Date Of Judgment 01-08-2018, Ita v. M/S Sami Labs Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 1 DAY OF AUGUST 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A. No.515/2016 BETWEEN : 1.Pr. COMMISSIONER OF INCOME TAX-VI,_ C.R. BUILDING, QUEENS ROAD,| BANGALORE. «|DEPUTY COMMISSIONER OF.INCOME TAX, CIRCLE-12(3),BANGALORE _ APPBLLANTS| (BY SRI E.I.SANMATHI, ADV.) AND : M/s SAMI LABS LTD.,|18/1 & 19/2,|FIRST MAIN ROAD, II PHASE,PEENYA INDUSTRIAL AREA,BANGALORE -58.PAN: AADCS2549E_. RESPONDENT. (RESPONDENT SERVED.) THIS [TA IS FILED UNDER SECTION 260-A OF INCOME|TAX ACT 1961, ARISING OUT OF ORDER DATED 04/12/2019)PASSEDIN|IT(TP)ANO.1398/BANG/2011,KOR.THEASSESSMENI YEAR JOO/-2JOO8S ANNEBEXURE-A. PRAYING TO:DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH.OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE| Date of Judgment 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd. HON'BLE COURT AS DEEMED FIT. 2. SEIT ASIDE JHEAPPELLATE ORDER DATED 04/12/2015 PASSED BY THE ITAT,.‘ACBENCH,BENGALURU,AS|SOUGHTIFOR, LN|THERESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGSIT(TPJA NO.1398/BANG/2011 FOR A.Y.2007-08 ANNEXURE-A. THIS APPEAL COMING ON FOR HEARING, THIS DAY,|S. SUJATHA, J., DELIVERED THE FOLLOWING: JU DBiGMENT Mr. E.I.Sanmathi,Adv. for Appellants — Revenue. This Appeal is filed by the Revenue purportedly raising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal,6A?Bench,Bangalore, inIT A No.1358/Bang/2011dated 04.12.2015.relating to the Assessment Year2007-QO89 2.ThisAppealhasbeenadmittedOTL 24.10.2017to consider the following substantialquestion of law formulated by the Revenue in theMemorandum of Appeal: “WhetherOTFthe factsandin|thecircumstances of the case, the Tribunal is right inlaw in giving relief to the assessee on the issue ofinterest charged to Associated Enterprise when it is clear that interest is not charged at ArmsLength Price?”| 3. The learned Tribunal, after discussing the rival contentions ot boththeAppellant-RevenueandRespondent-Assessee, has returned the findings as.under: “19. It was further submitted that thisissue has been decided in assessee’s own case|for AY 2008-09 wherein this Tribunal had|decided that since loan given was in foreign|currency, interest rate changed which 1s within|+/-5% of LIBOR 1s at arm’s length. The relevantobservationsof|the|Tribunalin|IT(IPJANo.1197/Bang/2012 dated §.5.2015 are as|follows: XAXXKX 20. Respectfully following the decision ofthis Tribunal in assessee’s own case for the AY|2008-09, interest charged on loan given to|Australian subsidiary 1s deleted.” Date of Judgment 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd. 4/7 4. The controversy involved herein is no moreTeSintegrain view of the decision of this Court inI1.T.A.Nos.536/2015 c/w 537/2015dated|25.06.2018 (Prl.Commissioner of Income Tax & Anr. -v- M/s’Softbrands India Pvt. Ltd.,) Wherein it has beenobserved that unless the finding of the Tribunal is foundex facie perverse, the Appeal u/s. 260-A of the Act, isnot maintainable. The relevant portion of the Judgmentis quoted below for ready reference: “Conclusion: 55.Asubstantial quantumof|international trade and transactions depends|upon the fair and quick judicial dispensation|in such cases. Had it been a case oOf|Substantialquestionof|interpretation|of|provisions of Double Taxation AvoidanceTreaties (DTAA), interpretation ofprovisions ofthe Income Tax Act or Overriding Effect of the|Treaties over the Domestic Legislations or the |questions like Treaty Shopping, Base Erosionand Profit Shifting (BEPS), Transfer of Shares| “Conclusion: 55.Asubstantial quantumof|international trade and transactions depends|upon the fair and quick judicial dispensation|in such cases. Had it been a case oOf|Substantialquestionof|interpretation|of|provisions of Double Taxation AvoidanceTreaties (DTAA), interpretation ofprovisions ofthe Income Tax Act or Overriding Effect of the|Treaties over the Domestic Legislations or the |questions like Treaty Shopping, Base Erosionand Profit Shifting (BEPS), Transfer of Shares| in Tax Havens (like in the case of Vodafone|etc.), tf based on relevant facts, such|substantial questions of law could beraised before the High Court underSection260-Aof the Act, the Courts could have|embarked upon such exercise offraming 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, Futers for|arriving at the correct list of comparables|have been rightly applied or not, do not in our|consideredopinion, giveriseTo anysubstantial question of law. 06. Weare therefore of the consideredopinion that the present appeals filed by the|Revenue do not give rise to any substantialquestionof|law.andthe|Suggested|substantial questions of law do not meet therequirements ofSection 260-A|of the Act andthus the appeals filed by the Revenue are|found to be devoid of merit and the same are.liable to be dismissed. Date of Judgment 01-08-2018, ITA No.515/2016 Pr. Commissioner of Income Tax-VI & another Vs. M/s Sami Labs Ltd. 6/7 57. We make it clear that the same'§yardsticks and parameters will have to beapplied, even tf 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|7s “ArmLength Price“in the case of the assesseeswith which the assessees may not be|satisfied and have filed such appeals beforethis Court. Therefore we clarify that mere|dissatisfaction with the findings of facts|arrived at by the learned Tribunal ts not at all|a sufficient reason to invoke.Section 260-Aof the Act before this Court. o8. The appeals filed by the Revenue are|therefore dismissed with no order as_ tocosts.” o. In the circumstances, having heard the learned Counsel appearing for appellants-Revenue, We are of the considered opinion that no substantial question oflaw arises for consideration in the present case. | Hence, the Appeal filed by the Appellants-Revenue is liable to be dismissed and is accordingly dismissed. —No costs. Copy of this order be sent to the respondent- Assessee, forthwith. In. Sd/-.JU DGE Sd/-.JU DGE