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1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 25TH DAY OF JULY 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.494/2016 BETWEEN:
PRINCIPAL COMMISSIONER OF INCOME TAX - 6 C.R. BUILDING, QUEENS ROAD, BANGALORE - 560 001
DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE – 12 (3) BANGALORE
... APPELLANTS
(BY SRI.E I SANMATHI, ADV.) AND:
M/S. SOCEITE GENERALE GLOBAL SOLUTION CENTRE PVT. LTD., "INVENTOR" BLDG., 6TH FLOOR, INTERNATIONAL TECH PARK, WHITE FIELD ROAD, BANGALORE - 560 006 PAN:AAECS 6764L
... RESPONDENT
(BY SRI.SANDEEP HUILGOL, ADV. FOR SRI.SURYANARAYANA T, ADV.)
THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED :22/04/2016 PASSED IN IT(TP)A NO.1188/BANG/2011, FOR THE ASSESSMENT YEAR 2007-2008 ANNEXURE – A. PRAYING TO: DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH
Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd.,
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OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT. SET ASIDE THE APPELLATE ORDER DATED:22/04/2016 PASSED BY THE ITAT, 'A' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO.IT(TP)A NO. 1188/BANG/2011 FOR THE ASSESSMENT YEAR 2007-08 ANNEXURE-A AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
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. Sandeep Huilgol, Adv. for Mr. T. Suryanarayana, 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, ‘A’ Bench, Bangalore in IT[TP]A No.1188/Bang/2011 dated 22.04.2016, relating to the Assessment Year 2007-08.
This Appeal has been admitted on 24.10.2017 to consider the following substantial question of law.
Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd.,
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“2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in directing the TPO to exclude Avani Simcom Technologies Ltd, E-zest Solutions Ltd., Helios and Metheson Information Technologies Ltd., Persistent Systems Ltd., Wipro Ltd., Bodhtree Consulting Ltd., Exlerx Services Ltd., Moldtech Technologies Ltd Accel Transmatics Ltd., KALS Information Systems Lucid Software Ltd., Infosys Technologies Ltd., and Tata Elxsi Ltd., as comparable in the case of the taxpayer on the ground of functional dis-similarity even with the TPO has rightly chosen the same considering the functions, FAR analysis and applying the required test?”
The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned findings as under: “12. Now, we shall deal with each of them. Bodhtree Consulting Ltd., Eclerx Services Ltd., and Mold-Tek Technologies Ltd., were excluded from the list of comparables by this Tribunal in the case of First Advantage Offshore Services Pvt.Ltd.(supra) on the ground of functional
Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd.,
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dissimilarity. The Tribunal further observed that these companies are into the business of Knowledge Process Outsourcing (KPO). Accordingly, the Tribunal held that these companies cannot be compared with assessee- company which is engaged in IT enabled services. The relevant paras of the order of the Tribunal in the case of First Advantage Offshore Services Pvt.Ltd. (supra) are extracted hereunder: xxxxxxxxxx The Hon'ble Delhi High Court in the case of Rampgreen Solutions Ltd. (supra) held that KPO company cannot be compared with BPO company extracted supra. The learned DR has not controverted that these companies are KPO companies. In the result, we hold that these companies cannot be considered as comparables following the ratio laid down in the cases cited supra. Infosys BPO Ltd. and Wipro Ltd. 13. This Tribunal excluded these companies from the list of comparables in the case of Symphony Marketing Solutions India Pvt. Ltd.(supra) holding that Infosys BPO Ltd., was a subsidiary of Infosys Ltd., and having brand value etc. Similar observations were made by the
Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd.,
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Tribunal in the case of Capital IQ Information Systems (India) Pvt.Ltd. [TS 720 ITAT 2012(Hyd) TP]. Hon'ble Delhi High Court in the case of Agnity India Technologies P.Ltd.(supra) held that these companies cannot be compared with smaller companies. Following the decision of Hon'ble Delhi High Court as well as the Tribunal in the above cited cases, we direct IT(TP)A No.1188/Bang/2011 the TPO/AO to exclude these companies from the list of comparables.” 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/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 upon the fair and quick judicial dispensation in such cases. Had it been
Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd.,
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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 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
Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd.,
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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 of the considered opinion that no substantial question of law arises for consideration in the present case.
Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd.,
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Hence, the Appeal filed by the Appellants- Revenue is liable to be dismissed and is accordingly dismissed. No costs.
Sd/- JUDGE
Sd/- JUDGE
AN/-