PRINCIPAL COMMISSIONER OF INCOME TAX-4 vs. M/S METRICSTREAM INFOTECH (INDIA)

PRINCIPAL COMMISSIONER OF INCOME TAX -4 BMTC COMPLEX, KORAMANGALA BENGALURU

THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -4(1) (2), BMTC COMPLEX , KORAMANGALA , BENGALURU …APPELLANTS (BY SRI. SANMATHI E I.,ADVOCATE)

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 27.02.2019 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP) A No.2735/Bang/2017 for the assessment year 2013-14, raising the following substantial questions of law:

Whether on the facts and circumstances of the case and in law, the Tribunal correct in holding that Larsen and Toubro Infotech Ltd and Persistent Systems Ltd cannot be taken as comparable holding that these companies are functionally dissimilar ignoring the materials brought on record by Transfer Pricing Officer?

Whether on the facts and circumstances of the are and in law, the Tribunal’s order can be said as perverse in nature as Tribunal has ignored material evidences and has only followed previous orders without appreciating that Transfer Pricing Officer has applied required tests as prescribed in Rules?

Whether in the facts and circumstances of the case and in law, the Tribunal was right in excluding certain comparable’s without considering the materials brought on record by Transfer Pricing Officer?

Whether on the facts and circumstances of the case in law, the Tribunal was right in not acknowledging that determination of ALP by carrying out comparability analysis of the comparable companies is an art and not exact

Whether on the facts and circumstances of the case and in law, the Tribunal was right in law in demanding comparability standards that may itself defeat the purpose of law relating to determination of ALP under the Act? 3. 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.