THE PR COMMISSIONER OF INCOME -TAX vs. M/S ANALOG DEVICES

PDF · subscribers
ITA/140/2020HC KarnatakaKAHC01024405202027 September 2024Bench: S.G.PANDIT,C.M. POONACHA6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal, granting liberty to the revenue to revive it if it falls within exceptions of CBDT circulars. The substantial questions of law were kept open for future adjudication.

What were the facts?

The Revenue filed an appeal against an ITAT order concerning the assessment year 2005-06. The appeal raised substantial questions of law regarding the Tribunal's treatment of comparable companies and the application of transfer pricing rules.

What were the issues?

Whether the Tribunal correctly applied transfer pricing rules and selected comparable companies, and whether the appeal is maintainable in light of CBDT circulars regarding tax effect.

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:40413-DB ITA No. 140 of 2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH 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.140 OF 2020

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME -TAX, 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANAGALA, BENGALURU-560 095.

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-11(1) PRESENT ADDRESS DCIT, CIRCLE-1(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095. …APPELLANTS

(BY SRI. DILIP M., ADVOCATE ALONG WITH SRI. RAVIRAJ Y.V., ADVOCATE)

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

- 2 -

NC: 2024:KHC:40413-DB ITA No. 140 of 2020

AND:

M/S. ANALOG DEVICES INDIA PVT. LTD., RMZ INFANITY NO.3, LEVEL-6, TOWER-D, OLD MADRAS ROAD, BENGALURU 560 016. …RESPONDENT

(BY SRI. SRIKANTH PATIL.K., ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 20.12.2019 PASSED IN IT(TP)A NO.619/BANG/2013, FOR THE ASSESSMENT YEAR 2005-2006 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AND ETC.

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

- 3 -

NC: 2024:KHC:40413-DB ITA No. 140 of 2020

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

Heard the learned counsel Sri. Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for appellants/Revenue and learned counsel Sri. Srikanth Patil.K., 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 20.12.2019 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.619/Bang/2013 for the assessment year 2005-06.

3.

This Court, admitted the appeal on 13.10.2020 to consider the following substantial questions of law:

1.

Whether the Tribunal was right in law to ignore the parameters of analysis prescribed under Rule 10B, which are exhaustive and if so, whether it is legally

- 4 -

NC: 2024:KHC:40413-DB ITA No. 140 of 2020

permissible to bypass the same partially or by implication?

2.

Whether the Tribunal was right in fact and in law in not acknowledging that there is no direct relationship between brand value and margin earned by the company and brand may generate the revenue of the company but does not increase the profit margin?

3.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding comparables M/s. Bodhtree Consulting Ltd and M/s. Geometric Software Solutions Company from the list of Comparables, holding that it is functionally different, without appreciating that the comparables satisfy all the qualitative and quantitative filters applied by the TPO and that selection of comparables in a case depends on assessee specific FAR analysis

4.

Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature as the Tribunal has directed Transfer Pricing Officer to exclude certain comparable’s on the basis of

- 5 -

NC: 2024:KHC:40413-DB ITA No. 140 of 2020

high turnover, abnormal profit and functional dissimilarity without appreciating that the comparables chosen by TPO satisfies all required tests as prescribed in the Rule 10B?

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.

6.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned

- 6 -

NC: 2024:KHC:40413-DB ITA No. 140 of 2020

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

SMJ List No.: 4 Sl No.: 25

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 →