Loading judgment…
No AI summary yet for this case.
1/8 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 23rd DAY OF JULY 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON’BLE Mrs.JUSTICE S.SUJATHA
I.T.A.No.618/2015
BETWEEN:
THE COMMISSIONER OF INCOME-TAX C.R. BUILDING, QUEENS ROAD BANGALORE.
THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11(2), RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE-560001.
…APPELLANTS (By Mr. K.V. ARAVIND, ADV.)
AND:
M/S. CEGEDIM SOFTWARE INDIA PVT. LTD., MARUTHI INFOTECH CENTRE 11/1 & 12/1, KORAMANGALA RING ROAD AMARJOTHI LAYOUT BANGALORE-560071 PAN: AABCD 9297J.
…RESPONDENT
THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONSOF LAW STATED ABOVE. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BENGALURU IN ITA No.1432/BANG/2014 DATED 19/06/2015, ANNEXURE-D
Date of Judgment 23-07-2018 I.T.A.No.618/2015 The Commissioner of Income-tax & Anr. Vs. M/s. Cegedim Software India Pvt. Ltd.,
2/8
CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(2), BENGALURU.
THIS I.T.A. COMING ON FOR ORDERS, THIS DAY S. SUJATHA J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. K.V. Aravind, Adv. for Appellant- 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, Bangalore Bench ‘B’, Bangalore, dated 19.06.2015 passed in IT(TP)A No.1432/Bang/2014 (Deputy Commissioner of Income Tax vs. M/s.Cegedim Software India Pvt. Ltd.,) for A.Y.2009-10.
This appeal has been admitted on 17.03.2016 to consider the following substantial questions of law framed by the learned counsel for the Appellants- Revenue:-
Date of Judgment 23-07-2018 I.T.A.No.618/2015 The Commissioner of Income-tax & Anr. Vs. M/s. Cegedim Software India Pvt. Ltd.,
3/8
“1. Whether on the facts and in the circumstances of the case, the Tribunal is right in rejecting the comparables chosen by Transfer Pricing Officer without appreciating the materials on record and proper application of facts set out by TPO?
Whether on the facts and in the circumstances of the case, the Tribunal is right in law in disregarding the position of law that there could be difference between the enterprises compared under the Transaction Net Margin Method that are not likely to materially affect the price or cost charged or the profits accruing to such enterprises?”.
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:-
Date of Judgment 23-07-2018 I.T.A.No.618/2015 The Commissioner of Income-tax & Anr. Vs. M/s. Cegedim Software India Pvt. Ltd.,
4/8
“10.3.1
We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited and relied upon. We find that the co-ordinate bench of this Tribunal in the case of Cisco Systems (India) Pvt. Ltd. (supra) has excluded this comparable from the list of comparable companies to those engaged in software development services. The relevant portion of the order of the co-ordinate bench (supra), at para 26.1 thereof is extracted hereunder:-
xxxxxxxxxxx
10.3.2 Following the above mentioned decision of the co-ordinate bench of this Tribunal in the case of Cisco Systems (India) Pvt. Ltd., (supra) for Assessment Year 2009-10, we direct the TPO to exclude the aforesaid company from the list of comparable companies for the computation of ALP.
Kals Information Systems Ltd.
11.3.1
We have heard the rival contentions and perused and carefully considered the material on record; including the judicial decisions cited and placed reliance upon. We find
Date of Judgment 23-07-2018 I.T.A.No.618/2015 The Commissioner of Income-tax & Anr. Vs. M/s. Cegedim Software India Pvt. Ltd.,
5/8
that a co-ordinate bench of the Bangalore ITAT in the case of Cisco Systems (India) Pvt. Ltd. (supra) has excluded this company from the set of comparable companies to those engaged in software development services, holding as under at para 26.3 of its order:
xxxxxxxxxxx
11.3.2 Following the aforementioned order of the co-ordinate bench of this Tribunal in the case of Cisco Systems (India) Pvt. Ltd. (supra) for Assessment Year 2009-10, we direct the TPO to exclude this company i.e., Kals Information Systems Ltd. from the list of comparables for computation of the ALP.
It is ordered accordingly”.
However, this Court in a recent judgment 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
Date of Judgment 23-07-2018 I.T.A.No.618/2015 The Commissioner of Income-tax & Anr. Vs. M/s. Cegedim Software India Pvt. Ltd.,
6/8
the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable. 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 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
Date of Judgment 23-07-2018 I.T.A.No.618/2015 The Commissioner of Income-tax & Anr. Vs. M/s. Cegedim Software India Pvt. Ltd.,
7/8
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.
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.
Date of Judgment 23-07-2018 I.T.A.No.618/2015 The Commissioner of Income-tax & Anr. Vs. M/s. Cegedim Software India Pvt. Ltd.,
8/8
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 no substantial question of law arises in the present case also. 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
Srl.