PR COMMISSIONER OF INCOME TAX -2 vs. M/S SABRE TRAVEL TECHONOLOGIES PVT LTD

PDF · subscribers
ITA/93/2022HC KarnatakaKAHC01040324202124 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal with liberty to the Revenue to revive it if the matter fell within the exceptions of CBDT Circulars No. 09/2024 and 05/2024. The Court explicitly stated that the substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the substantial questions of law raised by the Revenue. The operative direction was to dispose of the appeal with the granted liberty, leaving the substantive legal issues undecided.

What were the facts?

The Revenue, comprising the Pr. Commissioner of Income Tax -2 and the Income Tax Officer, Ward 6(1)(1), has filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 31.08.2020 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru. The appeal pertains to the assessment year 2010-11 and challenges the Tribunal's decision in IT(TP)A.No.203/Bang/2015. The High Court admitted the appeal on 02.02.2022 to consider specific substantial questions of law related to the Tribunal's directions concerning the exclusion of comparables, the adoption of a Related Party Transaction (RPT) filter, and the allowance of risk adjustment.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether the Tribunal's order is perverse for directing the Transfer Pricing Officer (TPO) to exclude Kals Informations Systems Ltd. on grounds of functional dissimilarity, despite it allegedly satisfying Rule 10B criteria. 2. Whether the Tribunal's order is perverse for directing the TPO to adopt an RPT filter at 15% instead of 25% without objective reasoning, ignoring the purpose of the filter to prevent distortion of net profit margins by controlled transactions. 3. Whether the Tribunal's order is perverse for failing to adjudicate the issue of allowing a 1% risk adjustment, holding that the Dispute Resolution Panel (DRP) did not direct the TPO to allow it, despite the assessee's single customer risk being equivalent to the marketing and technical risks of comparables. The Revenue argued that the Tribunal's directions were perverse. The Assessee argued that the tax effect was below Rs. 2 Crores, making the appeal non-maintainable under CBDT Circular No. 09/2024. The Revenue sought liberty to revive the appeal if exceptions under Circulars 09/2024 and 05/2024 applied.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2024:KHC:39746-DB ITA No. 93 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 93 OF 2022 BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX -2, BMTC COMPLEX, KORAMANGALA, BANGALORE.

2.

INCOME TAX OFFICER, WARD 6(1)(1), BMTC COMPLEX, KORAMANGALA, BENGALURU. …APPELLANTS (BY SRI SANMATHI E I, ADVOCATE)

AND:

1.

M/S SABRE TRAVEL TECHONOLOGIES PVT LTD., UNIT 1 AND2 LEVEL 2 NAVIGATOR BUILDING ITPB, WHITELFILED MAIN ROAD, BANGLORE 5660066, PAN AAICS5777P. …RESPONDENT (BY SRI K R VASUDEVAN, ADVOCATE ALONGWITH SRI ANKUR P.D, ADVOCATE)

THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:31/08/2020 PASSED IN IT(TP)A NO.203/BANG/2015, FOR THE ASSESSMENT YEAR: 2010-2011, PRAYING THIS HON’BLE COURT MAY BE PLEASED TO DECIDE THE FOREGOING QUESTION OF LAW AND/ OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT AND ETC.

Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA

- 2 -

NC: 2024:KHC:39746-DB ITA No. 93 of 2022

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

CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel K.R.Vasudevan along with learned counsel Sri.Ankur.P.D., for respondent/assessee.

2.

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 31.08.2020 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.203/Bang/2015 for the assessment year 2010-11.

- 3 -

NC: 2024:KHC:39746-DB ITA No. 93 of 2022

3.

This

Court,

admitted the appeal on 02.02.2022 to consider the following substantial question of law: “a) Whether on facts and circumstances of the case, the Tribunal's order can be said as perverse in nature as Tribunal has directed TPO to exclude Kals Informations Systems Ltd on the ground of functional dissimilarity when the said comparable satisfied all the required tests as prescribed in Rule 10B?

b) Whether on facts and circumstances of the case, the Tribunal's order can be said as perverse in nature as Tribunal directed TPO to adopt RPT filter at 15% as against 25% without giving any objective reason for direction and ignoring the purpose of using limit for RPT is that the controlled transactions of the related party transactions (RPT) is that the controlled transactions or the related party transactions (RPT) may have bearing and would distort or influence the net profit margin?

c) Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature as Tribunal failed to not adjudicate the issue relating to allowance of risk

- 4 -

NC: 2024:KHC:39746-DB ITA No. 93 of 2022

adjustment at 1% by holding that the DRP has not directed TPO allow the same when the fact that a single customer risk bone by the tax payer in its status of a captive service provider was equivalent to the marketing and technical risk attached to the comparable and the TPO was justified in not allowing adjustment on account risk?”

4.

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.

5.

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.

- 5 -

NC: 2024:KHC:39746-DB ITA No. 93 of 2022

6.

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.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

MPK List No.: 2 Sl No.: 34

More judgments on Section 260-A

All 2,570 judgments and leading authorities on Section 260-A →

Recent GST High Court judgments

Search GST case law →