COMMISSIONER OF INCOME TAX vs. M/S. YAHOO SOFTWARE

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ITA/250/2015HC KarnatakaKAHC01031660201523 October 2020Bench: ALOK ARADHE,H.T. NARENDRA PRASAD5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that a mutual agreement had been reached between the competent authorities of India and USA, and the Assessing Officer had passed an order giving effect to this agreement. Consequently, the substantial questions of law were rendered academic.

What were the facts?

The revenue filed an appeal against an ITAT order concerning the assessment year 2006-07. The appeal raised substantial questions of law regarding the selection of comparable companies and the application of filters for transfer pricing.

What were the issues?

Whether the ITAT correctly applied filters for selecting comparable companies in transfer pricing, and if the mutual agreement between tax authorities rendered the appeal academic.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 23RD DAY OF OCTOBER 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD

I.T.A. NO.250 OF 2015

BETWEEN

1.

COMMISSIONER OF INCOME TAX, CENTRAL REVENUE BUILDINGS QUEENS ROAD, BANGALORE-560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12 (5), BANGALORE. ...APPELLANTS

(BY SRI E I SANMATHI, ADV.)

AND

M/S. YAHOO SOFTWARE DEVELOPMENT INDIA PVT. LTD., ’TORREY PINES’, EMBASSY GOLF LINKS, BUSINESS PARK OFF. INDIRANAGAR, KORAMANGALA

INTERMEDIATE RING ROAD, BANGALORE. …RESPONDENT

(BY SRI T.SURYANARAYANA, ADV.) - - -

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED:31/12/2014 PASSED IN ITA NO.1129/BANG/2010, FOR THE ASSESSMENT YEAR 2006-2007 PRAYING TO 1. DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT. 2. SET ASIDE THE APPELLATE ORDER DATED: 31/12/2014 PASSED BY THE ITAT, ‘B’ BENCH, BANGALORE, IN APPEAL PROCEEDINGS IN ITA NO. 1129/BANG/2010 FOR ASSESSMENT YEAR 2006-07 AS SOUGHT FOR IN THIS APPEAL.

THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

Mr.E.I.Sanmathi, learned counsel for the revenue.

Mr.T.Suryanarayana, learned counsel for the assessee.

2.

This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the

Act’, for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment Year 2006-07. The appeal was admitted by a Bench of this Court vide order dated 18.01.2016 on the following substantial questions of law:

“1. Whether on the facts and in the circumstances of the case, the Tribunal were right in law in adopting turnover filter of Rs.200 crore when the turnover is not a relevant filter in the software industry and when the size of the turnover and profit margins are not linked in the software industry unlike capital intensive companies?

2.

Whether, on the facts and in the circumstances of the case, the Tribunal were right in law in holding that KALS Information Systems Ltd., Accel Transmatic Ltd., Tata Elxsi Limited and Lucid Software Ltd., cannot be taken as comparables on the basis of facts of different case for different assessee for

different assessment year without making any specific FAR analysis vis a vis the assessee company in contrast to the facts that these companies satisfy all the qualitative and quantitative filters applied by the TPO?

3.

Whether, on the facts and in the circumstances of the case, the Tribunal were right in law in directing the TPO to apply RPT filter of 15% instead of RPT of 25%?”

3.

When the matter was taken up today, learned counsel for the assessee has produced a memo, which is taken on record. Learned counsel for the assessee submits that the competent authority of USA and India have reached mutual agreement and on the basis of the aforesaid agreement, the Assessing Officer has passed an Order giving effect to mutual agreement procedure vide order dated 15.12.2015. It is also pointed out that in view of the order passed by the Assessing Officer

dated 15.12.2015, the substantial questions of law involved in this appeal have been rendered academic.

4.

However, learned counsel for the revenue submits that the appeal may be disposed of with liberty to the revenue to revive the same, if occasion so arises.

In view of aforesaid submission, the appeal is disposed of with liberty as prayed for.

Sd/- JUDGE

Sd/- JUDGE

dn/- CT-HR

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