THE PR.COMMISSIONER OF INCOME TAX vs. M/S ARCTERN CONSULTING PVT LTD

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

THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -1(1)(2) 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU-560095. …APPELLANTS (BY SRI. RAVIRAJ Y.V., ADV. A/W SRI. DILIP M., ADV.)

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 03.11.2021 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.2747/Bang/2017 for the assessment year 2013-14.

This

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the Transfer Pricing Officer to exclude comparables even when the TPO had considered the said comparables after satisfying all the required tests and ignoring the reasoning's assigned by Transfer Pricing Officer?

Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in directing Transfer Pricing Officer to exclude comparables when same is chosen by said authority on basis of data available in public domain and also materials on record?

Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that there is no basis for the Transfer Pricing Officer to grant working capital adjustments after verification of claim made by assessee when

Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that M/s.Infosys Ltd cannot be taken as a comparable as the Company is having high turnover exceeding Rs.200 Crores without appreciating the fact that the higher turnover does not necessarily mean that it would increase the profit margin?

Whether on the facts and in the circumstance's of the case and in law, the Tribunal was right in holding that Transfer Pricing Officer is required to include comparables namely, M/s.Akshay Software Technologies Ltd and R.Systems International Ltd ignoring that Transfer Pricing Officer in his under section 92CA has given elaborate reasons for such exclusion?

Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that M/s.Capegemini Business services (India) Pvt Ltd cannot be considered as comparable on account of RPT filter even though the findings of the TPO and guidelines prescribed by OECD?

Whether on the facts and in circumstances of the case, the Tribunal's order can be said as perverse in directing Transfer Pricing Officer to include and exclude comparables ignoring parameters of Rule 10B?

Whether the Tribunal is justified in taking different stands on adjustments to comparables margins to make them comparable to tested party, just to apply to case of assessee even though it goes against to principles of equality and natural justice?”

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.

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

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.