THE PR COMMISSIONER OF INCOME TAX vs. M/S SYMBOL TECHNOLOGIES INDIA PVT LTD

THE PR. COMMISSIONER OF INCOME TAX 5TH FLOOR, BMTC BUILDILNG, 80 FEET ROAD, KORMANGALA, BENGALURU-560095.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6(1)(2), PRESENT ADDRESS ACIT, CIRCLE-6(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560095.

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 20.05.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.2057/Bang/2019 for the assessment year 2011-12.

This

"Whether on the facts and in the circumstances of the case, the Tribunal is correct in fact and law in disregarding the position of law that there could be differences between the enterprises compared under the TNMM method that are not likely to materially affect the price or cost charged or the profits accruing to such enterprises?

"Whether on the facts and circumstances of the case, the Tribunal is right in law not following its own decision in the case of M/s Societe General Global Solution Centre (P) Ltd. Vs DCIT, Circle- 12(3), Bangalore vide IT(TP) A No. 118 (Bang)2011, the jurisdictional ITAT Bangalore has opined that the turnover cannot be relevant criteria in a service sector where fixed overheads are nominal and the cost of service is in direct proportioned to the services rendered".

"Whether on the facts and circumstances of the case the order of the Tribunal is right in law in rejecting comparable cases by insistence on strict comparability under TNMM defeats the very purpose

"Whether the Tribunal is right in law in including comparable i.e. FCS Software Solutions Ltd as comparables on functional similarity only when there is doubt in its operating activity & majority of it is financial activity"?

"Whether on the facts and circumstances of the case, the Tribunal was right in fact and in law by relying upon the decision in the case of Huawei Technologies India (P) Ltd., wherein the Tribunal held that the working capital adjustment is to be allowed as per actual on the final set of comparables"?

"Whether on the facts and circumstances of the case, the Tribunal was right in fact and in law in directing to allow Working capital adjustments without considering that the average working capital may not show the actual working capital employed during the year"?

"Whether on the facts and circumstances of the case, the Tribunal was right in law in providing working capital adjustment to the taxpayer without considering that the disclosures in the Annual report

"Whether on the facts and circumstances of the case the Tribunal was right in law in providing working capital adjustment to the taxpayer without considering that Cost of capital is different for different companies"?

"Whether on the facts and in the circumstances of the case, the Tribunal is right in law in not considering the fact that the normal credit period is 30 days which was confirmed by Tribunal itself and accordingly erred in not sustaining the interest on delayed receivables computed by the TPO and moreover assesse raised this issue for first time before Tribunal"?

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 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.