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1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 8TH DAY OF AUGUST 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.321/2017
BETWEEN :
THE Pr. COMMISSIONER OF INCOME TAX 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560 095.
THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE - 11(1), PRESENT ADDRESS CIRCLE - 1(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560 095.
...APPELLANTS
(BY SRI K.V.ARAVIND, ADV.)
AND :
M/s AXA BUSINESS SERVICES PVT. LTD., SJR PLAZA, MUNICIPAL NO.1, 29TH MAIN, BTM LAYOUT 1ST STAGE, BENGALURU - 560 068.
…RESPONDENT
(BY SRI SANDEEP HUILGOL, ADV. FOR SRI T.SURYANARAYANA, ADV.)
THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 29/11/2016 PASSED IN ITA NO.484/BANG/2013, FOR THE ASSESSMENT
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YEAR 2008-2009 ANNEXURE-D. PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BENGALURU IN ITA NO.484/BANG/2013 DATED 29/11/2016 ANNEXURE-D CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), BENGALURU.
THIS APPEAL COMING ON FOR HEARING, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Mr. K.V.Aravind, Adv. for Appellants – Revenue. Mr. Sandeep Huilgol, Adv. for Mr. T.Suryanarayana, Adv. Respondent – Assessee.
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.334/Bang/2013 dated 29.11.2016 relating to the Assessment Year 2008-09.
The appeal is admitted on 5.6.2018 to consider the following substantial question of law: “1. Whether in the facts and circumstances of the case, the Tribunal is right in law in excluding the comparables, namely, M/s. Cross Domain Solutions Ltd., M/s. E-Clerx
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Services Ltd., M/s. Genesys International Corporation Ltd., and M/s. Wipro Ltd., on the ground of functional dissimilarity by following its earlier order which has not reached finality and even when the TPO had chosen the comparables as it satisfies qualitative and quantitative filters applied by the TPO and Tribunal ought to have decided the comparability of these companies on the basis of specific facts brought out on record by the TPO in the case of the assessee?
The learned Tribunal, after discussing the rival contentions of both the Appellant-Revenue and Respondent-Assessee, has returned the findings as under: “ (v) Crossdomain Solutions Ltd. 40.1. This company was selected by the TPO and also retained by the CIT (Appeals). The assessee has raised the objection regarding the comparability of this company and submitted that this company is engaged in providing KPO services and thus is not comparable to the assessee.
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40.2 The ld. AR of the assessee has relied upon the decision of the co-ordinate bench of this Tribunal dt. 14.8.2013 in the case of Symphony Marketing solutions Ltd. Vs. ITO in IT(TP) A No.1316/Bang/2012.
40.3 On the other hand, the ld. DR has relied upon the orders of authorities below and submitted that the TPO has examined the functional comparability of this company and found that this company satisfied all the filters and criteria of the comparability.
40.4
Having considered the rival submissions as well the relevant material has been examined by the co-ordinate bench of this Tribunal in case of Symphony Marketing Solutions India Pvt. Ltd. –v- ITO in IT(TP)A No.1316/Bang/2012 dt. 14.08.2013 (supra) in paras 18 & 19 as under: Xxxxx Thus it is clear that this company is engaged in the business of providing services ranges from high end KPO Services to development of product and routine low and high end services. By following the order of the co-ordinate bench
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(supra), we direct the A.O/TPO to exclude this company from the set of comparables.
43.3. Having considered the rival submissions as well as the relevant material on record, we note that the functional comparability of this company has been examined by this Tribunal in the case of Symphony Mzrketing Solutions India Pvt. Ltd. Vs. ITO (supra) in paras 22 & 23 as under:
Xxxx Following the earlier order of this Tribunal, we direct the Assessing Officer to exclude this company from the set of comparables.”
For the similar reasons, the learned Tribunal has excluded other comparables also.
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
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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 embarked upon such exercise of framing and answering
such
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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.
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
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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 counsels appearing for the parties, 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.
Sd/- JUDGE
Sd/- JUDGE
ln.