PR. COMMISSIONER OF INCOME TAX-3 vs. M/S. ISG NOVASOFT TECHNOLOGIES LTD.,

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ITA/547/2023HC KarnatakaKAHC01043839202325 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal, granting the Revenue liberty to revive it if the matter falls within exceptions to the CBDT circulars. The substantial question of law was kept open for future adjudication.

What were the facts?

The Revenue appealed against an ITAT order concerning the selection of comparable companies for transfer pricing analysis for Assessment Year 2018-19. The assessee argued that the appeal should not be entertained due to a low tax effect, citing CBDT Circular No. 09/2024.

What were the issues?

Whether the ITAT's order regarding the exclusion and inclusion of comparable companies in transfer pricing analysis was perverse. Applicability of CBDT circulars on tax effect to the maintainability of the appeal.

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:39922-DB ITA No. 547 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH 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. 547 OF 2023

BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX-3, KORMANGALA, BANGALORE

2.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1) KORMANGALA, BANGALORE. …APPELLANTS (BY SRI. SANMATHI E.I., ADVOCATE)

AND:

M/S. ISG NOVASOFT TECHNOLOGIES LTD., NO.496/4, 2ND FLOOR, 1ST CROSS, NEAR BASHYA CIRCLE, SADASHIVANAGARA, BENGALURU-560 080, PAN AABC12488Q …RESPONDENT (RESPONDENT SERVED)

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39922-DB ITA No. 547 of 2023

THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 20/01/2023 PASSED IN IT(TP)A NO.804/BANG/2022, FOR THE ASSESSMENT YEAR 2018-2019 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HONBLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 20.01.2023 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN IT(TP)A NO.804/BANG/2022 FOR A.Y.2018- 2019 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.

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

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NC: 2024:KHC:39922-DB ITA No. 547 of 2023

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

Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue.

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 20.01.2023 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.804/Bang/2022 for the assessment year 2018-19.

3.

This

Court,

admitted the appeal on 11.03.2024 to consider the following substantial question of law: "Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature directing the Transfer Pricing Officer to exclude in law in comparable, namely, Exilant Technologies Ltd, Larsen & Tourbo Ltd, Nihilent Ltd, Mind Tree Ltd, Persistent Systems Ltd,

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NC: 2024:KHC:39922-DB ITA No. 547 of 2023

Wipro Ltd, Tata Elxsi Ltd, Infosys Ltd, Cybage Software Pvt Ltd on ground turnover filter having in excess of Rs.200cr and further Tribunal has included comparables namely, Batchmaster Software Pvt Ltd, Extentia Information Pvt Ltd, Orangespace Technology Ltd, Yudiz Solutions Pvt Ltd, Celetream Technologies Pvt Ltd without appreciating that the selection of comparables in a case depends on transfer pricing on assessee's specific FAR analysis and specific facts brought out on record by the TPO and as per Rule 10B of I.T.Rules?"

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 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

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NC: 2024:KHC:39922-DB ITA No. 547 of 2023

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

SMJ List No.: 2 Sl No.: 22

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