Loading judgment…
No AI summary yet for this case.
1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 16TH DAY OF AUGUST 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.590/2017
BETWEEN:
PR. COMMISSIONER OF INCOME TAX-6 BMTC COMPLEX, KORAMANGALA, BANGALORE
THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12 (3) BANGALORE
... APPELLANTS
(BY SRI.SANMATHI E I, ADV.)
AND:
M/S. SONIM TECHNOLOGIES (IND.) PVT. LTD., SREEGANDHA, ARCADE, 564/564-I, 9TH CROSS, J P NAGAR, 3RD PHASE, BANGALORE - 560 078 PAN NO.AAECS7712A
... RESPONDENT
THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:24.03.2017 PASSED IN IT[TP]A NO.252/BANG/2014, FOR THE ASSESSMENT YEAR-2009-10 VIDE ANNEXURE - A, PRAYING THIS HON'BLE COURT TO: DECIDE THE FOREGOING
Date of Judgment 16-08-2018, ITA No.590/2017 Pr. Commissioner of Income Tax-6 & another Vs. M/s SONIM TECHNOLOGIES (IND.) PVT. LTD.
2/8
QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT. (A) SET ASIDE THE APPELLATE ORDER DATED:24.03.2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'A' BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO.IT[TP]A NO.252/BANG/2014 FOR ASSESSMENT YEAR: 2009- 10 VIDE ANNEXURE – A.
THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Mr. Sanmathi E I , 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.252/Bang/2014 dated 24.03.2017 relating to the Assessment Year 2009-10.
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 is right in law in excluding certain comparable’s on the ground of functional dissimilarity by relying on its earlier
Date of Judgment 16-08-2018, ITA No.590/2017 Pr. Commissioner of Income Tax-6 & another Vs. M/s SONIM TECHNOLOGIES (IND.) PVT. LTD.
3/8
order in case of Cisco Systems India Pvt. Ltd. which has been challenged before this Hon’ble Court when it satisfied all the qualitative and quantitative filters applied by the TPO and the Tribunal has used a narrower functionality filter than TPO, but has not tested other comparable’s against the narrower functionality filter applied by it?”
The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings as under: “5. We have considered the rival submissions. We find that as per the Tribunal order rendered in the case f M/s Cisco Systems India Pvt. Ltd. Vs DCIT in IT (TP)A No.271(Bang)/2014 (Supra), it was noted that this company is engaged in the business of rendering software development services as noted by the Tribunal in para-3 of this Tribunal order. In the present case also, as per page-2 of the order of TPO, the assessee company provides software development and maintenance services to its Associated Enterprises (AE) in USA. Hence, it is seen that functional profile of both
Date of Judgment 16-08-2018, ITA No.590/2017 Pr. Commissioner of Income Tax-6 & another Vs. M/s SONIM TECHNOLOGIES (IND.) PVT. LTD.
4/8
these companies are similar and therefore, in our considered opinion, this Tribunal order is applicable in the present case. Therefore, we reproduce para-26.1 to 26.3 of this Tribunal order from pages 375 to 378 of case laws compilation. The same are as under:
xxxxxxxxxxx
From the above paras re-produced from the order of the Tribunal, it is seen that in that case, the Tribunal held that these two companies are to be excluded from the list of final comparables because these two companies are not functionally comparable. Since in the present case also, the facts are similar and the ld. DR of the revenue could not point out any difference in facts, we respectfully follow this Tribunal order and direct the AO/TPO in the present case also to exclude these two companies from the list of final comparables and then determine the ALP and decide whether any TP adjustment is requested to be made or not as per law.”
However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015 delivered on
Date of Judgment 16-08-2018, ITA No.590/2017 Pr. Commissioner of Income Tax-6 & another Vs. M/s SONIM TECHNOLOGIES (IND.) PVT. LTD.
5/8
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: “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
Date of Judgment 16-08-2018, ITA No.590/2017 Pr. Commissioner of Income Tax-6 & another Vs. M/s SONIM TECHNOLOGIES (IND.) PVT. LTD.
6/8
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 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.
Date of Judgment 16-08-2018, ITA No.590/2017 Pr. Commissioner of Income Tax-6 & another Vs. M/s SONIM TECHNOLOGIES (IND.) PVT. LTD.
7/8
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 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
Date of Judgment 16-08-2018, ITA No.590/2017 Pr. Commissioner of Income Tax-6 & another Vs. M/s SONIM TECHNOLOGIES (IND.) PVT. LTD.
8/8
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.