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1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 16TH DAY OF JULY 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A.No.112/2015
BETWEEN :
THE COMMISSIONER OF INCOME-TAX C R BUILDING, QUEENS ROAD, BANGALORE
THE INCOME TAX OFFICER WARD-11 (1) RASHTROTHANA BHAVAN, NRUPATHUNGA ROAD, BANGALORE-560 001
...APPELLANTS
(BY SRI K.V.ARAVIND, ADV.)
AND : M/s APTEAN SOFTWARE INDIA PVT. LTD., (FORMERLY KNOWN AS CDC SOFTWARE INDIA PVT. LTD.,) LEVEL-5 (8TH FLOOR), "GOLDEN HEIGHTS", NO.1/2, 59TH ‘C' CROSS ROAD, 4TH ‘M’ BLOCK, RAJAJI NAGAR, BANGALORE-560 010 PAN:AACP 7154 M
…RESPONDENT
(BY SRI A.SHANKAR & SRI M.LAVA, ADVS.)
Date of Judgment 16-07-2018, ITA No.112/2015 The Commissioner of Income Tax & another Vs. M/s Aptean Software India Pvt. Ltd.
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THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 31/10/2014 PASSED IN ITA NO. 207/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 INCOME-TAX APPELLATE TRIBUNAL, BANGALORE IN IT(TP)A NO.207/BANG/2014 DATED 31/10/2014 ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-11(1), BANGALORE.
THIS APPEAL COMING ON FOR HEARING, 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. A.Shankar & Mr. M.Lava, Advs. 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.207/Bang/2014 dated 31.10.2014, relating to the Assessment Year 2009-10.
The appeal has been admitted on 10.08.2015 to consider the following substantial questions of law:
Date of Judgment 16-07-2018, ITA No.112/2015 The Commissioner of Income Tax & another Vs. M/s Aptean Software India Pvt. Ltd.
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“1. Whether, the Tribunal, on the facts and in the circumstances of the case was right in excluding KALS Information Systems Ltd., and Bodhtree Consulting Ltd., from the list of comparables holding that they are functionally different without appreciating that the comparables satisfy all the qualitative and quantitative filters applied by the TPO and that selection of comparables in a case depends on assessee specific FAR analysis?
Whether the Tribunal, on the facts and in the circumstances of the case right in excluding KALS Information Systems Ltd., and Bodhtree Consulting Ltd., by relying on various decisions of the Tribunal and not deciding the selection of the comparables on the basis of specific facts brought on record by the TPO?
Whether the Tribunal on the facts and in the circumstances of the case right in considering the comparables as engaged in software products business, merely because it has developed software products by following software development process, development services for its development, without have legal ownership on software products?”
Date of Judgment 16-07-2018, ITA No.112/2015 The Commissioner of Income Tax & another Vs. M/s Aptean Software India Pvt. Ltd.
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The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings as under: Regarding Substantial Question of Law Nos.1 to 3: “9. The following were the relevant observations of the Tribunal on the aforesaid comparable companies in the case of Trilogy E- Business Software India Pvt. Ltd., [supra]:-
“xxxxx”
The facts and circumstances under which the aforesaid companies were considered as comparable is identical in the case of the Assessee as well as in the case of Trilogy E- Business Software India Pvt. Ltd., [supra]. Respectfully following the decision of the Tribunal referred to above in the case of Trilogy E- Business Software India Pvt. Ltd., [supra], we direct that the following companies be excluded from the list of 14 comparable arrived at by the TPO.
a] KSLS Information Systems Limited
Date of Judgment 16-07-2018, ITA No.112/2015 The Commissioner of Income Tax & another Vs. M/s Aptean Software India Pvt. Ltd.
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b] Accel Transmatic.
Bodhtree Consulting Ltd:
“xxxxx”
In view of the aforesaid decision rendered by the Tribunal, we are of the view that the aforesaid company should be excluded from the list of comparable companies finally chosen by the TPO. We order 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:
Date of Judgment 16-07-2018, ITA No.112/2015 The Commissioner of Income Tax & another Vs. M/s Aptean Software India Pvt. Ltd.
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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.
Date of Judgment 16-07-2018, ITA No.112/2015 The Commissioner of Income Tax & another Vs. M/s Aptean Software India Pvt. Ltd.
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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. 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.
Date of Judgment 16-07-2018, ITA No.112/2015 The Commissioner of Income Tax & another Vs. M/s Aptean Software India Pvt. Ltd.
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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.