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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 29TH DAY OF JUNE 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A.Nos.85 – 86/2016
BETWEEN : 1. Pr. COMMISSIONER OF INCOME TAX
CENTRAL REVENUE BUILDINGS
QUEENS ROAD
BANGALORE-560001.
DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE 11[3]
BANGALORE.
...APPELLANTS
(BY SRI SANMATHI.E.I., ADV.)
AND : M/s. POLE TO WIN INDIA PRIVATE LIMITED FORTUNE SUMMIT, 4TH FLLOR Nos.290/281/276/243/244 6TH SECTOR, HSR LAYOUT RUPENA AGRAHARA BANGALORE-560068 PAN : AABCV 1574A.
…RESPONDENT
(BY SRI SANDEEP HUILGOL., ADV.)
THESE INCOME TAX APPEALS ARE FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 23.06.2015 PASSED IN IT [TP]A No.1275/BANG/2010 AND M.P. No.86/BANG/2015 DATED 04.09.2015, FOR THE
Date of Judgment 29-06-2018, ITA Nos.85-86/2016 Pr. Commissioner of Income Tax & another Vs. M/s. Pole to Win India Private Limited
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ASSESSMENT YEAR 2006-07, PRAYING TO 1]. DECIDE THE FOREGOING QUESTION OF LAW AND OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT AND 2]. SET ASIDE THE APPELLATE ORDER DATED 23.06.2015 PASSED BY THE ITAT, ‘A’ BENCH, BENGALURU IN APPEAL PROCEEDINGS No.IT[TP]A No.1275/BANG/2010 AND M.P.NO.86/BANG/2015 DATED 04.09.2015; AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
THESE APPEALS COMING ON FOR HEARING, THIS DAY, Dr. VINEET KOTHARI, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Mr. Sanmathi.E.I., Adv. for Appellants – Revenue. Mr. Sandeep Huilgol., Adv. for Respondent – Assessee.
These Appeals are filed by the Revenue purportedly raising substantial questions of law arising from the Order of the Income Tax Appellate Tribunal, Bangalore Bench ‘A’, Bangalore, in IT[TP]A No.1275/Bang/2010 dated 23.06.2015, relating to the Assessment Year 2006-07.
The proposed substantial questions of law framed by the Revenue in the Memorandum of Appeals are as under:
Date of Judgment 29-06-2018, ITA Nos.85-86/2016 Pr. Commissioner of Income Tax & another Vs. M/s. Pole to Win India Private Limited
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“[2] Whether on the facts and in the circumstances of the case, the Tribunal was right in law in seeking exact comparability while searching for comparable companies of the assessee under TNMM method whereas requirement of law and international jurisprudence require seeking similar comparable companies?
[3] Whether on the facts and in the circumstances of the case, while seeking the exact comparability as mentioned above the Tribunal was right in law in imposing condition beyond law where the requirement of the law is to acknowledge only those differences that are likely to materially affect the margin?
[4] Whether on the facts and in the circumstances of the case, the Tribunal was right in law in not acknowledging that determination of ALP by carrying out comparability analysis of the companies is an art and not exact science as no two companies are exactly the same?
[5] Whether on the facts and in the circumstances of the case, the Tribunal was right in law in demanding comparability standards
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that may itself defeat the purpose of law relating to determination of ALP under the Act?”
The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned a finding, we consider it appropriate to quote from the order of Tribunal as under: “7.4. We have heard the rival contentions and perused and carefully considered the material on record including the judicial decisions cited. We now proceed to deal with each of six comparables listed out in para 6.2 of this order [supra].
7.5 Maple e-Solutions Ltd.
7.5.1 This was a company chosen as a comparable by the assessee and accepted by the TPO. Before us, the assessee has filed additional grounds of appeal seeking to exclude this company from the final set of comparables on the grounds that this company’s management is tainted and therefore the financials of this company and its data are unreliable for being applied for comparability purposes. It is submitted that it is on these grounds that this
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company was rejected as a comparable by the ITAT, Delhi Bench in the case of CRM Services India Pvt. Ltd., in ITA No.468/Del/2009 and that this decision was followed by a co-ordinate bench of this Tribunal in the case of Ariba Technologies India Pvt. Ltd., [supra] for Assessment Year 2006- 07. In view of this, the learned Authorised Representative prayed that this company be excluded from the final list of comparables.
7.5.2 Per contra, the learned Departmental Representative supported the orders of the authorities below in including this company in the list of comparables.
7.5.3. We have heard the rival submissions and perused the carefully considered the material on record; including the judicial pronouncements cited and placed reliance on. The additional grounds raised by the assessee for exclusion of Maple e-Solutions Ltd., are considered and the same are admitted for adjudication. We find that a co-ordinate bench of this Tribunal in the case of Ariba Technologies India Pvt. Ltd., [supra] for the same assessment year has considered the comparability of this company and excluded this company from the final set of comparables following the decision of the ITAT, Hyderabad
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Bench in HSBC Electronic Data Processing India Ltd., in ITA No.1624/Hyd/2010 dated 28.06.2013 and the Delhi Bench of the ITAT in the case of CRM Services India Pvt. Ltd., [supra] where it was excluded for the purpose of comparability on account of the unreliability of data in its financials. The operative portion of the order of the co-ordinate bench in Ariba Technologies India Pvt. Ltd., [supra] at para 24 are extracted hereunder :-
“12. xxxxx 12.1. xxxxx”
Following the decision of the co-ordinate bench of this Tribunal in the case of Ariba Technologies India Pvt. Ltd., [supra], for the same assessment year 2006-07, we direct the Assessing Officer/TPO to exclude this company viz., Maple e-Solutions Ltd., from the set of comparable companies.”
For the similar reasons, learned Tribunal has excluded other comparables also.
The controversy involved herein is no more res integra in view of the decision of this Court in I.T.A.
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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 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
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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 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
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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 sides, we are of the considered opinion that no substantial question of law arises for consideration in the present case.
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Hence, the Appeals filed by the Appellants- Revenue are liable to be dismissed and are accordingly dismissed. No costs.
Sd/- JUDGE
Sd/- JUDGE
NC.