PRINCIPAL COMMISSIONER OF INCOME TAX-6 vs. M/S SONUS NETWORKS INDIA PVT LTD.,

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ITA/64/2021HC KarnatakaKAHC01050918201924 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryDismissed

What did the High Court hold?

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

What were the facts?

The Revenue appealed a High Court order concerning transfer pricing for assessment year 2007-08. The assessee argued the appeal should not be entertained due to low tax effect, citing CBDT circulars.

What were the issues?

Whether the appeal should be entertained given the tax effect and CBDT circulars, and the validity of the Tribunal's decision on comparable selection in transfer pricing.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39702-DB ITA No. 64 of 2021

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. 64 OF 2021 BETWEEN:

1.

PRINCIPAL COMMISSIONER OF INCOME TAX-6, BMTC COMPLEX, KORAMANGALA, BANGALORE.

2.

DEPUTY COMMISSIONER, INCOME TAX, CIRCLE-12(3), BANGALORE. …APPELLANTS (BY SRI SANMATHI E. I., ADV.) AND:

M/S. SONUS NETWORKS INDIA PVT. LTD., 2ND FLOOR, DELTA BLOCK, EMBASSY TECH SQUARE, KADUBEESANAHALLI VILLAGE, OUTER RING ROAD, VARTHUR HOBLI, BANGALORE-560 103. PAN NO. AALCS5706P …RESPONDENT (BY SRI K R VASUDEVAN, ADV. A/W SRI ANKUR P D, ADV.)

THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28/06/2019 PASSED IN ITA NO.1365/BANG/2011, FOR THE ASSESSMENT YEAR 2007-2008, PRAYING TO A) DECIDE THE FOREGOING

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39702-DB ITA No. 64 of 2021

QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT 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

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

Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Sri.K.R.Vasudevan along with Sri.Ankur P.D., learned counsel 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 28.03.2019 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.1365/Bang/2011 for the assessment year 2007-08.

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NC: 2024:KHC:39702-DB ITA No. 64 of 2021

3.

This

Court,

admitted the appeal on 16.02.2022 to consider the following substantial questions of law: “1. Whether under the facts and circumstances of the case and in law, the Tribunal was right in super imposing the decision of other benches of Tribunal in the case of the assessee to exclude these comparables when selection of comparables in a case in transfer pricing depends on an assessee specific FAR analysis (functions performed, Assets and used and Risks undertaken)?

2.

Whether under the facts and circumstances of the case and in law, the Tribunal’s order can be said as perverse since the Tribunal has directed the Transfer Pricing Officer to exclude certain comparables without analyzing the application of the different financing year ending filter and respectively following and rejecting parts of its decision in the relied upon case?”

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

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NC: 2024:KHC:39702-DB ITA No. 64 of 2021

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 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 CT:bms List No.: 2 Sl No.: 16

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