Date Of Judgment 05-07-2018 I.t.a v. M/S. Broadcom Communications Technologies Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURUDATED THIS THE 5[th]DAY OF JULY 2018 PRESENT THE HON'BLE Dr.JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA I.T.A.No.687/2017 Between:| 1.The Pr. Commissioner of Income-tax, CIT(A)5[th]floor, BMTC Building,80 Feet Road, Kormangala.Bengaluru-560 O95.5[th]floor, BMTC Building,80 Feet Road, Kormangala.Bengaluru-560 O95. 2.The Deputy Commissioner of Income-Tax,Circle-11(2), Present AddressCircle-1(1)(2), 2[nd]Floor,BMTC Building, 80 Feet RoadKormangala, Bengaluru-560 O95... Appellant (By Mr. Aravind K.V. Advocate) And: M/s. Broadcom Communications Technologies Pvt. Ltd.,Campus IA, 4[th]Floor, RMZ Ecospace,Bellandur Village, Varthur Hobh,Bengaluru-9560 103.PAN: AACCB 8136B._ ...Respondent (By Ms. Manasa Ananthan. Advocate) Date of Judgment 05-07-2018 I.T.A.No.687/2017 The Pr. Commissioner of Income-Tax, CIT (A) & Anr. Vs. M/s. Broadcom Communications Technologies Pvt. Ltd., 2/7) This I.T.A. is tiled under Section 260-A of Income Tax!Act 1961, praying to: 1. Formulate the substantial questions|of law stated above. 2. Allow the appeal and set aside the|orders passed by the Income-Tax Appellate Tribunal,|Bengaluru in IT(TP)A No.145/Bang/2014 dated 17-03-2017|Annexure - D and confirm the order of the DRP confirming|the order passed by the Deputy Commissioner of Income|Tax, Circle-1(1)(2), Bengaluru & etc. This I.T.A. coming on tor Admission, this day Dr. Vineet KothariJ. delivered the following:- JU DBiGMENT Mr. Aravind K.V.Adv. for Appellants — Revenue Ms. Manasa AnanthanAdv. for Respondent - Assessee 1. The Appellants - Revenue have filed this appealraising purported substantial questions of law arising from the Order oft thelearned Income Tax Appellate| Tribunal Bangalore Bench “B”,Annexure Dsdated 17/03/2017in)IT(TP)A.No.145/Bang/2014forAY|2009-10 2. The Revenue has suggested the substantialquestion of law, which is quoted below for readyreference: Date of Judgment 05-07-2018 I.T.A.No.687/2017 The Pr. Commissioner of Income-Tax, CIT (A) & Anr. Vs. M/s. Broadcom Communications Technologies Pvt. Ltd., 3/7) “WhetherOnthe|factsand.circumstances of the case, the Tribunal 1isright in law in directing the TPO to exclude|comparablessuchas|M/s.)Bodhtree|ConsultingLtd,Persistent|oystemsLtd, Larsen and Tourbo Infotech and InfosysTechnologies Ltdas|comparable’sbyfollowing its earlier orders which has _ noreached finality and even when the TPO had|chosen the comparable’s on the basis of its|functional similarity and by application ofqualitative and quantitative tests?” 3. In so far as the substantial question of lawraised by the Revenue in this appeal is concerned, the learned ITAT in its Order dated|17/03/2017has giventhe findings, the relevant portion of which is quotedbelow for ready reference:-_ “6. We have considered the rivalSubmissions as well as relevant material on'record. At the outset, we note that the|functional comparability of five companieshas been considered by the co-ordinate bench|of this Tribunal in the case of Infinera India Date of Judgment 05-07-2018 I.T.A.No.687/2017 The Pr. Commissioner of Income-Tax, CIT (A) & Anr. Vs. M/s. Broadcom Communications Technologies Pvt. Ltd., 4/7) Pot. Ltd. Vs. ITO72taxmann.com 68 in|paras 12 to 17 as under:| 2 Following the earlier order of thisTribunal, we direct the A.O/TPO to exclude|thesefivecompaniesfrom)theset|of|comparables. The AO/TPO is directed to|recompute the arm’s length by considering the|remaining comparable companies. Needless|to say the benefit of 2[na]proviso to section 92C|(2) be considered.” “6. We have considered the rivalSubmissions as well as relevant material on'record. At the outset, we note that the|functional comparability of five companieshas been considered by the co-ordinate bench|of this Tribunal in the case of Infinera India Date of Judgment 05-07-2018 I.T.A.No.687/2017 The Pr. Commissioner of Income-Tax, CIT (A) & Anr. Vs. M/s. Broadcom Communications Technologies Pvt. Ltd., 4/7) Pot. Ltd. Vs. ITO72taxmann.com 68 in|paras 12 to 17 as under:| 2 Following the earlier order of thisTribunal, we direct the A.O/TPO to exclude|thesefivecompaniesfrom)theset|of|comparables. The AO/TPO is directed to|recompute the arm’s length by considering the|remaining comparable companies. Needless|to say the benefit of 2[na]proviso to section 92C|(2) be considered.” 