High Court judgments

Search GST case law →