PR. COMMISSIONER OF INCOME TAX-3 vs. M/S. NTS TECHNOLOGY

PR. COMMISSIONER OF INCOME TAX-3, KORMANGALA, BANGALORE

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1) KORMANGALA, BANGALORE. …APPELLANTS (BY SRI. SANMATHI E.I., ADVOCATE)

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 27.03.2023 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.940/Bang/2022 for the assessment year 2018-19.

This

Whether Tribunal's order can be said as perverse in nature in imposing turnover filter by holding that there exist a co-relation between turnover and operating margin of an entity?

Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in directing Transfer Pricing Officer to consider afresh in respect of issue pertaining to delayed receivables by following its earlier decision without considering that assesse has not substantiated charging of particular interest rate and grant of credit period?

Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in directing the Transfer Pricing Officer to exclude M/s.Great Software Laboratory Pvt Ltd, M/s.Elveego Circuits Pvt Ltd, M/s. Acewin Agritech Ltd, M/s.Infobeans Technologies Ltd and M/s.Threesixty Logica Testing Services Pvt Ltd on ground of functional dissimilarity without appreciating that transfer pricing is not an exact science and no two entities can be exact replica and when the law international jurisprudence itself

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing Transfer Pricing Officer to exclude M/s.Exhilent Technologies Ltd, M/s.Tech Mahindra Ltd, M/s Larsen & Tourbo Infotech Ltd, M/s.Mind Tree Ltd, M/s. Nihilent Ltd, M/s.Persistent Systems Ltd, M/s.Wipro Ltd, M/s.Tata Elxsi Ltd, M/s.Infosys Ltd, M/s. Cybage Software Pvt Ltd as comparable on turnover filter when Transfer Pricing Officer has rightly rejected same on basis of Rule 10B?”

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.