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1/9 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 31ST DAY OF AUGUST 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.73/2018
BETWEEN :
THE PR. COMMISSIONER OF INCOME TAX, 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560 095.
THE INCOME-TAX OFFICER WARD-11(1), PRESENT ADDRESS 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560 095. ... APPELLANTS
(BY SRI. DILIP, ADV. FOR SRI. K.V. ARAVIND, ADV.)
AND:
M/S. CAE SIMULATION TECHNOLOGIES PVT. LTD., SY. NO. 26/27 2ND AND 3RD FLOOR BANDARAMANAHALLI VILLAGE DEVANAHALLI BENGALURU-560 078 PAN: AACCC 6086F. ... RESPONDENT
Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd.,
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THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:01/09/2017 PASSED IN IT(TP)A NO. 141/BANG/2014, FOR THE ASSESSMENT YEAR 2009-2010, VIDE ANNEXURE-D PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO.141/BANG/2014 DATED:01/09/2017 VIDE ANNEXURE-‘D’ CONFIRMING THE ORDER OF THE DRP AND CONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-2(1)(1), BENGALURU AND ETC.
THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Mr. Dilip, for Mr. K.V.Aravind, Adv. for Appellants – Revenue.
This Appeal is filed by the Revenue purportedly raising substantial questions of law arising from the Order of the Income Tax Appellate Tribunal, Bangalore Bench ‘A’, Bangalore, in IT[TP]A No.141/Bang/2014 dated 01.09.2017, (The Income-Tax Officer Vs. M/s CAE Simulation Technologies Pvt. Ltd.,) for AY 2009- 10.
Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd.,
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The proposed substantial question of law framed in the Memorandum of Appeal by the Appellant/s Revenue is quoted below for ready reference:
“Whether on the facts and in the circumstances of the case, Tribunal is right in law in setting aside the re-computation of 10A deduction made by assessing authority by following the judgment of this Hon’ble High Court in the case of CIT V/s. Tata Elxsi even though the said decision has not reached finality and the assessing authority recomputed the 10A deduction as per the provisions of the Act?”
The learned counsel for the Appellants- Revenue seeks to raise additional substantial question of law. The same is quoted hereunder:
“ Whether on the facts and in the circumstances of the case, The Tribunal is right in law in excluding Bodhtree consulting
Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd.,
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Ltd and Infosys Technologies Ltd on the basis of high fluctuation margin and imposing condition beyond law bty following its earlier judgments which has not reached finality and even when the Transfer Pricing Officer has considered the comparables on the basis of qualitative and quantitative filters?”
The learned counsel appearing for the Appellants – Revenue, Mr. Dilip for K.V. Aravind submitted that he does not press the first Substantial Question of Law raised by him in the present appeal. The same is placed on record.
The learned Tribunal, after discussing the rival contentions of both the Appellants/Revenue and the Respondent-Assessee, has given the following findings: relating to the Assessment Year 2009-10.
Regarding Addl. Substantial Question of Law:
Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd.,
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“31. Ground No.13, is on the issue whether Infosys Technologies Ltd., can be taken as a comparable.
31.1. After hearing rival contentions, we find that Infosys Technologies Ltd., cannot be taken as a comparable for the reason that the brand value of Infosys is much higher than the brand value of the assessee company.
For this proposition of law, we place reliance on the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Agnity India Technologies Pvt. Ltd., being ITA No.1204/2011, dt: 10th July, 2013 wherein it has been held as follows: Xxxxx
xxxx xxxx
Respectfully following the same, we allow this ground of the assessee.”
However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015 delivered on 25.06.2018 (Prl. Commissioner of Income Tax & Anr.
Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd.,
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–v- M/s Softbrands India Pvt. Ltd.,) has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable.
The relevant portion of the said judgment is quoted below for ready reference:
“Conclusion: 55.
A substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases. Had it been a case of substantial question of interpretation of provisions of Double Taxation Avoidance Treaties (DTAA), interpretation of provisions of the Income Tax Act or Overriding Effect of the Treaties over the Domestic Legislations or the questions like Treaty Shopping, Base Erosion and Profit Shifting (BEPS), Transfer of Shares in Tax Havens (like in the case of Vodafone
Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd.,
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etc.), if based on relevant facts, such substantial questions of law could be raised before the High Court under Section 260-A of the Act, the Courts could have embarked upon such exercise of framing and answering such substantial question of law. On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law.
We are therefore of the considered opinion that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed.
Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd.,
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We make it clear that the same yardsticks and parameters will have to be applied, even if such appeals are filed by the Assessees, because, there may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an ‘Arm’s Length Price’ in the case of the assessees with which the assessees may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all a sufficient reason to invoke Section 260-A of the Act before this Court.
The appeals filed by the Revenue are therefore dismissed with no order as to costs.”
Having heard the learned counsel appearing for the appellants-Revenue, we are therefore of the opinion that no substantial question of law arises in the present case also. The Appeal filed by the Appellants-
Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd.,
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Revenue is liable to be dismissed and it is dismissed accordingly. No costs. The copy of this judgment be sent to the Respondent – Assessee forthwith.
Sd/- JUDGE
Sd/- JUDGE
Psg*