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1/6 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 30TH DAY OF AUGUST 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.285/2018
BETWEEN : 1. PR. COMMISSIONER OF INCOME TAX-4 5TH FLOOR, BMTC BUILDING KORAMANGALA, BANGALORE.
THE ASSISTANT COMMISSIONER OF INOME-TAX, CIRCLE-4(1) BENGALURU.
...APPELLANTS
(BY SRI SANMATHI.E.I., ADV.)
AND : M/s. MICROCHIP TECHNOLOGY (INDIA) P. LTD., No.149B, EPIP 1ST PHASE INDUSTRIAL AREA, WHITEFIELD BENGALURU-560066 PAN: AABCM9868J.
…RESPONDENT
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 27.10.2017 PASSED IN IT[TP]A No 260/BANG/2015, FOR THE ASSESSMENT YEAR: 2010-2011, VIDE ANNEXURE - A, PRAYING TO: DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE COMMON APPELLATE ORDER DATED:
Date of Judgment 30-08-2018, ITA No.285/2018 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. Microchip Technology [India] P. Ltd.,
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27.10.2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BANGALORE, IN APPEAL PROCEEDINGS IN IT[TP]A No.260/BANG/2015 FOR ASSESSMENT YEAR: 2010- 2011, VIDE ANNEXURE-A, AS SOUGHT FOR IN THIS APPEAL.
THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Mr. E.I.Sanmathi, 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 ‘B’, Bangalore, in IT[TP]A No.260/Bang/2015 dated 27.10.2017, relating to the Assessment Year 2010-11.
The substantial question of law framed by the Revenue in the Memorandum of Appeal is as under: “Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing the TPO to apply RPT filter of 15% when different Tribunal’s including ITAT Bengaluru have considered 25% RPT as appropriate?”
Date of Judgment 30-08-2018, ITA No.285/2018 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. Microchip Technology [India] P. 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: “05. Apropos RPT filter the bench has also pointed out that the Tribunal is directing taking 25% RPT filter as against 0% in its order in the matter of ACI Worldwide Solutions P. Ltd., [IT[TP]A.262/Bang/2015, dated 26.07.2017, has extensively dealt with the issue of RPT filter, to the following effect:
“xxxxx”
Following the principles laid down by Bench in the above noted case, it was suggested objections raised regarding the suitability of comparables have to be examined considering this decision, along with other aspects.”
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
Date of Judgment 30-08-2018, ITA No.285/2018 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. Microchip Technology [India] P. Ltd.,
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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 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
Date of Judgment 30-08-2018, ITA No.285/2018 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. Microchip Technology [India] P. Ltd.,
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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 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
Date of Judgment 30-08-2018, ITA No.285/2018 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. Microchip Technology [India] P. Ltd.,
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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- Revenue is liable to be dismissed and it is dismissed accordingly. No costs.
Copy of this Order be sent to the Respondent- Assessee forthwith.
Sd/- JUDGE
Sd/- JUDGE
NC.