PR.COMMISSIONER OF INCOME TAX-3 vs. M/S INFINERA INDIA PVT.LTD.

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ITA/231/2021HC KarnatakaKAHC01004903202124 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
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What did the High Court hold?

The High Court noted that the tax effect in the appeal was less than Rs. 2 Crores, making the appeal not maintainable at the instance of the Revenue, in view of CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. The Revenue's counsel sought liberty to revive the appeal if the matter fell within the exceptions under Circular No. 09/2024 and Circular No. 5/2024 dated 15.03.2024. The Court disposed of the appeal with the liberty as prayed for by the Revenue. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding.

What were the facts?

The Revenue, comprising the Pr. Commissioner of Income Tax-3 and the Joint Commissioner of Income Tax, Special Range-3, Bengaluru, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 19.06.2023 passed by the Income Tax Appellate Tribunal, 'C' Bench, Bengaluru. The appeal pertains to Assessment Year 2011-12 and challenges the Tribunal's decision in ITA.No.1568/Bang/2018. The High Court admitted the appeal on 24.02.2022 to consider substantial questions of law concerning the exclusion/inclusion of comparable companies by the Tribunal and whether the Tribunal's order was perverse. The tax effect in this appeal was noted to be less than Rs. 2 Crores.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in excluding/including certain comparable’s ignoring the parameters of analysis prescribed under Rule 10B, which are exhaustive and, if so, whether it is legally permissible to bypass the same partially or by implication? (Assessee's contention: Not recorded. Revenue's contention: The Tribunal erred by ignoring the parameters of Rule 10B in selecting comparables, rendering its decision legally impermissible.) 2. Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse since Tribunal has excluded certain comparable’s without going into reasons assigned by Transfer Pricing Officer? (Assessee's contention: Not recorded. Revenue's contention: The Tribunal's exclusion of comparables without considering the Transfer Pricing Officer's reasoning constitutes perversity.)

Which sections of the Income-tax Act were involved?

Section 260-A,Section 10B

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39709-DB ITA No. 231 of 2021

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH 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. 231 OF 2021 BETWEEN:

1.

PR.COMMISSIONER OF INCOME TAX-3, BMTC COMPLEX, KORAMANGALA, BANGALORE.

2.

THE JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE-3, BENGALURU, KORAMANGALA, BENGALURU. …APPELLANTS (BY SRI SANMATHI E. I., ADV.)

AND:

M/S. INFINERA INDIA PVT.LTD., NO.401, LEVEL 4, PRESTIGE SOLITAIRE, NO.6, BRUNTON ROAD, ASHOK NAGAR, BENGALURU-560025, PAN-AABC11411R. …RESPONDENT

THIS APPEAL IS FILED UNDER SECTION.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 13/03/2020 PASSED IN IT(TP)A NO.1568/BANG/2018, FOR THE ASSESSMENT YEAR 2011-2012, PRAYING THIS COURT TO 1. DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND ETC.

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39709-DB ITA No. 231 of 2021

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

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

Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue.

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 19.06.2023 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.1568/Bang/2018 for the assessment year 2011-12.

3.

This

Court,

admitted the appeal on 24.02.2022 to consider the following substantial question of law: “1. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in excluding/including certain comparable’s

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NC: 2024:KHC:39709-DB ITA No. 231 of 2021

ignoring the parameters of analysis prescribed under Rule 10B, which are exhaustive and, if so, whether it is legally permissible to bypass the same partially or by implication?

2.

Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse since Tribunal has excluded certain comparable’s without going into reasons assigned by Transfer Pricing Officer?

4.

It is noticed that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable 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.

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NC: 2024:KHC:39709-DB ITA No. 231 of 2021

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

MPK List No.: 2 Sl No.: 25

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