THE PR COMMISSIONER OF INCOME -TAX CIT (A) vs. M/S GOKALDAS IMAGES PVT LTD

PDF · subscribers
ITA/221/2020HC KarnatakaKAHC01024392202027 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal based on the submissions made by both parties. The assessee contended that the appeal should be dismissed as the tax effect was below Rs. 2 Crores, citing CBDT Circular No. 09/2024. The Revenue requested liberty to revive the appeal if it fell under exceptions mentioned in Circulars 09/2024 and 05/2024. The Court granted this liberty to the Revenue. Consequently, the appeal was disposed of without adjudicating on the substantial question of law. The question of law was kept open to be adjudicated in an appropriate proceeding. No specific finding was given on the appropriateness of the integral CUP method or the conditions for its application.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Deputy Commissioner of Income-Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 05.02.2020 passed by the Income Tax Appellate Tribunal, Bengaluru. The appeal pertains to Assessment Year 2010-11 and challenges the Tribunal's decision regarding the determination of the Arm's Length Price (ALP). The High Court admitted the appeal on 05.01.2021 to consider a substantial question of law. The amount in dispute is not explicitly stated, but the tax effect is mentioned as less than Rs. 2 Crores.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the integral Comparable Uncontrolled Price (CUP) method is the most appropriate method for determining the Arm's Length Price (ALP) without examining the necessary conditions for its application and failing to appreciate that transactions should be exactly similar for its application, which is not possible in the instant case? (Question of law and fact, concerning the determination of ALP under transfer pricing provisions). Assessee's contention: The appeal should not be entertained by the Revenue due to the tax effect being less than Rs. 2 Crores, as per CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. Revenue's contention: The Revenue sought liberty to revive the appeal if the matter falls within the exceptions provided in Circular No. 09/2024 and Circular No. 5/2024 dated 15.03.2024.

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:40449-DB ITA No. 221 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.221 OF 2020

BETWEEN:

1.

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

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1)(2) 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:40449-DB ITA No. 221 of 2020

AND:

M/S. GOKALDAS IMAGES PVT. LTD., 7 & 12, INDL. SUBURB, 2ND STAGE, YESHWANTHPUR, BENGALURU - 560022. PAN: AAACG 6637Q.

…RESPONDENT

(BY SRI. ANNAMALAI.S., ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 05.02.2020 PASSED IN ITA(TP) NO.77/BANG/2015 FOR THE ASSESSMENT YEAR 2010-11 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:40449-DB ITA No. 221 of 2020

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

Heard the learned counsel Sri. Sushal Tiwari for the appellants/Revenue and Sri. Annamalai.S., 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 05.02.2020 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short ‘Appellate Authority’) in IT(TP)A.No.77/Bang/2015 for the assessment year 2010-11.

3.

This Court, admitted the appeal on 05.01.2021 to consider the following substantial question of law:

"Whether on the facts and in the circumstances of the case, the Tribunal is right in law holding that integral CUP method is most appropriate method for determining Arm's Length Price

- 4 -

NC: 2024:KHC:40449-DB ITA No. 221 of 2020

without examining the necessary conditions for application of said method and failing appreciate that transactions should be exactly similar for the application of said method which is not possible in the instant case?"

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.

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.

- 5 -

NC: 2024:KHC:40449-DB ITA No. 221 of 2020

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

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 →