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1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 20TH DAY OF JULY 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A.No.675/2015
BETWEEN : 1. Pr. COMMISSIONER OF INCOME TAX-VII, CENTRAL REVENUE BUILDINGS, QUEENS ROAD, BANGALORE-560001
DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12(2), BANGALORE.
...APPELLANTS
(BY SRI E.I.SANMATHI, ADV.)
AND : M/s. NOVO NORDISK INDIA PVT. LTD., PLOT NO.32, 47-50, EPIP AREA, WHITEFIELD, BANGALORE-560066 PAN NO: AAACN 7425M.
…RESPONDENT
(BY SRI MALLAHARAO.K., ADV. FOR SRI NAGESWAR RAO, ADV.)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 08/05/2015, PASSED IN ITA NO.122/BANG/2014, FOR THE ASSESSMENT YEAR 2009-2010, ANNEXURE-A, PRAYING TO: 1]. DECIDE THE FOREGOING QUESTION OF LAW AND / OR
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SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT; 2]. SET ASIDE THE APPELLATE ORDER DATED: 08/05/2015 PASSED BY THE ITAT, 'B' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO. ITA NO.122/BANG/2014 FOR ASSESSMENT YEAR 2009-2010, AS SOUGHT FOR IN THIS APPEAL.
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. Mr. Mallaharao.K, Adv. for Mr. Nageswar Rao, Adv. for 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, Bangalore Bench ‘B’, Bangalore, in IT[TP]A No.122/Bang/2014 dated 08.05.2015, relating to the Assessment Year 2009-10.
The appeal has been admitted on 17.03.2016 to consider the following substantial question of law: “Whether, on the facts and in the circumstances of the case, the Tribunal was right
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in holding that the size and turnover of the company are deciding factors for treating a company as a comparable and consequently erred in excluding Infosys BPO Ltd., as comparable in the case of taxpayer?”
Learned counsel for the Appellants-Revenue has raised additional substantial question of law, which has been quoted hereunder: “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding comparable’s namely, Accentia Technologies Ltd., Cosmic Global Ltd., and Eclerx Services Ltd., by following the decision of Hyderabad Income Tax Tribunal in the case of Paraxel International [India] Pvt. Ltd., without considering the materials/FAR analysis brought on record by Transfer Pricing Officer?”
The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings as under:
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Regarding both the Substantial Questions of Law: “86. Before us the learned counsel for the Assessee prays for exclusion of 4 comparable companies out of the 8 comparable companies finally chosen by the TPO for the purpose of comparison. A chart was filed before us showing how the 4 comparable companies which the Assessee seeks to exclude were also considered by ITAT Hyderabad Bench in the case of Paraxel International [India] Private Limited Vs. ACIT ITA No.144/Hyd/2014 order dated 30.09.2014 a ITES service providers such as the Assessee. We deal with the comparable companies which the Assessee seeks exclusion. 1. Infosys BPO Ltd: 2. Accentia Technologies Ltd. 3. Cosmic Global Ltd. 4. Eclerx Solutions Ltd. The comparability of these company with a ITES company was considered by this Tribunal in the case of Paraxel International [India] Pvt. Ltd., [supra] and the Tribunal held as follows on the comparability of the aforesaid companies with a company providing ITES in the following manner:-
“xxxxx”
The facts and circumstances and the AY in which the aforesaid companies were
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excluded as not comparable with ITES company, are identical as in the case of the Assessee in this appeal. Respectfully following the decision of the Tribunal referred to above, we direct that the aforesaid 4 companies be excluded from the list of comparable companies for the purpose of computing arithmetic mean for comparability purpose. The TPO is directed to give effect 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: “Conclusion: 55.
A substantial quantum of international trade and transactions depends
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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.
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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 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.
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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 sides, we are 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.
Sd/- JUDGE
Sd/- JUDGE
NC.