M/S. BIESSE MANUFACTURING CO PVT LTD vs THE DEPUTY COMMISSIONER OF INCOME TAX

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF JANUARY, 2021 PRESENT THE HON’BLE MR. JUSTICE SATISH CHANDRA SHARMA AND THE HON’BLE MR. JUSTICE V. SRISHANANDA I.T.A. NO.851/2017 C/W I.T.A.NO.321/2018 IN I.T.A. NO.851/2017 BETWEEN: M/S. BIESSE MANUFACTURING CO. PVT LTD., SY.NO.32,# 469, JAKKASANDRA VILLAGE, SONDEKAPPA ROAD, NELAMANGLA TALUK, BENGALURU RURAL DISTRICT - 562 123. (REPRESENTED BY ITS DIRECTOR, SRI.PRASHANTH K.V., AGED ABOUT 44 YEARS, S/O. K.B.VIRUPAKSHAIAH) PAN: AACCB 7928D.

.... APPELLANT (BY SRI.TATA KRISHNA & SRI.CHYTHANYA K.K. , ADVS.) AND: THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(2), ROOM NO.242, 2ND FLOOR,BMTC BUILDING 80 FT ROAD, KORAMANGALA BENGALURU - 560 095.

... RESPONDENT (BY SRI. K.V. ARAVIND ADV.,) - - -

2 THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:07.07.2017 PASSED IN IT(TP)A NO.755/BANG/2017, FOR THE ASSESSMENT YEAR-2012-2013, ANNEXURE-A, PRAYING TO:(A)FORMULATE THE SUBSTANTIAL QUESTION OF LAW, (B) ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU 'C' BENCH BEARING IN IT(TP)A NO.755/BANG/2017 DATED 07.07.2017 AND ETC. I.T.A.NO.321/2018 BETWEEN M/S. BIESSE MANUFACTURING CO.PVT LTD., SY.NO.32,# 469, JAKKASANDRA VILLAGE, SONDEKAPPA ROAD, NELAMANGLA TALUK, BENGALURU RURAL DISTRICT - 562 123. (REPRESENTED BY ITS DIRECTOR, SRI.PRASHANTH K.V., AGED ABOUT 45 YEARS, S/O. K.B.VIRUPAKSHAIAH) PAN: AACCB 7928D.

…APPELLANT (BY SRI.TATA KRISHNA & SRI.CHYTHANYA K.K. , ADVS) AND THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(2), ROOM NO.242, 2ND FLOOR, BMTC BUILDING 80 FT ROAD, KORAMANGALA BENGALURU - 560 095.

... RESPONDENT (BY SRI. K.V. ARAVIND ADV.,) THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:15.12.2017 PASSED IN M.P.NO.252/BANG/2017, IN IT (TP)A

3 NO.755/B/2017, FOR THE ASSESSMENT YEAR-2012-2013, VIDE ANNEXURE-A, PRAYING TO: (A) FORMULATE THE SUBSTANTIAL QUESTION OF LAW (B) ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU 'C' BENCH BEARING IN MP NO.252/BANG/2017 IN IT(TP)A NO.755/B/2017, DATED 15.02.2017 VIDE ANNEXURE-A AND ETC., THESE I.T.As., COMING ON FOR HEARING OF JUDGMENT, THIS DAY, V. SRISHANANDA. J., DELIVERED THE FOLLOWING: JUDGMENT

These two matters are pertaining to the same assessee and therefore, they are disposed of by this common order.

ITA No. 851/2017 is filed u/s.260-A of the Income Tax Act, 1961 with the following prayers: a) ”Formulate the substantial question of law stated above; b) Allow the appeal and set-aside the impugned order of the Income Tax Appellate Tribunal, Bengaluru 'C' Bench bearing in IT(TP) A No.755/B/2017 dated 07.07.2017; and c) Pass such other suitable orders including order as to costs as this Honorable Court may deem fit to grant in the facts and

4 circumstances of the case in the interest of justice and equity." Whereas ITA No.321/2018 is filed u/s.260-A of the Income Tax Act with the following prayer:

"WHEREFORE, it is respectfully prayed that

this Hon'ble court may be pleased to:- a) Formulate the substantial question of law stated above; b) Allow the appeal and set-aside the impugned order of the Income Tax Appellate Tribunal, Bengaluru 'C' Bench bearing in Mp No.252/Bang?2017 in IT (TP) A No. 755/B/2017, dated 15.12.2017;and c) Pass such other suitable orders including order as to costs as this Honorable Court may deem fit to grant in the facts and circumstances of the case in the interest of justice and equity.

