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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 20TH DAY OF AUGUST 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.924/2017
BETWEEN :
PR. COMMISSIONER OF INCOME TAX -6 BMTC COMPLEX KORAMANGALA, BANGALORE
DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -12 (3) BANGALORE
... APPELLANTS
(BY SRI. SANMATHI E I, ADV.)
AND:
M/S. SANYO BPL P. LTD., JUBILEE BUILDING 2ND FLOOR NO.45 MUSEUM ROAD, BANGALORE - 560 025 PAN:AAJCSO 332B
... RESPONDENT
THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:09/06/2017 PASSED IN IT(TP)A
Date of Judgment 20-08-2018, ITA No.924/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd.
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NO.1626/BANG/2014, FOR THE ASSESSMENT YEAR 2008- 2009 VIDE ANNEXURE – A, PRAYING TO: (A) 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. (B) SET ASIDE THE APPELLATE ORDER DATED:09/06/2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'A' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO.IT(TP)A NO. 1626/BANG/2014 FOR ASSESSMENT YEAR 2008-09 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, ‘A’ Bench, Bangalore, in IT [TP] A No.1626/Bang/2014 dated 09.06.2017 relating to the Assessment Year 2008-09.
The substantial question of law framed by the Revenue in the Memorandum of Appeal is as under:
Date of Judgment 20-08-2018, ITA No.924/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd.
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“ Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in law in directing the Transfer Pricing Officer to carry out the working capital adjustment on the basis of actual workings on the financials of the final companies remained as comparable without appreciating that Transfer Pricing Officer had rightly passed order under section 92CA whereby no adjustment of working capital was granted since the assessee had failed to give proper justification and detailed computation of adjustment of fixed expenses and as such the Tribunal ought to have upheld the approach of the TPO in not granting the working capital adjustment?”
The learned Tribunal, after discussing the rival contentions of both the Appellant-Revenue and Respondent-Assessee, has returned the findings as under: “10. We have gone through the record as well as the direction issued by the CIT (A). In our view, the CIT(A) has not directed the TPO in the way it has been portrayed by the Ld. DR. In fact, the direction issued by the CIT (A) was only to the
Date of Judgment 20-08-2018, ITA No.924/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd.
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effect to calculate the working capital adjustment and grant it to the assessee. Even otherwise in our view, working capital adjustment is required to be granted on the basis of the actual working of the financials of the finally company remained as comparable and Workmen’s Compensation Act,1923 is required to be given by the TPO on actual basis. Therefore in the light of the above, this ground of the Revenue is also devoid of fact and therefore dismissed.”
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. The relevant portion of the said judgment is quoted below for ready reference:
Date of Judgment 20-08-2018, ITA No.924/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd.
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“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 not, do not in our
Date of Judgment 20-08-2018, ITA No.924/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd.
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considered opinion, give rise to any substantial question of law. 56. 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
Date of Judgment 20-08-2018, ITA No.924/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd.
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a sufficient reason to invoke Section 260-A of the Act before this Court. 58. The appeals filed by the Revenue are therefore dismissed with no order as to costs.”
Having heard the learned counsel 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
ln.