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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.117/2018
BETWEEN : 1. THE PR. COMMISSIONER OF INCOME-TAX 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560095.
THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11(3), PRESENT ADDRESS DCIT, C-3(1)(2), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA BENGALURU 560095.
...APPELLANTS
(BY SRI DILIP, ADV FOR SRI ARAVIND.K.V., ADV.)
AND : M/s. GLOBAL E-BUSINESS OPERATIONS PVT. LTD., HP TOWER 1, 2 & 3, GOLF VIEW CAMPUS WIND TUNNEL ROAD MURUGESHPALYA BENGALURU 560017.
…RESPONDENT
(BY SRI ANKUR PAI, ADV.)
Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations 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 16/08/2017, PASSED IN IT(TP)A No.318/BANG/2014, FOR THE ASSESSMENT YEAR 2005-2006 VIDE ANNEXURE-D, PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A No.318/BANG/2014 DATED:16/08/2017 VIDE ANNEXURE-D AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(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. Aravind.K.V., Adv. for Appellants – Revenue. Mr. Ankur Pai, 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.318/Bang/2014 dated 16.08.2017, relating to the Assessment Year 2005-06.
The substantial questions of law framed by the Revenue in the Memorandum of Appeal are as under:
Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd.,
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“1. Whether, on the facts and circumstances of the case, the Tribunal is right in law in holding that the expenses reduced from the export turnover has to be reduced from the total turnover also when no provision under section 10A provides for exclusion of such expenses from the total turnover?
Whether, on the facts and in circumstances of the case, the Tribunal is right in holding that M/s. Maple E-Solutions Ltd., cannot be taken as a comparable being functionally different, when it satisfies all the qualitative and quantitative filters applied by the TPO?
Whether, on the facts and in circumstances of the case, the Tribunal is correct in superimposing the decision of other benches of the ITAT in case of the assessee to reject this comparable company, when selection of comparable companies in transfer pricing study depends on assessee specific FAR analysis?
Whether, on the facts and in circumstances of the case, the Tribunal is right in law in concluding that M/s. Maple E-Solutions Ltd., is not comparable to the assessee overlooking the fact that the company is selected
Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd.,
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as comparable by the TPO on the basic of Specific facts brought on record?”
Learned Counsel for the Appellants-Revenue does not press substantial question No.1.
Submission is taken on record.
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.2, 3 & 4: “7.3 We have heard the rival contentions of the parties. The subsequent decision of the Delhi Tribunal Stream International Services P. Ltd., v. Addl. Director of Income-tax [Intl. Taxation] [31 taxmann.com 227], has considered the order passed by the tribunal in the matter of ITO v. CRM Services India P. Ltd., [(2011) 14 taxmann.com 96] and thereafter in paras 17 and 18, it was held by the Tribunal as under:
“xxxxx”
Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd.,
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7.4 We find that no contrary judgment to Stream International Services P. Ltd., [Supra] has been brought to our notice. The Learned. DR has failed to point out any reason as to why the ratio laid down by the coordinate bench in the mater of Stream International Services P. Ltd., [supra] is not applicable to the facts and circumstances of the present case. Accordingly, we have no hesitation to delete this comparable, namely, Maple eSolutions Ltd., as the subsequent decision of the Tribunal in Stream International Services P. Ltd., [Supra] will have more precedence value in comparison to the earlier order. Accordingly, we direct exclusion of this comparable.”
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.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations 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
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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.
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
Date of Judgment 31-08-2018, ITA No.117/2018 The Pr. Commissioner of Income-tax & Another Vs. M/s. Global E-Business Operations Pvt. Ltd.,
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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 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
NC.