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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.240/2018
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 WARD-1(1)(2) 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560 095. ... APPELLANTS (BY SRI. DILIP, ADV. FOR SRI. ARAVIND. K. V, ADV.)
AND:
M/S. AT & T GLOBAL BUSINESS SERVICES INDIA PVT. LTD., BLOCK A, GROUND FLOOR SALARPURIA SOFTZONE, BELLANDUR POST BENGALURU-560 103 PAN: AACCA 9362N. ... RESPONDENT
Date of Judgment 31-08-2018, ITA No.240/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. AT & T Global Business Services India 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:11/10/2017 PASSED IN IT(TP)A NO.154/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 ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO. 154/BANG/2014 DATED:11/10/2017 AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-1(1)(2), BENGALURU. (VIDE ANNEXURE-D) AND ETC.
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. 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 ‘B’, Bangalore, in IT[TP]A No.154/Bang/2014 dated 11.10.2017, (M/s AT & T Global Business Services India Pvt. Ltd., Vs. The Income-Tax Officer) for AY 2009-10.
Date of Judgment 31-08-2018, ITA No.240/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. AT & T Global Business Services India 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 circumstances of the case, the Tribunal is right in law in excluding M/s Bodhtree consulting Ltd., Tata Elxis ltd and Infosys Technology comparable’s on the ground of functional dis-similarity by following its earlier decision which has not reached finality?”
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.
“6. Having carefully examined the orders of lower authorities in the light of rival
Date of Judgment 31-08-2018, ITA No.240/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. AT & T Global Business Services India Pvt. Ltd.
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submissions and the order of Tribunal in the case of M/s Infinera India Pvt. Ltd.,(supra), we find that these comparables were examined by the Tribunal and the Tribunal has come to the conclusion that these comparables are functionally different from, the assessee. Therefore, these comparables were directed to be excluded from the list of comparables. We have also examined the contentions of the revenue with regard to Bodhtree Consulting Ltd. and Persistent Systems Ltd., but from a perusal of the objections filed and the order of DRP, we find that the issue of functionality was raised before the DRP in the case of Bodhtree Consulting Ltd. and was raised before the DRP in the case of Bodhtree Consulting Ltd. and Persistent Systems Ltd. and the DRP made a discussions of the functional profile of Bodhtree Consulting Ltd. and Persistent System Ltd., Therefore, the DRP had an occasion to examine the functionality of these two companies. Thus, we do not find any force in the contention of the revenue. However, we find that all these four
Date of Judgment 31-08-2018, ITA No.240/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. AT & T Global Business Services India Pvt. Ltd.
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comparables were examined by the Tribunal in the case of M/s Infinera India Pvt. Ltd.(supra) in which it was held that these comparables are functionally different. The relevant observations of the Tribunal with respect to these 4 comparables are extracted hereunder:-
Xxxx
xxxx xxxx
Since the Tribunal has examined the profile of these comparables and held that this comparables are functionally different, they cannot be included in the list of comparables, we accordingly following the same, direct the TPO to exclude these 4 comparables from the list of comparable sand thereafter determine the ALP in accordance with the law.”
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.240/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. AT & T Global Business Services India 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.240/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. AT & T Global Business Services India 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.
We make it clear that the same yardsticks and parameters will have to be
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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-
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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*.