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NC: 2024:KHC:39747-DB ITA No. 284 of 2017
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 284 OF 2017 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX-7 BMTC COMPLEX, KORAMANGALA, BANGALORE.
THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-12(5), BANGALORE. …APPELLANTS (BY SRI. SANMATHI E.I., ADV.)
AND: M/S. XCHANGING SOLUTIONS LTD., NO.13, 14 AND 15, SJR I PARK, EPIP INDL AREA, PHASE-I, WHITEFIELD, BANGALORE-560066 PAN-AAEFCS9303L. …RESPONDENT (BY SRI. NAGESHWAR RAO D.D., ADV. (V/C))
THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 31/10/2016 PASSED IN IT(TP)A NO.166/BANG/2014, FOR THE ASSESSMENT YEAR 2009-2010, PRAYING TO (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 31/10/2016 PASSED BY THE INCOME TAX APPELLATE
Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA
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NC: 2024:KHC:39747-DB ITA No. 284 of 2017
TRIBUNAL, 'A' BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN IT(TP)A NO.166/BANG/2014 FOR A.Y. 2009-10 & GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE S.G.PANDIT AND HON'BLE MR JUSTICE C.M. POONACHA
ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)
Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Sri.Nageshwar Rao.D.D., for respondent/assessee through video conference.
The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 31.10.2016 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.166/Bang/2014 for the assessment year 2009-10.
This
Court,
admitted the appeal on 18.10.2019 to consider the following substantial question of law:
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NC: 2024:KHC:39747-DB ITA No. 284 of 2017
“[i] Whether on the facts and circumstances of the case, the Tribunal is right in directing the assessing officer/TPO to adopt the arms length commission of corporate guarantee at 0.5% instead of prevailing market rate and without appreciating that corporate and financial institutions charge for such credit guarantees and prevailing market rate for guarantee commission is on average at 3% of the credit availed?
[ii] Whether on the facts and in the circumstances of the case, the Tribunal is right in directing in fixing the interest rate at 2% instead of standard rate available in market or rate/basis points fixed by regulatory bodies and without appreciating that the interest by the Associates Enterprises to tax payers was in foreign currency and the standard procedure is LIBOR + BASIS POINTS prescribed by RBI/Regulatory authority for that period?”
Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct
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NC: 2024:KHC:39747-DB ITA No. 284 of 2017
Taxes. It is also submitted that the aforesaid Circular binds the revenue.
On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.
In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.
Sd/- (S.G.PANDIT) JUDGE
Sd/- (C.M. POONACHA) JUDGE
MPK CT:bms List No.: 2 Sl No.: 0