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

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ITA/385/2017HC KarnatakaKAHC01032116201712 February 2025Bench: KRISHNA S DIXIT,G BASAVARAJA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal on the grounds of maintainability. It noted that the amount involved in the case fell below the minimum ceiling limit prescribed by CBDT Circular No. 9/2024 dated September 17, 2024. Consequently, the appeal was not maintainable. The Court reserved liberty to recall the order if the matter fell under any exceptions enumerated in the Circular or otherwise. Therefore, the Tribunal's decision on the substantial questions of law regarding Section 10A deduction, exclusion of comparables, and market risk adjustment was not adjudicated on merits.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Deputy Commissioner of Income-Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961. The appeal challenges an order dated September 22, 2016, passed by the Income Tax Appellate Tribunal (ITAT), Bangalore Bench, in IT(TP)A No. 1068/Bang/2011. The assessment year in question is 2007-2008. The Revenue sought to set aside the ITAT's order, which had confirmed the order of the Dispute Resolution Panel (DRP) that in turn confirmed the order of the Deputy Commissioner of Income Tax. The respondent is M/s Infineon Technologies India Pvt. Ltd. The appeal was admitted for hearing.

What were the issues?

The Tribunal was asked to decide three substantial questions of law: 1. Whether the Tribunal erred in setting aside the re-computation of deduction under Section 10A of the Act by relying on the High Court's decision in CIT v/s. Tata Elxsi, which had not reached finality. 2. Whether the Tribunal was correct in directing the Assessing Officer (AO)/Transfer Pricing Officer (TPO) to exclude comparable companies based on functional dissimilarity, even though the TPO had selected them using qualitative and quantitative filters. 3. Whether the Tribunal was right in directing the TPO to consider market risk adjustment, despite the absence of a reliable method to quantify qualitative differences into quantitative adjustments for risk levels. The Revenue contended that the ITAT's decision on Section 10A was based on a case that was not final. The Revenue also argued that the ITAT wrongly directed the exclusion of comparables and the consideration of market risk adjustment. The judgment does not record specific arguments from the assessee.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 10A

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:6293-DB ITA No. 385 of 2017

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND THE HON'BLE MR JUSTICE G BASAVARAJA INCOME TAX APPEAL NO. 385 OF 2017

BETWEEN:

1.

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

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11(4), PRESENT ADDRESS, CIRCLE-3(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560095. …APPELLANTS (BY SRI. E.I. SANMATHI, ADV.)

AND:

M/S INFINEON TECHNOLOGIES INDIA PVT. LTD. KALYANI PLATINA, 3RD FLOOR, BLOCK-I, #6 & 24, EPIP ZONE PHASE I, WHITEFIELD, BENGALURU-560066. …RESPONDENT (BY SMT. TANMAYEE RAJKUMAR, ADV.)

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:22/09/2016

Digitally signed by LAKSHMINARAYAN N Location: High Court of Karnataka

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NC: 2025:KHC:6293-DB ITA No. 385 of 2017

PASSED IN IT(TP)A NO.1068/BANG/2011, FOR THE ASSESSMENT YEAR 2007-2008, ANNEXURE-D PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN IT(TP)A NO.1068/BANG/2011 DATED:22/09/2016, ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), BENGALURU AND ETC.

THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT and HON'BLE MR JUSTICE G BASAVARAJA

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 questioning the correctness and legality of order dated 22nd September, 2016 passed by the Income Tax Appellate Tribunal, Bench-A, Bengaluru in IT(TP)A No.1068/Bang/2011 for the Assessment Year 2007-2008.

2.

The Revenue has framed the following substantial questions of law in the appeal memo:

"1. Whether on the facts and circumstances of the case, the Tribunal is right in law in setting aside the re-computation of deduction under Section 10A of the Act by following the decision of this Court in the case of CIT v/s. Tata Elxsi which has not reached finality?

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NC: 2025:KHC:6293-DB ITA No. 385 of 2017

2.

Whether on the facts and circumstances of the case, the Tribunal is right in law in directing AO/TPO to exclude certain comparable based on functional dissimilarity even when the TPO has chosen the said comparable by applying qualitative and quantitative filers when culling out comparable companies?

3.

Whether on the facts and circumstances of the case, the Tribunal is right in law in directing the Transfer Pricing Officer to consider the claim of market risk adjustment despite the fact that there is no reliable method to convert the qualitative difference into qualitative difference and to make appropriate adjustment on account of risk level?”

3.

Since the amount involved in the case falls below the minimum ceiling limit prescribed in the CBDT Circular No.9/2024 dated 17th September, 2024, the Appeal is not maintainable and accordingly it is disposed off reserving liberty to recall the order in the event the matter falls in one of the exceptions enumerated in the Circular or otherwise.

Sd/- (KRISHNA S DIXIT) JUDGE

Sd/- (G BASAVARAJA) JUDGE lnn List No.: 1 Sl No.: 24

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