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1/7 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 03rd DAY OF AUGUST 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON’BLE Mrs.JUSTICE S.SUJATHA
I.T.A.No.198/2017 BETWEEN:
PR. COMMISSIONER OF INCOME TAX-VII BMTC COMPLEX, KORAMANGALA BANGALORE.
THE DY. COMMISSIONER OF INCOME TAX CIRCLE-12(4), BANGALORE.
…APPELLANTS (By Mr. E.I. SANMATHI, ADV.)
AND:
M/S. TEKTRONIX ENGINEERING DEVELOPMENT (INDIA) PVT. LTD SAMRAH PLAZA, 2ND FLOOR 4/2, ST. MARKS ROAD BANGALORE-560001 PAN: AAACT7289F.
…RESPONDENT (By Ms. MANASA ANANTHAN, ADV., FOR Mr. T. SURYANARAYANA, ADV.,)
THIS I.T.A. IS FILED UNDER SECTION 260-A OF THE IT ACT, 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. SET ASIDE THE APPELLATE ORDER DATED 19/10/2016 PASSED BY THE ITAT, ‘B’ BENCH, BENGALURU, IN APPEAL PROCEEDINGS
Date of Judgment 03-08-2018 I.T.A.No.198/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tektronix Engineering Development (India) Pvt. Ltd.,
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No.IT(TP)A No.1318/BANG/2012 FOR ASSESSMENT YEAR 2008- 09 ANNEUXRE-A AS SOUGHT FOR IN THIS APPEAL AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
THIS I.T.A. COMING ON FOR HEARING THIS DAY, S. SUJATHA J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. E.I. Sanmathi, Adv. for Appellants- Revenue Ms. Manasa Ananthan, Adv. for Mr. T. Suryanarayana, Adv. for Respondent - Assessee
The Appellants-Revenue have filed this appeal u/s.260A of the Income Tax Act, 1961, raising purportedly one substantial question of law arising from the order of the ITAT, Bangalore Bench ‘B’, Bangalore, dated 19.10.2016 passed in IT(TP)A No.1318/Bang/2012 (M/s.Tektronix Engineering Development (India) Pvt. Ltd., vs. Dy.Commissioner of Income Tax ) for A.Y.2008-09.
This appeal has been admitted on 25.10.2017 to consider the following substantial question of law framed by the learned counsel for the Appellants- Revenue:-
Date of Judgment 03-08-2018 I.T.A.No.198/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tektronix Engineering Development (India) Pvt. Ltd.,
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“Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting three comparables, from list of comparables, namely, Avani Cincom Technologies Ltd, Bodhtree Consulting Ltd, Celestial Biolabs Ltd, E-Zest Solutions Ltd, Infosys Ltd, Kals Information System Ltd, Lucid Software Ltd, Persistent Systems Ltd, Quintegra Solutions Ltd, Softsol India Ltd, Tata Elxsi Ltd, Thirdware Solutions Ltd and Wipro Ltd, on the basis of functional dissimilarity by following its earlier decision which has not reached finality even when the TPO applied 2 kinds of filters when culling out comparables, namely, quantitative filters and qualitative filters?”
The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and the Respondent-Assessee, has given the following findings:- “Since two comparable companies viz. Bodhtree Consulting Ltd. and Lucid Software Ltd. were accepted by the assessee itself as comparable for the Assessment Year 2006-07 and the Tribunal vide its order dt.20.02.2015 in assessee’s own case has not disturbed the comparability of these two companies therefore
Date of Judgment 03-08-2018 I.T.A.No.198/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tektronix Engineering Development (India) Pvt. Ltd.,
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by following the earlier orders of this Tribunal, we direct the AO/TPO to exclude the remaining 11 companies from the set of comparables and then recomputed the ALP. Needless to say the benefit of proviso to section 92CA also to be considered if the price of the assessee is within the tolerance range of + or -5% of ALP so computed by the TPO”.
However, this Court in a recent judgment in ITA No.536/2015 C/w ITA No.537/2015 delivered on 25.06.2018 (Prl. Commissioner of Income Tax & Anr. Vs. 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:
Date of Judgment 03-08-2018 I.T.A.No.198/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tektronix Engineering Development (India) Pvt. Ltd.,
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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 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
Date of Judgment 03-08-2018 I.T.A.No.198/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tektronix Engineering Development (India) Pvt. Ltd.,
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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 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 for the parties, we are therefore of the opinion that no substantial question of law arises in the present case
Date of Judgment 03-08-2018 I.T.A.No.198/2017 Pr. Commissioner of Income Tax-VII & Anr. Vs. M/s. Tektronix Engineering Development (India) Pvt. Ltd.,
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also. The appeal filed by the Appellants-Revenue is liable to be dismissed and it is dismissed accordingly. No costs.
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