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1/8 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.1044/2017
BETWEEN : 1. PR. COMMISSIONER OF INCOME TAX-5 BMTC COMPLEX KORAMANGALA BANGALORE.
THE JOINT COMMISSIONER OF INCOME TAX, CIRCLE 5(1)(1) BANGALORE.
...APPELLANTS
(BY SRI SANMATHI.E.I., ADV.)
AND : M/s. RAMBUS CHIP TECHNOLOGIES (INDIA) PVT. LTD., (RAMBUS INDIA) 12TH FLOOR TOWER C & D, IBC KNOWLEDGE PARK, 4/1 BANNERGATTA ROAD BANGALORE-560029 PAN NO.AACCR8522M.
…RESPONDENT
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28/07/2017, PASSED IN IT[TP]A No.1091/BANG/2016, FOR THE ASSESSMENT YEAR 2010-11 VIDE ANNEXURE-A,
Date of Judgment 30-08-2018, ITA No.1044/2017 Pr. Commissioner of Income Tax-5 & Another Vs. M/s. Rambus Chip Technologies [India] Pvt. Ltd.,
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PRAYING TO: DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED: 28/07/2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BENGALURU, IN APPEAL PROCEEDINGS IN IT[TP]A No.1091/BANG/2016 FOR ASSESSMENT YEAR 2010-11 VIDE ANNEXURE-A, AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
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.1091/Bang/2016 dated 28.07.2017, relating to the Assessment Year 2010-11.
The substantial questions of law framed by the Revenue in the Memorandum of Appeal are as under: “1. Whether on the facts and circumstances of the case, the Tribunal is justified
Date of Judgment 30-08-2018, ITA No.1044/2017 Pr. Commissioner of Income Tax-5 & Another Vs. M/s. Rambus Chip Technologies [India] Pvt. Ltd.,
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in directing the Assessing Officer to exclude the certain expenditure incurred in foreign currency both from the export turnover and the total turnover when there is no provision in section 10A which requires the said expenses to be reduced from the total turnover?
Whether on the facts and circumstances of the case, the Tribunal is right in excluding comparables such as Tata Elxsi and Infosys Technologies Ltd., when the said comparables are considered by the Transfer Pricing Officer after application of quantitative and qualitative filters?”
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:
Date of Judgment 30-08-2018, ITA No.1044/2017 Pr. Commissioner of Income Tax-5 & Another Vs. M/s. Rambus Chip Technologies [India] Pvt. Ltd.,
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Regarding Substantial Question of Law No.2: “4. Having carefully examined the order of the lower authorities and documents available on record in the light of rival submissions, we find that in the earlier years, the Tribunal has examined the issue and following another order in the case of Airbus India Operations Pvt. Ltd., has held that Tata Elxsi Ltd., and Infosys Ltd., are not the good comparables, therefore they should be excluded from the list of final comparables. The relevant observation of the Tribunal is extracted hereunder:
“xxxxx”
Since the Tribunal has taken a particular view in the similar set of facts, we find no justification to take a contrary view in this appeal. Accordingly, we hold that exclusion of these companies from the list of comparables by the CIT[A] is proper. We accordingly confirm the order of the CIT[A].”
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.
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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
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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
Date of Judgment 30-08-2018, ITA No.1044/2017 Pr. Commissioner of Income Tax-5 & Another Vs. M/s. Rambus Chip Technologies [India] Pvt. Ltd.,
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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- Revenue is liable to be dismissed and it is dismissed accordingly. No costs.
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Copy of this Order be sent to the Respondent- Assessee forthwith.
Sd/- JUDGE
Sd/- JUDGE
NC.