Date Of Judgment 03-07-2018 I.t.a v. M/S. Isg Novasoft Technologies Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU.DATED THIS THE 3 DAY OF JULY 2018 PRESENT THE HON'BLE Dr.JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA|I.T.A.No.345/2016 BETWEEN: 1.THE PR. COMMISSIONER OF INCOME-TAX, CIT{(A)k FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|BANGALORE -560 095.k FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|BANGALORE -560 095. 2.THER DEPUTY COMMISSIONER OF INCOMBE-TACIRCLE-3(1)(1), 2 FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALACIRCLE-3(1)(1), 2 FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA BBENGALURU-560 095. .. APPBLLANT (BY Mr. ARAVIND K.V. ADV.) AND: M/s. ISG NOVASOFT TECHNOLOGIES LTD., GROUND FLOOR, NORTH WINGVAYU BLOCK, SALARPURIA GR TECH PARK)WHITEFIELD, BANGALORE-3s60 066PAN: AABC 1248380. . RESPONDENT (By Mr. K. MALLAHA RAO, ADV.) THIS ILT.A. IS FILED UNDER SECTION 2J6O0-A OF INCOMTAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL|QUESTIONS OF LAW STATED ABOVE. ALLOW THE APPEAL|AND SET ASIDE THE ORDERS PASSED BY THE MITAT, Date of Judgment 03-07-2018 I.T.A.No.345/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. ISG Novasoft Technologies Ltd., BENGALURU IN IT(TP)A No.189/Bang/2015 DATED 30/09/2015,ANNEBEXURE-D AND CONFIRM THR ORDER OF THR DRCONFIRMING|THE;ORDERPASSEDBY|THE;DEPUTY.COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), BENGALURU|& KTC. THIS I.T.A. COMING ON FOR ADMISSION, THIS DAYDr. VINEET KOTHARIJ' DRLIVBERED THR FOLLOWING:- JUDGMENT Mr. K.V. Aravind,Adv. for Appellants-Assessee Mr. K.Mallaha Rao,Adv. for Respondent-Revenue The appellants-Revenuehave filed this appealu/s. 260Aot the.Income Tax Act, 1961(for short ‘Act’)raising purportedly certain substantial questions of lawarising from the order of theIncome Tax Appellate| Tribunal, Bangalore Bench ‘B’ Bangalore(for short‘Tribunal’ |dated30.09.2015passed1n IT(TP)ANo.185(B)/2015 (M/s. ISG Novasoft TechnologiesLtd. v. The Deputy Commissioner of Income-tax)fortheA.Y.2007-2008 2 |The proposed substantial questions of law|framed in the memorandum of appeal by the appellants-Revenue is quoted below for ready reference: Date of Judgment 03-07-2018 I.T.A.No.345/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. ISG Novasoft Technologies Ltd., 3/7 “Whether, on the facts and the circumstances ofthe case, the Tribunal is right in law in directingthe TPO to consider M/s.Microland Ltd as aicomparableanddirectingToexclude.M/s.|Accentia Technologies Ltd as a comparable due to’extraordinary events like merger and acquisitionby following its earlier decision which has notreached finality since the said order has beenchallenged before this Hon’ble Court in ITANo. 7/2014?” 3.|The learned Tribunal, after discussing therival contentions of both the appellants-Revenue andthe Respondent-assessee, has given the followingfindings with regard to various issues raised before itwith regard to ‘Transfer Pricing’|and‘Transfer Pricing| Adjustments’made by the concerned authorities below.We consider it appropriate to quote the relevantportions hereunder: “SO. We have perused the orders and hearthe rival contentions. The issue of comparability ofM/s Accentia Technologies Ltd., in the ITESsegment had come up before this Tribunal in the Date of Judgment 03-07-2018 I.T.A.No.345/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. ISG Novasoft Technologies Ltd., 4/7 case of M/s Novo Nordisk India Put.Ltd., Vs DCIT'(Supra) This Tribunal had held as under; XXXX since assessment year involved is very same, weare of the opinion that the assessee has toSucceed on its contention. We direct the lowerauthorities to exclude Ms Accentia Tech.Ltd., fromthe list of comparables, while analyzing thepricing of the international transaction undertakenby the assessee in the ITES segment. Ground no.8&of the assessee is allowed.” 