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1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 30TH DAY OF JULY 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.617/2015
BETWEEN:
THE COMMISSIONER OF INCOME-TAX C.R. BUILDING, QUEENS ROAD, BANGALORE
THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE - 2(1)(1) 2ND FLOOR, BMTC BUS DIPO, 80 FEET ROAD, KORAMANGALA, BANGALORE - 560 095.
... APPELLANTS
(BY SRI K.V.ARAVIND, ADV.)
AND:
M/s. CEGEDIM SOFTWARE INDIA PVT. LTD., MARUTHI INFOTECH CENTRE, 11/1 & 12/1, KORAMANGALA RING ROAD, AMARJOTHI LAYOUT, BANGALORE - 560 071 PAN: AABCD 9297J .
... RESPONDENT
(BY SRI.ANKUR PAI, ADV.)
Date of Judgment 30-07-2018, ITA No.617/2015 The Commissioner of Income-tax & Another Vs. M/s Cegedim Software India Pvt. Ltd.
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THIS INCOME TAX APPEAL UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 19/06/2015 PASSED IN ITA NO.1371/BANG/2014, FOR THE ASSESSMENT YEAR 2009-2010, ANNEXURE –D. PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BENGALURU IN ITA NO.1371/BANG/2014 DATED: 19/06/2015 ANNEXURE-D AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(1), BENGALURU.
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. Ankur Pai, 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.1371/Bang/2014 dated 19.06.2015, relating to the Assessment Year 2009-10.
Date of Judgment 30-07-2018, ITA No.617/2015 The Commissioner of Income-tax & Another Vs. M/s Cegedim Software India Pvt. Ltd.
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This Appeal has been admitted on 17.03.2016 to consider the following substantial questions of law. “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in rejecting the comparables chosen by Transfer Pricing Officer without appreciating the materials on record and proper application of facts set out by TPO?
Whether on the facts and in the circumstances of the case, the Tribunal is right in law in disregarding the position of law that there could be difference between the enterprises compared under the Transaction Net Margin Method that are not likely to materially affect the price or cost charged or the profits accruing to such enterprises?
The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned findings as under: “10. Bodhtree Consulting Ltd.
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10.3.1 We have heard the rival contentions and perused and carefully
Date of Judgment 30-07-2018, ITA No.617/2015 The Commissioner of Income-tax & Another Vs. M/s Cegedim Software India Pvt. Ltd.
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considered the material on record; including the judicial pronouncements cited and relied upon. We find that the co-ordinate bench of this Tribunal in the case of Cisco Systems (India) Pvt. Ltd. (supra) has excluded this comparable from the list of comparable companies to those engaged in software development services. The relevant protion of the order of the co-ordinate bench ( supra), at para 26.1 thereof is extracted hereunder:-
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10.3.2 Following the above mentioned decision of the co-ordinate bench of this Tribunal in the case of Cisco Systems (India) Pvt. Ltd. (supra) for Assessment year 2009-2010, we direct the TPO to exclude the aforesaid company from the list of comparable companies for the computation of ALP.
Kals Information Systems Ltd.
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11.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial decisions cited and placed reliance upon. We find that a co-ordinate bench of the
Date of Judgment 30-07-2018, ITA No.617/2015 The Commissioner of Income-tax & Another Vs. M/s Cegedim Software India Pvt. Ltd.
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Bangalore ITAT in the case of Cisco Systems (India) Pvt. Ltd. (supra) has excluded this company from the set of comparable companies to those engaged in software development services, holding as under at para 26.3 of its order:-
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11.3.2 Following the aforementioned order of the co-ordinate bench of this Tribunal in the case of Cisco Systems (India) Pvt. ltd. (supra) for Assessment Year 2009-10, we direct the TPO to exclude this company i.e. Kals Information Systems Ltd. from the list of comparables for computation of the ALP. It is ordered 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
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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 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,
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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 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
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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 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
AN/-