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1/8 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.476/2018
BETWEEN : 1. THE PR. COMMISSIONER OF INCOME TAX
5TH FLOOR, BMTC BUILDING
80 FEET ROAD, KORMANGALA
BENGALURU-560 095.
THE DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE-12(5), PRESENT ADDRESS
CIRCLE-7(1)(2)
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 YODLEE INFOTECH PVT. LTD., PRESTIGE TECHNOLOGY PARK MERCURY (2B) BLOCK 1ST FLOOR, SARJAPUR MARATHALLI RING ROAD BENGALURU-560 087 PAN: AAACY 1273E. …RESPONDENT
(BY SRI. K. MALLAHARAO & SRI. PARTH, ADVS. FOR SRI. NAGESHWAR RAO, ADV., )
Date of Judgment 31-08-2018, ITA No.476/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s Yodlee Infotech 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 15.12.2017 PASSED IN IT(TP)No.1138/BANG/2011, FOR THE ASSESSMENT YEAR 2007-2008 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)No.1138/BANG/2011 DATED 15.12.2017, VIDE ANNEXURE-D, AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7(1)(2), BENGALURU.
THIS APPEAL COMING ON FOR ORDERS, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Mr. Dilip, Adv. for Mr. K.V. Aravnind, Adv. for Appellants – Revenue. Mr. K. Mallaharao, & Mr. Parth, Advs. for Mr. Nageswar Rao, Adv. for Respondent – Assessee.
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 ‘B’, Bangalore, in IT[TP]A No.1138/Bang/2011 dated 15.12.2017, relating to the Assessment Year 2007-08.
Date of Judgment 31-08-2018, ITA No.476/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s Yodlee Infotech Pvt. Ltd.,
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The substantial questions of law framed by the Revenue in the Memorandum of Appeal are as under: “1. Whether on the facts and in the circumstances of the case, the order of the Tribunal can be said as perverse in excluding the comparables chosen by the Transfer Pricing Officer by following its earlier order in the case of NXP Semi-conductors (I) Pvt. Ltd., ignoring the materials brought on record by the Transfer Pricing Officer in its order dated 22.09.2010 and without comparing the assessee’s activities with the comparables considered by the Transfer Pricing Officer with regard to the qualitative and quantitative filters adopted by Transfer Pricing Officer? 2. Whether on the facts and in the circumstances of the case, the ITAT was right in super imposing the decision of other benches of ITAT in the case of assessee to reject these comparables when selection of comparables in a case depends in transfer pricing on assessee specific FAR analysis?”
Date of Judgment 31-08-2018, ITA No.476/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s Yodlee Infotech Pvt. Ltd.,
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The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings as under: Regarding Substantial Question of Law Nos.1 & 2: “8. We have carefully examined the orders of the lower authorities and the order of the Tribunal in the case of NXP Semiconductors India Pvt. Ltd., (supra) and we find that undisputedly all these comparables were examined by the Tribunal in this case and having examined the comparable in this case in the light of various Tribunal orders, the Tribunal has excluded the aforesaid 15 comparables and for inclusion of the remaining comparables, the Tribunal has restored the matter to the TPO to examine afresh in the light of assessee’s contentions.
For the sake of reference, we extract the relevant portion of the order of the Tribunal as under:
xxxxxxxxxxxx
Since the Tribunal has taken a particular view in similar set of facts, we find no justification to take a contrary view in this
Date of Judgment 31-08-2018, ITA No.476/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s Yodlee Infotech Pvt. Ltd.,
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appeal. Accordingly, following the same, we direct the AO/TPO to exclude the following comparables; 1. Accel Transmatics Limited (Seg.) 2. Avani Cimcon Technologies Limited 3. Celestial Labs Limited 4 .E-Zest Solutions Limited 5. Helios & Matheson Information Technology Limited 6. Infosys Technologies Limited 7. Ishir Infotech Limited 8. KALS Infosystems Limited 9. Lucid Software Limited 10. Megasoft Limited 11. Persistent Systems Limited 12. Quintegra Solutions Limited 13. Tata Elxsi Limited (Seg.) 14. Thirdware Solutions Limited 15. Wipro Limited.”
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. –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.
Date of Judgment 31-08-2018, ITA No.476/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s Yodlee Infotech Pvt. Ltd.,
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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 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
Date of Judgment 31-08-2018, ITA No.476/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s Yodlee Infotech Pvt. Ltd.,
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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.
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.
Date of Judgment 31-08-2018, ITA No.476/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s Yodlee Infotech Pvt. Ltd.,
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The appeals filed by the Revenue are therefore dismissed with no order as to costs.”
Having heard the learned counsels appearing for the parties, we are therefore of the opinion that no substantial question of law arises in the present case also. The Appeal filed by the Appellants-Revenue is liable to be dismissed and it is dismissed accordingly. No costs.
Sd/- JUDGE
Sd/- JUDGE
PMR