Date Of Judgment 05-07-2018, Ita v. M/S. Lm Wind Power Technologies India Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURUDATED THIS THER DAY OF JULY 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THERE HON’BLE MRS.JUSTICEHK S.SUJA I.T.A.No.213/2017 BETWEEN : 1.|THE Pr. COMMISSIONBR OF INCOME TAX-4 BMTC COMPLEX. KORAMANGALA BANGALORE.» «|THE Dy. COMMISSIONER OF INCOME TAX | CIRCLE 4/11} 1] BMTC COMPLEX, KORAMANGALA> BANGALORE. _ APPBLLANTS| (BY SRI SANMATHI.E.I., ADV.) AND : M/s. LM WIND POWER|TECHNOLOGIES INDIA PVT. LID.,, FLOOR, RMZ INFINITYTOWER ‘B’BANGALORE -560016. _. RESPONDENT. (BY Mrs. MANASA ANANTHAN, ADV.) Date of Judgment 05-07-2018, ITA No.213/2017 The Pr. Commissioner of Income Tax-4 & another Vs. M/s. LM Wind Power Technologies India Pvt. Ltd., 2/8 THIS INCOMB TAX APPBAL IS FILED UNDER SECTION|260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER|DATED 08.09.2016 PASSED IN IT/TP|A NO.289/BANG/2016, FOR:THE ASSESSMENT YEAR 2011-12, ANNEXURE-A, PRAYING TO.}1}. DECIDE THE FOREGOING QUESTION OF LAW AND / OR.SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED|BY THR HON’BLE COURT AS DEBMEBED FIT AND SHT ASIDE THAPPELLATE ORDER DATED 08.09.2016 PASSED BY THE ITAT,“A?BENCH,BENGALURU,AS|SOUGHTFOR,IN|THERESPONDENT-ASSESSEE’S CASE, IN APPEAL PROCEEDINGS|No.IT/TPJA No.289/BANG/2016 FOR ASSESSMENT YEAR 2011-2012, ANNEXURE-A AND GRANT SUCH OTHER RELIEF AS)DEEMED FIT, IN THE INTEREST OF JUSTICE. THIS APPEAL COMING ON FOR HEARING, THIS DAY, Dr, VINEET KOTHARI, J., DELIVERED THE FOLLOWING: JU DBiGMENT Mr. Sanmath1.E.I., Adv. for Appellants — Revenue.Mrs. Manasa Ananthan,Adv. for Respondent-Assessee. This Appeal is filed by the Revenue purportedlyraising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal, BangaloreBench ‘A’, Bangalore, inI.T.[T.P]A. No.289/ Bang/2016dated08.09.2016, relating to the Assessment Year2011-12. 2.TheappealhasbeenadmittedOT)05.12.2017 to consider the substantial question of law Date of Judgment 05-07-2018, ITA No.213/2017 The Pr. Commissioner of Income Tax-4 & another Vs. M/s. LM Wind Power Technologies India Pvt. Ltd., 3/8 formulated in the appeal memorandum, which readsthus: “WhetherOTFthe factsandin|thecircumstances of the case, the Tribunal was rightin law in directing the assessing authority /transfer pricing officer to allow risk adjustment of1% to the assessee as per prevailing norms byfollowing its earlier decision in case of IntellinetTechnologies P. Ltd., in ITA No.1237/Bang/2007which has been challenged before this Hon’bleCourt and even when no adjustment on accountof risk ts required to be allowed to assessee asper Rule 10(3)P” 3.The learned Tribunal has though passed avery brief order holding that the grounds of appealsraised by the appellant are misconceived but they wereextracted from the submissions made by the assesseeand have relied upon the earlier decision of the learnedTribunal and order of DRP for preceding yearA.Y.2010-11_ Para No.3 ot the said order of the learned|Tribunal is quoted below for ready reference: 4/8 “3The learned counsel for the assessee Submitted as under: 3.The learned Tribunal has though passed avery brief order holding that the grounds of appealsraised by the appellant are misconceived but they wereextracted from the submissions made by the assesseeand have relied upon the earlier decision of the learnedTribunal and order of DRP for preceding yearA.Y.2010-11_ Para No.3 ot the said order of the learned|Tribunal is quoted below for ready reference: 4/8 “3The learned counsel for the assessee Submitted as under: As regards adjustment on account of risk|analysis, the objections of the tax payerhave been considered along with the judicialdecisions cited. This issue was before DRPfor AY 2010-11 also and the objection of theaSSCSSCEWadaaccepted.TheHon'bleBangaloreITATin|CaseofIntellinetTechnologiesPut.Ltd.,Vs.ITO.HITA|No.1237/ Bang/ 2007rejectedthe tax|department’sargumentthatasinglecustomer risk borne by the tax payer in itsStatus of a captive service provider wasequivalent to the marketing and technicalrisk attached to the comparables. TheHon'ble ITAT held that the risk of having asingle customer is an anticipated risk whichMayOTnothappenunlike|themarketing and technical risks which have tobe contemporaneously dealt with by thecomparables. The ITAT did not accept thatthe risk adjustment should be by 5% or atthe difference of PLR of the RBI and thebanks, and directed the TPO to consider allthe contentions and decide the percentage ofrisk adjustments to be made in accordance Date of Judgment 05-07-2018, ITA No.213/2017 The Pr. Commissioner of Income Tax-4 & another Vs. M/s. LM Wind Power Technologies India Pvt. Ltd., 5/8 with law. Respectfully following the decisionof the Hon’ble ITAT Bangalore as above theTPO is directed to decide the percentage ofrisk adjustments to be calculated in thiscase. By means of guidance, it may bementioned that in the case of DCIT Vs. Hellosoft Put. Ltd., [2013] 32 taxmann.com 101HITAT, Hyd] 1% adjustment to the averagemarginWasprovidedtowardsriskdifferential. 4 |We are of the opinion that Revenue’sgrounds are misconceived and hence we dismissthe same.” 4The controversy involved herein is no moreres integrain view of the decision of this Court in 1.T.A.Nos.536/2015 c/w 537/20155;=9525.06.2018 [Prl. |Commissioner.of|Income.TaxOQAnr.V/s.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: Date of Judgment 05-07-2018, ITA No.213/2017 The Pr. Commissioner of Income Tax-4 & another Vs. M/s. LM Wind Power Technologies India Pvt. Ltd., 6/8 “Conclusion: 55.ASubstantialquantumof|international trade and transactions dependsupon the fair and quick judicial dispensation|in such cases. Had it been a case oOf|substantial questionof|interpretationof|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| Date of Judgment 05-07-2018, ITA No.213/2017 The Pr. Commissioner of Income Tax-4 & another Vs. M/s. LM Wind Power Technologies India Pvt. Ltd., 7/8 consideredopinion,|giverisetO arysubstantial question of law. Date of Judgment 05-07-2018, ITA No.213/2017 The Pr. Commissioner of Income Tax-4 & another Vs. M/s. LM Wind Power Technologies India Pvt. Ltd., 7/8 consideredopinion,|giverisetO arysubstantial 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 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. 57. We make tit clear that the sameyardsticks and parameters will have to be.applied, 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| Date of Judgment 05-07-2018, ITA No.213/2017 The Pr. Commissioner of Income Tax-4 & another Vs. M/s. LM Wind Power Technologies India Pvt. Ltd., 8/8 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.” 5.In the circumstances, having heard the learned Counsel appearing for both the sides, we are of the considered opinion that no substantial question oflaw arises for consideration in the present case. 6.Hence, the Appeal filed by the Appellants-Revenue is liable to be dismissed and is accordinglydismissed. Nocosts.| NC. Sd/-.JUDGE| Sd/-.JUDGE|