THE PR. COMMISSIONER OF INCOME-TAX, vs. M/S AUTODESK INDIA PVT LTD.,

PDF · subscribers
ITA/338/2019HC KarnatakaKAHC01038017201924 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 submissions made by both parties concerning CBDT Circular No. 09/2024 and Circular No. 5/2024. The learned counsel for the assessee submitted that the tax effect in the appeal was less than Rs. 2 Crores, and therefore, the appeal should not be entertained by the Revenue in view of Circular No. 09/2024, which binds the Revenue. The learned counsel for the Revenue sought liberty to revive the appeal if the matter fell within the exceptions of the aforementioned circulars. In light of these submissions, the Court disposed of the appeal with the liberty sought by the Revenue. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No finding was given on the merits of the questions of law.

What were the facts?

The Revenue, comprising 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 December 21, 2018, passed by the Income-Tax Appellate Tribunal (ITAT), Bengaluru Bench. The appeal pertains to Assessment Year 2011-2012 and challenges the ITAT's decision in IT(TP)A No. 156/Bang/2016. The core of the dispute revolves around the selection of comparable companies by the Transfer Pricing Officer (TPO) for determining the arm's length price of international transactions entered into by the assessee, M/s. Autodesk India Pvt Ltd. The High Court admitted the appeal to consider substantial questions of law concerning the ITAT's rejection of certain comparable companies.

What were the issues?

The High Court was called upon to decide five substantial questions of law, all framed as whether the Tribunal was correct in rejecting specific comparable companies selected by the TPO. These questions are of mixed law and fact, turning on the interpretation and application of transfer pricing provisions. 1. Whether the Tribunal erred in rejecting M/s. Acropetal Technologies Ltd., M/s. ICRA Techno Analytics Ltd., M/s. Infosys Technologies Ltd., M/s. Tata Elxsi Ltd., M/s. Persistent Systems and Solutions Ltd., and M/s. Persistent Systems Ltd., by relying on a co-ordinate bench decision in *Applied Material (I) Pvt., Ltd.*, without in-depth analysis of facts and ignoring TPO's evidence. 2. Whether the Tribunal erred in rejecting M/s. E-Infochips Ltd., and M/s. E-Zest Solutions Ltd., by relying on a co-ordinate bench decision in *M/s. Commonscope Networks (I) Pvt. Ltd.*, without in-depth analysis and ignoring TPO's evidence. 3. Whether the Tribunal erred in rejecting M/s. Larsen & Turbo Infotech Ltd., on grounds of functional dissimilarity without in-depth analysis and ignoring TPO's evidence. 4. Whether the Tribunal erred in rejecting M/s. ICC International Agencies Ltd., by relying on *Electronic Imaging (1) Pvt. Ltd. vs. DCIT*, without in-depth analysis and ignoring TPO's evidence. 5. Whether the Tribunal erred in rejecting comparable companies selected by the TPO merely by following decisions in other assesses' cases, instead of deciding comparability based on specific facts in the respondent-assessee's case. The Revenue argued that the Tribunal failed to analyze the facts in depth and ignored evidence brought on record by the TPO. The Assessee argued that the tax effect was below Rs. 2 Crores, making the appeal not maintainable in view of CBDT Circular No. 09/2024.

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:39753-DB ITA No. 338 of 2019

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. 338 OF 2019 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX, 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU -560095.

2.

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

AND: M/S AUTODESK INDIA PVT LTD., UNIT A-4, A-WING, 2ND FLOOR, DIVYASHREE CHAMBERS, LANGFORD ROAD,BENGALURU- 560025. PAN: AABCA 6924B. …RESPONDENT (BY SMT. TANMAYEE RAJKUMAR, ADV.)

THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 21.12.2018 PASSED IN IT(TP)A NO.156/BANG/2016, FOR THE ASSESSMENT YEAR 2011-2012, PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A

Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA

- 2 -

NC: 2024:KHC:39753-DB ITA No. 338 of 2019

NO.156/BANG/2016 DATED 21.12.2018 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1)(1), BENGALURU AND ETC.

THIS APPEAL, COMING ON FOR ORDERS, 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.Raviraj.Y.V., along with Sri.Dilip.M., learned counsel for appellants/Revenue and learned counsel Smt.Tanmayee Rajkumar for 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 21.12.2018 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.156/Bang/2016 for the assessment year 2011-12.

- 3 -

NC: 2024:KHC:39753-DB ITA No. 338 of 2019

3.

This

Court,

admitted the appeal on 24.10.2019 to consider the following substantial question of law: “i. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in rejecting the comparable companies, M/s.Acropetal Technologies Ltd., M/s.ICRA Techno Analytics Ltd., M/s.Infosys Technologies Ltd., M/s.Tata Elxsi Ltd., M/s.Persistent Systems and Solutions Ltd., and M/s.Persistent Systems Ltd., following the decision of the co-ordinate bench in the case of Applied Material (I) Pvt., Ltd., in IT(TP)A No.17 & 39/Bang/2016 without analyzing the facts in depth and ignoring evidence brought on record by TPO?

ii. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in rejecting the comparable companies, M/s.E- Infochips Ltd., and M/s.E-Zest Solutions Ltd., following the decision of the co-ordinate bench in the case of M/s.Commonscope networks (I) Pvt. Ltd., in IT(TP)A No.166 & 181/Bang/2016 without analyzing the facts in depth and ignoring evidence brought on record by TPO?

iii. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in rejecting M/s.Larsen & Turbo Infotech Ltd., on the

- 4 -

NC: 2024:KHC:39753-DB ITA No. 338 of 2019

grounds of functional dissimilarity without analyzing the facts in depth ignoring evidence brought on record by TPO?

iv. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in rejecting M/s.ICC International Agencies Ltd., by relying on the decision of the co-ordinate bench in the case of M/s.Electronic Imaging (1) Pvt. Ltd., Vs. DCIT (2017) 85 taxmann.com 124 (Bangalore-Trib) without analyzing the facts in depth ignoring evidence brought on record by TPO?

V. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in rejecting certain comparable companies selected by the TPO merely following the decision of the co- ordinate benches in the case of different assesses, when it ought to have decided the comparability of these companies on the basis of specific facts brought on record by the TPO in the case of respondent - assessee?”

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

- 5 -

NC: 2024:KHC:39753-DB ITA No. 338 of 2019

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.

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 CT:bms List No.: 2 Sl No.: 0

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 →