THE PR COMMISSIONER OF INCOME TAX vs. M/S FAIR ISSAC INDIA SOFTWARE PVT LTD

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

THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -3(1)(2), PRESENT ADDRESS, 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 05.04.2019 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.471/Bang/2015 for the assessment year 2010-11.

This Court, admitted the appeal on 05.03.2020 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 acknowledging that there is no direct relationship between brand value and the margin earned by the company and brand may generate the Revenue of the Company but does not increase the profit margin?.

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in seeking exact comparability, which searching for comparable companies of the assessee under TMM whereas the requirement of law and international jurisprudence require seeking similar comparables companies?.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirmed the exclusion of comparables, namely, Infosys Ltd., Kals Information Systems Ltd., Tata Elxsi Ltd., Persistent Systems Ltd., Acropetel Technologies Ltd., Eclerx Services Ltd., Infosys BPO Ltd., by relying upon its earlier decisions which has not reached finality and even when the Transfer Pricing Officer has rightly chosen comparable's after application of materials on record"?.

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

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.