THE PR COMMISSIONER OF INCOME TAX vs. M/S GXS INDIA TECHNOLOGY CENTRE PVT LTD

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ITA/55/2020HC KarnatakaKAHC01005779202030 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 exceptions under the circulars apply. The substantial questions of law were kept open for future adjudication.

What were the facts?

The Revenue appealed against an ITAT order concerning transfer pricing adjustments for AY 2009-10. The assessee argued that the appeal should not be entertained due to low tax effect, citing CBDT Circular No. 09/2024.

What were the issues?

Whether the Tribunal correctly excluded comparables without detailed analysis of transaction characteristics, and whether negative working capital adjustments are permissible. The appeal was also challenged on grounds of tax effect.

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:41692-DB ITA No. 55 of 2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH 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. 55 OF 2020 BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX CIT (A), 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560095.

2.

THE INCOME TAX OFFICER WARD-11(2) PRESENT ADDRESS DCIT, CIRCLE-3(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560095. …APPELLANTS (BY SRI. SUSHAL TIWARI N.,ADVOCATE)

AND:

M/S GXS INDIA TECHNOLOGY CENTRE PVT LTD 841/1, BINNAMANGALA, 100 FEET ROAD, INDIRANAGAR, BENGALURU-560038. PAN AABCG 7972P …RESPONDENT (BY SRI. K R VASUDEVAN.,ADVOCATE A/W SRI. ANKUR P D, ADVOCATE )

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO.

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41692-DB ITA No. 55 of 2020

57/BANG/2014 DATED 31/07/2019 FOR ASSESSMENT YEAR 2009- 2010 ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), BENGALURU 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. Sushal Tiwari., for appellants/Revenue and learned counsel Sri. K.R. Vasudevan along with Sri. Ankur. P.D., learned counsel for the 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 31.07.2019 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A No.57/Bang/2014 for the assessment year 2009- 10, raising the following substantial questions of law: “1. Whether on the facts and circumstances of the case and in law, the

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NC: 2024:KHC:41692-DB ITA No. 55 of 2020

Tribunal is right in law in holding that a comparable can be excluded on entity basis without determining the specific characteristics of the transactions; FAR, contractual terms and market conditions as prescribed in Rule 10B(2) of the Act? 2. Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in law in directing Transfer Pricing Officer/assessing authority to exclude certain comparable’s even when parameters of analysis prescribed under Rule 10B of I.T. Rules are fully satisfied by TPO while determining final list of comparable’s? 3. Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in holding that negative working capital adjustment cannot be granted in the case of the assessee without considering that working capital adjustment is computed scientifically and negative or positive working capital adjustment is only consequential?”

3.

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and

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NC: 2024:KHC:41692-DB ITA No. 55 of 2020

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.

4.

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.

5.

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 questions of law are kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

BS - List No.: 4 Sl No.: 24

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