DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-7(1)(1), BANGALORE vs. M/S THE TEXTRON INDIA PRIVATE LIMITED , BANGALORE

The revenue is aggrieved by the decision of Ld CIT(A) in directing exclusion of three comparable companies under Software Development activities. The assessee is supporting the order passed by Ld CIT(A) in the Cross objection filed by it.

At the time of hearing, the Ld A.R submitted that the tax effect involved in the appeal filed by the revenue is less than Rs.50.00 lakhs, being the new monetary limit prescribed by CBDT in Circular No.17/2019 dated 08-08-2019, which has also been clarified as having retrospective effect by CBDT.

Explaining further, the Ld A.R submitted that the assessee had entered into international transactions with its Associated Enterprises (AEs) and for the purpose of bench marking, they were classified into two categories, viz., “US related” and “Non-US related”. The assessee had settled the “US related” transactions under MAP proceedings and hence the transfer pricing adjustment made in respect of “US related” transactions was withdrawn by the assessee before Ld CIT(A). Accordingly, the Ld CIT(A) has passed the order in respect of “Non-US related” transactions only. The TP adjustment made by the TPO in respect of non-us related transaction was Rs.48.89 lakhs only. After the order passed by Ld CIT(A), the variation comes to Rs.29.06 lakhs only. Accordingly, the Ld A.R submitted that the tax effect involved in the relief granted by Ld CIT(A), on which the revenue is in appeal, would be less than Rs.50.00 lakhs. Accordingly he submitted that the revenue is precluded for pursuing this appeal.

The Ld D.R submitted that the tax effect involved in this appeal needs to be checked by the AO. Accordingly the bench granted two weeks time to furnish the details of tax effect. However, till date no reply has been received from the revenue.

From the submissions made by Ld A.R, we notice that the tax effect involved in the issues contested by the revenue appears to be less than Rs.50.00 lakhs and hence, as per the CBDT circular referred supra, the revenue is precluded from pursuing this appeal. Accordingly we dismiss the appeal of the revenue in limine. However, liberty is given to the revenue to move appropriate application for recall of this order in accordance with law, if it is found later that the above said Circular is not applicable to this appeal.

Since we have dismissed the appeal of the revenue and the cross objection filed by the assessee only supports the order of Ld CIT(A), we dismiss the Cross objection filed by the assessee also.

In the result, the appeal of the revenue and the cross objection filed by the assessee are dismissed.