Principal Commissioner Of Income Tax vs. M/S Eit Services India Pvt Ltd

PR. COMMISSIONER OF INCOME TAX (2), BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BANGALORE.

THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE 2(1)1- KORMANGALA, BANGALORE. …APPELLANTS (BY SRI. SANMATHI E.I., BADVOCATE) AND:

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 18.7.2023 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short ‘Appellate Authority’) in IT(TP)A.No.932/Bang/2022 for the assessment year 2018-19, raising the following substantial questions of law: 1. "Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in excluding comparables from BSS Segment i.e comparable namely, Axience Consulting Pvt Ltd & Pressuman Advertising ltd by following earlier orders which has not reached finality and even when the Transfer Pricing officer has chosen the comparable

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in not appreciating the fact that transfer pricing is not an exact science and no two entities can be of exact replicas"?

"Whether on the facts and in the circumstances of the case, the Tribunal was right in law in directing the TPO for exclusion of the companies from the set of comparables selected by the Transfer Pricing Officer by following earlier decisions ignoring the that TPO had chosen comparables as per parameter set out in Rule 10B"?

"Whether, on the facts and circumstances of the case, the Tribunal was right in law in demanding comparability standards that may itself defeat the purpose of law relating to determination of ALP under the Income Tax Act?"

"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 remove Lintas India Pvt Ltd & Cheil India Pvt Ltd as comparables by imposing upper limit on the turnover filter ignoring its earlier order passed in

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in holding that there exists a co- relation between turnover and operating margin of an entity"?

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 the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

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.