ACIT, CIRCLE 1(2) vs. M/S. SERAJUDDIN AND CO.

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 12.10.2020 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.Nos.160 and 211/Bang/2016 for the assessment year 2011-12, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the Transfer

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the Transfer Pricing Officer to exclude comparables even when the TPO had considered the said comparables after satisfying all the required tests and ignoring the reasoning's assigned by Transfer Pricing Officer?

Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in directing Transfer Pricing Officer to limiting the working capital adjustment to the average cost of capital of the comparable companies?

Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that there is no basis for the Transfer Pricing Officer for imposing an upper limit on the working capital adjustment when the Transfer Pricing Officer has rightly held that 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 circumstance's of the case, the Tribunal is right in law in directing the Transfer

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that M/s. ICC International Agencies Ltd cannot be held as comparable-company on the ground of non availability of information regarding nature of services, when the primary activity of company involves processing orders including marketing for its principal products?”

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.

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