PR. COMMISSIONER OF vs. M/S SAMI LABS LTD.,

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ITA/515/2016HC KarnatakaKAHC01050189201601 August 2018Bench: S.SUJATHA,VINEET KOTHARI7 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the ITAT's order. It emphasized that mere dissatisfaction with factual findings of the Tribunal is not sufficient to invoke Section 260-A.

What were the facts?

The Revenue appealed against an ITAT order that deleted interest charged on a loan given to an associated enterprise. The ITAT had followed its own previous decision for a different assessment year.

What were the issues?

Whether the ITAT was right in giving relief on interest charged to an associated enterprise when it was not at Arm's Length Price, and if the appeal raised a substantial question of law.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

1/7 IN THE HIGH COURT OF KARNATAKA, BENGALURU

DATED THIS THE 1ST DAY OF AUGUST 2018

PRESENT

THE HON’BLE DR.JUSTICE VINEET KOTHARI

AND

THE HON’BLE MRS.JUSTICE S.SUJATHA

I.T.A. No.515/2016

BETWEEN :

1.

Pr. COMMISSIONER OF INCOME TAX-VI, C.R. BUILDING, QUEENS ROAD, BANGALORE.

2.

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-12(3), BANGALORE

...APPELLANTS

(BY SRI E.I.SANMATHI, ADV.)

AND :

M/s SAMI LABS LTD., 18/1 & 19/2, FIRST MAIN ROAD, II PHASE, PEENYA INDUSTRIAL AREA, BANGALORE-58. PAN: AADCS2549E

…RESPONDENT

(RESPONDENT SERVED.)

THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 04/12/2015 PASSED IN IT(TP)A NO.1358/BANG/2011, FOR THE ASSESSMENT YEAR 2007-2008 ANNEXURE-A. PRAYING TO: 1. DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE

Date of Judgment 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd.

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HON'BLE COURT AS DEEMED FIT. 2. SET ASIDE THE APPELLATE ORDER DATED 04/12/2015 PASSED BY THE ITAT, 'A' BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IT(TP)A NO.1358/BANG/2011 FOR A.Y.2007-08 ANNEXURE-A.

THIS APPEAL COMING ON FOR HEARING, 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.1358/Bang/2011 dated 04.12.2015 relating to the Assessment Year 2007-089.

2.

This Appeal has been admitted on 24.10.2017 to consider the following substantial question of law formulated by the Revenue in the Memorandum of Appeal:

“Whether on the facts and in the circumstances of the case, the Tribunal is right in law in giving relief to the assessee on the issue of interest charged to Associated Enterprise when it

Date of Judgment 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd.

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is clear that interest is not charged at Arms Length Price?”

3.

The learned Tribunal, after discussing the rival contentions of both the Appellant-Revenue and Respondent-Assessee, has returned the findings as under: “ 19. It was further submitted that this issue has been decided in assessee’s own case for AY 2008-09 wherein this Tribunal had decided that since loan given was in foreign currency, interest rate changed which is within +/-5% of LIBOR is at arm’s length. The relevant observations of the Tribunal in IT(TP)A No.1197/Bang/2012 dated 8.5.2015 are as follows: Xxxxx

20.

Respectfully following the decision of this Tribunal in assessee’s own case for the AY 2008-09, interest charged on loan given to Australian subsidiary is deleted.”

Date of Judgment 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd.

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4.

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- 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: “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 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd.

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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 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd.

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57.

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.”

5.

In the circumstances, having heard the learned Counsel appearing for appellants-Revenue, We are of the considered opinion that no substantial question of law arises for consideration in the present case.

Date of Judgment 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd.

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Hence, the Appeal filed by the Appellants-Revenue is liable to be dismissed and is accordingly dismissed. No costs.

Copy of this order be sent to the respondent- Assessee, forthwith.

Sd/- JUDGE

Sd/- JUDGE

ln.

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