4. However, this Court in a recent judgment inI.T.A.No.536/2015c/w.I.T.A.No.537/2015(Pr.Commissionerof|[IncomeTax,Bangalore and Another Vs. M/s. Softbrands India P.Ltd.,) renderedon 25-06-2018,has held that in these type of cases,unless ansex-facle’ perversity in the findings of thelearned Income Tax Appellate Tribunal is established bythe appellant, the appeal at the instance of an assesseeor the Revenue under|Section 260-Aot the Act is not Date of Judgment 05-07-2018 I.T.A.No.687/2017 The Pr. Commissioner of Income-Tax, CIT (A) & Anr. Vs. M/s. Broadcom Communications Technologies Pvt. Ltd., o/ 7 maintainable and the relevant portion of the saidjudgment is quoted below for ready reference:| “Conclusion: 55.|Asubstantial quantumofinternational trade and transactions dependsupon the fair and quick judicial dispensationin such cases. Had it been a case ofSubstantialquestionof|interpretationofprovisions of Double Taxation AvoidanceTreaties (DTAA), interpretation ofprovisions ofthe Income Tax Act or Overriding Effect of theTreaties over the Domestic Legislations or the |questions like Treaty Shopping, Base Erosionand Profit Shifting (BEPS), Transfer of Sharesin Tax Havens (like in the case of Vodafoneetc.), tf based on relevant facts, such|substantial questions of law could beraised before the High Court underSection260-Aof the Act, the Courts could haveembarked upon such exercise offraming andanswering such substantial question of law. |On the other hand, the appeals of the presenttenor as to whether the comparables have Date of Judgment 05-07-2018 I.T.A.No.687/2017 The Pr. Commissioner of Income-Tax, CIT (A) & Anr. Vs. M/s. Broadcom Communications Technologies Pvt. Ltd., 6/7) been rightly picked up or not, Filters forarriving at the correct list of comparableshave been rightly applied or not, do not in ourconsideredopinion,|giverisetoanysubstantial question of law. 26. We are therefore of the considered|opinion that the present appeals filed by theRevenue do not give rise to any substantialquestionof|lawandtheSuggestedsubstantial questions of law do not meet therequirements ofSection 260-A.of the Act and|thus the appeals filed by the Revenue arefound to be devoid of merit and the same areliable to be dismissed. 57. We make it clear that the same'§yardsticks and parameters will have to beapplied, even if such appeals are filed by theAssessees, because, there may be caseswhere the Tribunal giving its own reasonsand findings has found certain comparablesto be good comparables to arrive at an|°“Arm’sLength Price“in the case of the assesseeswith which the assessees may not besatisfied and have filed such appeals before Date of Judgment 05-07-2018 I.T.A.No.687/2017 The Pr. Commissioner of Income-Tax, CIT (A) & Anr. Vs. M/s. Broadcom Communications Technologies Pvt. Ltd., T/T) this Court. Therefore we clarify that meredissatisfaction with the findings of factsarrived at by the learned Tribunal ts not at alla sufficient reason to invoke|Section 260-Aof the Act before this Court. o&. The appeals filed by the Revenue|are therefore dismissed with no order as tocosts.” Date of Judgment 05-07-2018 I.T.A.No.687/2017 The Pr. Commissioner of Income-Tax, CIT (A) & Anr. Vs. M/s. Broadcom Communications Technologies Pvt. Ltd., T/T) this Court. Therefore we clarify that meredissatisfaction with the findings of factsarrived at by the learned Tribunal ts not at alla sufficient reason to invoke|Section 260-Aof the Act before this Court. o&. The appeals filed by the Revenue|are therefore dismissed with no order as tocosts.” Oo. Having heard the learned counsel for theappellant — Revenue, this Court is satisfied that nosubstantial question of law would arise in the presentcase and the appeal filed by the Revenue is thereiore,liable to be dismissed. Accordingly, it is dismissed. NoCOSTS. BMV| Sd/-.JUDGE| Sd/-.JUDGE.