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1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 3RD DAY OF JULY 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON’BLE Mrs. JUSTICE S.SUJATHA
I.T.A.No.415/2016
BETWEEN:
THE PR. COMMISSIONER OF INCOME-TAX, CIT(A) 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BANGALORE-560 095.
THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(1)(1), 7TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095.
…APPELLANTS (BY Mr. K.V. ARAVIND, ADV.)
AND:
M/S. AMBA RESEARCH (INDIA) PVT. LTD., 7TH FLOOR, ELIXIR CHANCERY BUILDING, MUNICIPAL DOOR NO. 135/1-2, RESIDENCY ROAD, BENGALURU-560 025. PAN: AAECA 9391H.
…RESPONDENT (SERVED AND UNREPRESENTED)
THIS I.T.A. IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961, PRAYING TO 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE (2) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT,
Date of Judgment 03-07-2018 I.T.A.No.415/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. Amba Research (India) Pvt. Ltd.,
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BENGALURU IN IT(TP)A No.286/Bang/2015 DATED 09/03/2016 ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), BENGALURU & ETC.
THIS I.T.A. COMING ON FOR ADMISSION, THIS DAY Dr. VINEET KOTHARI J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. K.V. Aravind, Adv. for Appellants-Revenue
The Appellants-Revenue have filed this appeal u/s.260A of the Income Tax Act, 1961, raising purportedly certain substantial questions of law arising from the order of the ITAT, ‘B’ Bench, Bangalore, dated 09.03.2016 passed in IT(TP)A No.286/Bang/2015 (Amba Research (India) P. Ltd., vs. Deputy Commissioner of Income-tax) for A.Y.2010-11.
The proposed substantial questions of law framed in the Memorandum of appeal by the Appellants-Revenue are quoted below for ready reference:-
Date of Judgment 03-07-2018 I.T.A.No.415/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. Amba Research (India) Pvt. Ltd.,
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“1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in demanding comparability standards that may itself defeat the purpose of law relating to determination of ALP under the Income tax Act?”
Whether, on the facts and in the circumstances of the case, the Tribunal is right in trying to find out exact replica of the assessee for determining the Arm’s Length Price (ALP) based on such replica, even when the law and the international jurisdictional jurisprudence itself recognize that there cannot be an exact comparable to a given situation, especially with Transaction Net Margin Method as the most appropriate method?”
Whether, on the facts and in the circumstances of the case, the Tribunal is correct in fact and law in disregarding the position of law that there could be difference between the enterprises compared in the Transaction Net Margin Method that are not likely to materially affect the price or cost charged or the profits accruing to such enterprises?”
Date of Judgment 03-07-2018 I.T.A.No.415/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. Amba Research (India) Pvt. Ltd.,
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The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and the Respondent-assessee, has given the following findings against Revenue with regard to various issues raised before it with regard to ‘Transfer Pricing’ and ‘Transfer Pricing Adjustments’ made by the concerned authorities below.
We consider it appropriate to quote the relevant portions hereunder:-
“08. We have perused the orders and heard the rival contentions. No doubt Accentia Technologies Ltd, formed a part of the list of comparables considered by the assessee in its TP study. However assessee had objected to its inclusion citing functional dissimilarity before the AO as well as the DRP. Question regarding comparability of Accentia Technologies in the ITE segment for A. Y. 2010-11 had come up before this Tribunal in the case of Novo Nordisk India P. Ltd (supra). It was held as under at paras 31 and 32 of the order dt.30.07.2015 : xxxxx
Date of Judgment 03-07-2018 I.T.A.No.415/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. Amba Research (India) Pvt. Ltd.,
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Even after exclusion of Accentia Technologies Ltd, along with the exclusion of four comparable companies directed by DRP, there will be four companies left in the list of comparables which, in our opinion, cannot be considered as too small a sample for an effective TP study. In the circumstances, we direct exclusion of Accentia Technologies Ltd also from the list of comparables. Ordered accordingly.
This Court in ITA No.536/2015 C/w ITA No.537/2015 delivered on 25.06.2018 (Prl. Commissioner of Income Tax & Anr. Vs. M/s. Softbrands India Pvt. Ltd.,) has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable and the relevant portion of the said judgment is quoted below for ready reference:
Date of Judgment 03-07-2018 I.T.A.No.415/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. Amba Research (India) Pvt. Ltd.,
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“ 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, 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
Date of Judgment 03-07-2018 I.T.A.No.415/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. Amba Research (India) Pvt. Ltd.,
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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. 58. The appeals filed by the Revenue are therefore dismissed with no order as to costs.”
Having heard the learned counsel for the appellants-Revenue, we are therefore of the opinion that
Date of Judgment 03-07-2018 I.T.A.No.415/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. Amba Research (India) Pvt. Ltd.,
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no substantial question of law arises in the present case. The appeal filed by the Appellants-Revenue is liable to be dismissed and it is dismissed accordingly. No costs.
Copy of this order be sent to the Respondent- assessee forthwith.
Sd/- JUDGE
Sd/-
JUDGE