When the matter is taken up for hearing, learned counsel for the appellant in ITA No.851/2017 has filed a memo which reads as under:

5 "It is humbly prayed before this Hon'ble High Court to permit the Appellant to withdraw the Appeal in ITA No.851/2017 as the Appeal in ITA No.321/2018 is allowed by way of remand to the Tribunal by this Hon'ble High Court." 4. In ITA No.321/2018, the following substantial questions of law are raised:

"Whether, on the facts and circumstances of the case, the Tribunal is right in law in perversely dismissing the Miscellaneous Petition without application of mind?

II. Whether, on the facts and circumstances of the case, the Tribunal is right in law in refusing to recall its order to consider the grounds on rent and salaries for adjustment towards capacity underutilization/abnormal cost under Rule 10B (1) (e) (iii) of the IT Rules?

III. Whether, on the facts and circumstances of the case, the Tribunal is right in law in refusing to modify its direction regarding working capital adjustment?

IV. Whether, on the facts and circumstances of the case, the Tribunal is right in

6 law in refusing to recall its order to consider the ground on the Assessing Officer/Transfer Pricing Officer failing to follow directions of the Dispute Resolution Panel to compute margin before depreciation and provisions for bad and doubtful debts?

V. Whether, on the facts and circumstances of the case, the Tribunal is right in law in refusing to recall its order to consider the ground on treating Technical services and software testing services as a separate & independent function when the same is closely linked with the manufacturing activity?

VI. Whether, on the facts and circumstances of the case, the Tribunal is right in law in refusing to recall its order to consider the ground on adjustment of Rs.29,76,156/- under section 92CA for alleged software segment?

VII. Whether, on the facts and circumstances of the case, the Tribunal is right in law in refusing to recall its order to consider ground on non-grant of set off of losses brought forward from earlier years?

During the course of arguments Sri K.K. Chythanya, learned counsel for the appellant contended that by letter dated 6.11.2017, he has requested the Income Tax Appellate Tribunal to consider the Misc. Petition filed under Section 254(2) of the Income Tax Act, 1961 which may be considered on merits. He further submits that if the said Misc. Petition is considered, there is no necessity of proceeding further with the ITA No.851/2017.

In ITA No.321/2018, he drew the attention of this court to the impugned order passed by the Income Tax Appellate Tribunal in M.P. No.252/Bang/2017, wherein the Tribunal at para No.2 has noted that certain grounds i.e., 4.2.2 to 4.2.4, 4.3.1, 5.1, 5.2, 6.1 to 6.4 and ground No.8 were not decided. He further submitted that since those grounds are not considered by the Tribunal, necessity arose for assessee to file Misc. application. If the Misc. application is taken up for consideration and grounds urged therein is adjudicated in accordance with law, ends of justice would be met.

Learned counsel for the Revenue Sri K.V. Aravind submits that if this court is remanding the matter for consideration of the Misc. Application filed by the assessee, liberty be granted to revenue to urge all contentions which are available to Revenue.

In the light of the above submission, this court is of the considered opinion that Misc. Application filed by the appellant under Section 254(2), if adjudicated in accordance with law would meet the ends of justice. Hence, following order is passed: ORDER

ITA No.851/2017 filed by the assessee is dismissed as withdrawn in terms of Memo dated 29.1.2021.

ITA No.321/2018 is allowed in part. The order passed by the Income Tax Appellate Tribunal in MP No.252/Bang/2017 dated 15.12.2017 is hereby set aside and matter is remitted to the Tribunal for fresh disposal in accordance with law by directing the Tribunal to consider the Misc. Petition filed under Section 254(2) of the Income Tax Act, 1961, on merits in accordance with law.

Parties are at liberty to urge all the contentions before the Tribunal and this Court has not expressed anything on merits of the case. Sd/-

JUDGE Sd/- JUDGE PL*

M/S. BIESSE MANUFACTURING CO PVT LTD vs. THE DEPUTY COMMISSIONER OF INCOME TAX