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1/9 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 28th DAY OF JUNE 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON’BLE Mrs. JUSTICE S.SUJATHA
I.T.A.No.294/2016
Between:
Pr. Commissioner of Income Tax-6, B.M.T.C Complex Koramangala, Bangalore.
Deputy Commissioner Of Income Tax, Circle-6(1)(1), Bangalore. …Appellants (By Mr. Sanmathi.E.I, Advocate)
And:
M/s Sanyo India P. Ltd., No.45, 2nd floor, Jubilee Building, Museum Road, Bangalore-560 025.
Official Liquidator (of M/s. Sanyo India Pvt. Ltd) Corporate Bhavan,
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No.26-27, 12th floor, M.G.Road, Bengaluru-560001 …Respondents
(By Ms. Lakshmy Iyengar, Adv. for R2; R1 Served) *****
This I.T.A. is filed under Section 260-A of Income Tax Act 1961, praying to 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. (a) Set aside the appellate order dated:30/09/2015 passed by the ITAT, ‘B’ Bench, Bengaluru, in appeal proceedings No.IT(TP)A No.436/ Bang/2015 for the Assessment Year 2010-11, as sought for in this appeal; and to grant such other relief as deemed fit, in the interest of justice.
This I.T.A. coming on for Admission, this day Dr. Vineet Kothari J. delivered the following:-
JUDGMENT
Mr. Sanmathi.E.I. Adv. for Appellants - Revenue Ms. Lakshmy Iyengar Adv. for R2 –Official Liquidator
The Appellants - Revenue have filed this appeal raising purported substantial questions of law arising from the Order of the learned Income Tax Appellate Tribunal Bench ’B’, Bangalore, Annexure A dated
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30/09/2015 in IT(TP)A.No.436/Bang/2015 for AY 2010-11.
The appellants - Revenue have suggested one substantial question of law which is quoted below for ready reference: -
“Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the Transfer Pricing Officer to adopt the resale price method rejecting the transaction net margin method adopted by the transfer pricing officer as the most appropriate method without ascertaining the nexus with the business activity of the assessee company?”
In so far as the only purported substantial question of law raised by the Revenue is concerned, the learned ITAT in its Order dated 30/09/2015 has given the findings, the relevant portion of which is quoted below for ready reference:-
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“04. We have perused the orders and heard the rival contentions. Assessee was distributing and marketing consumer durables in the name Of ‘Sanyo’ and these were imported from its AE abroad, namely Sanyo Electric Co. Ltd, Japan. Assessee had used RPM in its TP study. As per the assessee, RPM was the most appropriate method since it was selling the goods which was received in finished manner from its AE abroad, in the local market without any value addition. However, the TPO when the matter was referred to him by the AO, rejected the RPM adopted and held that TNMM was the most appropriate method. He there after made analysis of the international transactions based on the TNMM. Assessee had assailed this before the DRP and DRP held that RPM was the most appropriate method in the situation of the business of the assessee for analyzing the value of the international transactions with regard to purchase of finished goods from its AE abroad and sale thereof in the local market.
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DRP had remitted the matter back to the AO for evaluating the value of international transactions of the assesse based on RPM. However, in the assessment order passed, AO had simply deleted the additions suggested by the TPO. Since the fact-situation is very similar to that in the assessment year 2008-09, in our opinion the directions given by this Tribunal for the said year would apply here also. Relevant paragraphs 11 to 21 of the order dt.17.10.2014, is reproduced hereunder: … … … … … … For the impugned assessment year also therefore we set aside the order of lower authorities and remit the issue of fixation of ALP of the international transactions entered by the assessee, back to the file of the AO/TPO. Same directions which were given by us for A.Y.2008-09 will apply here also.”
However, this Court in a recent judgment in I.T.A.No.536/2015 c/w. I.T.A.No.537/2015
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(Pr.Commissioner of Income Tax, Bangalore and Another Vs. M/s. Softbrands India P.Ltd.,) rendered on 25-06-2018, 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: “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
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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 filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed.
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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.” 5. Having heard the learned counsel for the parties, this Court is satisfied that no substantial question of law would arise in the present case and the
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appeal filed by the Revenue is therefore, liable to be dismissed. Accordingly, it is dismissed. No costs.
Sd/- JUDGE
Sd/-
JUDGE
BMV*