THE PR. COMMISSIONER OF INCOME TAX vs. M/S IPASS INDIA PVT LTD

THE PR. COMMISSIONER OF INCOME-TAX, 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095.

THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095. …APPELLANTS

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 19.07.2019 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.2093/Bang/2017 for the assessment year 2012-13.

This Court, admitted the appeal on 07.12.2020 to consider the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in not accepting Genesis International Corporation Limited / Infosys Limited / Larsen and Toubro Infotech Ltd / Persistent Systems Limited as a comparable when it satisfies all the qualitative and quantitative filters applied by the Transfer Pricing Officer?

Whether on the facts and in the circumstances of the case, the Tribunal was right in law in excluding certain comparable's from list of comparable on the ground of functional dissimilarity by following its earlier orders when the said companies satisfied qualitative and quantitative filers applied by Transfer Pricing Officer and they are functionally similar to that of assessee?

Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that negative working capital adjustment cannot be granted in the case of the assessee without considering that allowing working capital adjustment would result into better comparison?"

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.