PR. COMMISISONER OF INCOME TAX - 3, vs. M/S INFINEON TECHNOLOGIES INDIA PVT. LTD.,

PR. COMMISSIONER OF INCOME TAX - 3, BMTC COMPLEX, KORAMANGALA, BANGALORE.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), 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 31.3.2022 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short ‘Appellate Authority’) in IT[TP]A.No.2870/Bang/2017 for the assessment year 2013-14, raising the following substantial questions of law:

"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 permissible to bypass the same partially or by implication"?

"Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in excluding M/s.L & T Infotech Ltd, M/s.Persistent

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse since Tribunal has excluded certain comparable's without going into reasons assigned by Transfer Pricing Officer?"

"Whether on the facts and in the circumstances of the case, the Tribunal is right in allowing working capital adjustment without an upper limit would result into abnormal adjustment and would make the profit earned within the permitted range even when if no operating profit is earned and the upper limit of working capital adjustment should be the average of the cost of capital of the comparable companies"?

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in holding that assessing authority is not correct in making disallowance of excess provision amounting to Rs.1,09,79,733/- made under section 40(a)(ia) of the Act when assesse had not made TDS as required under law on said amount"?

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in holding that interest paid under section 201(1A) is compensatory in nature and not considered to be penal character ignoring that there is no bar under Act to disallow the said amount for delayed remittances"?

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in setting aside disallowance of capital expenses debited to P & L A/c in return of income ignoring the findings of assessing authority which has been confirmed by DRP"?

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in allowing working capital adjustment without an upper limit would result into abnormal adjustment and would make the profit earned within the permitted range even when if no operating profit is earned and the upper limit of working capital adjustment should be the average of the cost of capital of the comparable-companies"?

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

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.