4This Court in|ITA No.536/2015 C/w ITA. No.537/2015delivered OT] 25.06.2018 | (Pri. Commissioner of Income Tax & Anr. Vs. | Date of Judgment 03-07-2018 I.T.A.No.345/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. ISG Novasoft Technologies Ltd., 4/7 case of M/s Novo Nordisk India Put.Ltd., Vs DCIT'(Supra) This Tribunal had held as under; XXXX since assessment year involved is very same, weare of the opinion that the assessee has toSucceed on its contention. We direct the lowerauthorities to exclude Ms Accentia Tech.Ltd., fromthe list of comparables, while analyzing thepricing of the international transaction undertakenby the assessee in the ITES segment. Ground no.8&of the assessee is allowed.” 4This Court in|ITA No.536/2015 C/w ITA. No.537/2015delivered OT] 25.06.2018 | (Pri. Commissioner of Income Tax & Anr. Vs. | M/s. Softbrands India Pvt. Ltd.,)) has held that inthese type of cases, unless an|ex-facteperversity in thefindings of the learned Income Tax Appellate Tribunal isestablished by the appellant, the appeal at the instanceot an assessee or the Revenue under|Section 260-Aot.the Act is not maintainable and the relevant portion ofthe said judgment is quoted below for ready reference: Date of Judgment 03-07-2018 I.T.A.No.345/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. ISG Novasoft Technologies Ltd., 5/7 § Conclusion: 55. A substantial quantum of internationaltrade and transactions depends upon the fair andquick judicial dispensation in such cases. Had itbeen|OmCaASeofSubstantialquestionofinterpretation of provisions of Double TaxationAvoidance Treaties (DIAA), interpretation ofprovisions of the Income Tax Act or OverridingEffectoftheTreatiesOVECTthe|Domestic.Legislations or _ the questions like TreatyShopping, Base Erosion and Profit Shifting(BEPS), Transfer of Shares in Tax Havens (like inthe case of Vodafone etc.), tf based on relevantfacts, such substantial questions of law could |be raised before the High Court underSection|260-A|of the Act, the Courts could haveembarked upon such exercise of framing andanswering such substantial question of law. Onthe other hand, the appeals of the present tenoras to whether the comparables have been rightlypicked up or not, Filters for arriving at the correctlist of comparables have been rightly applied ornot, do not in our considered opinion, give rise toany substantial question of law. 56. We are therefore of the considered|opinion that the present appeals filed by the Date of Judgment 03-07-2018 I.T.A.No.345/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. ISG Novasoft Technologies Ltd., 6/7 Revenue do not give rise to any substantialquestion of law and the suggested substantialquestions of law do not meet the requirements ofSection 260-A.of the Act and thus the appealsfiled by the Revenue are found to be devoid ofmerit and the same are liable to be dismissed. | 57. We make it clear that the same|yardsticks and parameters will have to beapplied, even tf such appeals are filed by theAssessees, because, there may be cases wherethe Tribunal giving its own reasons and findingshas found certain comparables to be goodcomparables to arrive at an‘Arm’s LengthPrice“in the case of the assessees with whichthe assessees may not be satisfied and have filedsuch appeals before this Court. Therefore weclarify that mere dissatisfaction with the findings|offacts arrived at by the learned Tribunal is notat all a sufficient reason to invokeSection 260-Aof the Act before this Court. o8. The appeals filed by the Revenue are)therefore dismissed with no order as to costs.” 5Having heard the learned counsels for the parties, we are therefore of the opinion that no Date of Judgment 03-07-2018 I.T.A.No.345/2016 The Pr. Commissioner of Income-tax, CIT(A) & Anr. Vs. M/s. ISG Novasoft Technologies Ltd., 7/7 substantial question of law arises in the present case. _ The appeal filed by the Appellants-Revenue is liable to be dismissed and it is.,"4,""1.accordinglyNo| costs. TL Sd/-| JUDGE|Sd/-|JUDGE