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1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 2ND DAY OF AUGUST 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.337/2017 BETWEEN :
THE PR. COMMISSIONER OF
INCOME TAX
5TH FLOOR, BMTC BUILDING
80 FEET ROAD, KORAMANGALA
BENGALURU – 560 095
THE DEPUTY COMMISSIONER OF
INCOME-TAX,
CIRCLE – 3[1][1], 2ND FLOOR,
BMTC BUILDING, 80 FEET ROAD,
KORMANGALA
BENGALURU – 560 095
...APPELLANTS
(BY SRI K.V. ARAVIND, ADV.)
AND :
M/s. H & M MAURITZ INDIA PVT. LTD., No.1102, 1104 AND 1105, 11TH FLOOR WORLD TRADE CENTRE BENGALURU – 560 055 PAN: AABCH 6109F
…RESPONDENT
(BY SRI K.G. SIDDAREDDY, ADV.)
THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 19.08.2016 PASSED IN IT[TP]A No.282/BANG/2015, FOR A.Y. 2010-11, ANN-
Date of Judgment 2-8-2018, ITA No.337/2017 The Prl. Commissioner of Income-tax & Another Vs. M/s. H & M Mauritz India Pvt. Ltd.,
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D, PRAYING THIS HON’BLE COURT TO [I] FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; [II] ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BENGALURU IN IT [TP] A No.282/BANG/2015 DATED 19.08.2016 ANN-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE – 3[1][1], BENGALURU AND ETC.
THIS APPEAL COMING ON FOR ORDERS, 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. K.G. Siddareddy, Adv. for Respondent – Assessee.
This Appeal is filed by the Revenue purportedly raising substantial question of law arising from the Order of the Income Tax Appellate Tribunal, Bangalore Bench ‘B’, Bangalore in IT[TP]A No.282/Bang/2015 dated 19.08.2016, relating to the Assessment Year 2010-11.
This Appeal has been admitted on 07.11.2017 to consider the following substantial question of law.
Date of Judgment 2-8-2018, ITA No.337/2017 The Prl. Commissioner of Income-tax & Another Vs. M/s. H & M Mauritz India Pvt. Ltd.,
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“Whether in the facts and circumstances of the case, the Tribunal is right in law in excluding the comparables, namely, M/s. Aptico Ltd., M/s. Global Procurement Consultants Ltd., and M/s. TSR Darashaw 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 Appellants-Revenue and Respondent-Assessee, has returned findings as under: 10. We have considered the rival submissions. We find that as per para-13 of the TPO’s order, he has considered six companies as good comparables having average profit of 27.74%. On page-3 of the TPO’s order, the assessee’s profit margin has
Date of Judgment 2-8-2018, ITA No.337/2017 The Prl. Commissioner of Income-tax & Another Vs. M/s. H & M Mauritz India Pvt. Ltd.,
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been noted as 12.06%. Now as per arguments of the ld. AR of the assessee, two companies M/s Aptico Ltd., (Supra) and M/s Global Procurement Consultants Ltd., (Supra) should be excluded from the list of final comparables on the basis of functional dissimilarity in view of the Tribunal order rendered in the case of M/s Adidas Technical Services Pvt.Ltd., (Supra) .
The ld. DR of the revenue could not point out any difference in facts in the present case and in that case i.e. of M/s Adidas Technical Services Pvt.Ltd., (Supra). Para-8.3 of this Tribunal order is reproduced below. The Tribunal in that case held to exclude three companies i.e. M/s Aptico Ltd., M/s Global Procurement Consultants Ltd., and M/s TSR Darashaw Ltd.,
xxxx xxxx xxxx
Respectfully following this Tribunal order, and the absence of any difference in facts having been pointed out by the ld. DR of the
Date of Judgment 2-8-2018, ITA No.337/2017 The Prl. Commissioner of Income-tax & Another Vs. M/s. H & M Mauritz India Pvt. Ltd.,
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revenue, we direct the AO/TPO to exclude these three companies i.e. M/s Aptico Ltd., M/s Global Procurement Consultants Ltd., and M/s TSR Darashaw Ltd. from the list of final comparables and since, the average profit of the remaining three comparable i.e. M/s Cyber Media Research Ltd.,14.85%, M/s HCCA Business Services Pvt. Ltd., 20.05% and M/s Quadrant Communications Ltd., 1.11% is around 16% which is within += 5% range of the assessee’s profit margin of 12.06%, no TP adjustment is required to be made. We hold accordingly.”
The controversy involved herein is no more res integra in view of the decision of this Court in I.T.A. Nos.536/2015 c/w 537/2015 dated 25.06.2018 [Prl. Commissioner of Income Tax & Anr. V/s. M/s.Softbrands India Pvt. Ltd.,] wherein it has been observed that unless the finding of the Tribunal is found ex facie perverse, the Appeal u/s. 260-A of the Act, is not maintainable. The relevant portion of the Judgment is quoted below for ready reference:
Date of Judgment 2-8-2018, ITA No.337/2017 The Prl. Commissioner of Income-tax & Another Vs. M/s. H & M Mauritz India Pvt. 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 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 2-8-2018, ITA No.337/2017 The Prl. Commissioner of Income-tax & Another Vs. M/s. H & M Mauritz 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.”
In the circumstances, having heard the learned Counsel appearing for both the parties, We are
Date of Judgment 2-8-2018, ITA No.337/2017 The Prl. Commissioner of Income-tax & Another Vs. M/s. H & M Mauritz India Pvt. Ltd.,
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of the considered opinion that no substantial question of law arises for consideration in the present case.
Hence, the Appeal filed by the Appellants- Revenue is liable to be dismissed and is accordingly dismissed. No costs.
All the pending applications stand disposed of accordingly.
Sd/- JUDGE
Sd/- JUDGE
AN/-