Date Of Judgment 07-08-2018 I.t.a v. M/S. Broadcom India Research Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU. DATED THIS THE 07[th]DAY OF AUGUST 2018| PRESENT THE HON'BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA|I.T.A.No.364/2017 BETWEEN: 1.THE PR. COMMISSIONER OF INCOME-TAX,|5[‘T]FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA,BANGALORE-560 O95.5[‘T]FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA,BANGALORE-560 O95. 2.THE DEPUTY COMMISSIONER OF INCOME-TAX,|CIRCLE-11(2), PRESENT ADDRESS,CIRCLE-11(2), PRESENT ADDRESS, ~ FLOOR, BMTC BUILDING, 80 FEET ROAD KORMANGALA, BANGALORE-560095. .. APPBLLANT (By Mr. K.V. ARAVIND, ADV.) AND: M/S. BROADCOM INDIA RESEARCH PVT. LTD.,CAMPUS 1A. 5[‘L]FLOOR,RMZ ECOSPACE, BELLANDUR VILLAGE, VARTHUR HOBLLI,BBNGALURU-560 103. ~ RESPONDENT (By Mr. SANDEEP HUILGOL, ADV., FORMr. T. SURYANARAYANA, ADV.,) THIS I.T.A. IS FILED UNDER SBCTION 2VJO0-A OF THER ACT, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONSOF LAW. ALLOW THE APPEAL AND SET ASIDE THE ORDERS| Date of Judgment 07-08-2018 I.T.A.No.364/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Broadcom India Research Pvt. Ltd., 2/7 PASSEDBY|THEITAT,BANGALOREIN|IT(TP)ANo.46/BANG/2014 DATED 03-11-2016, ANNEXURE-E AND.CONFIRMING THE ORDER OF THERE DRP AND CONFIRM THORDER PASSED BY THER DBPUTY COMMISSIONBR OF INCOMETAX, CIRCLE-1(1)(2), BENGALURU & ETC.| THIS LT.A. COMING ON FOR HEARING THIS DAY,S. SUJATHAJT DRBLIVERBD THE FOLLOWING : JUDGMENT Mr. K.V. Aravind,Adv. for Appellants-Revenue |Mr. Sandeep Huilgol,Adv. for | Mr. T. Suryanarayana, Adv. for Respondent-Assessee 1. The Appellants-Revenue have filed this appeal u/s.260Aof the Income Tax Act, 1961, raising)purportedly certain substantial questions of law arising from the order of the.ITAT, Bench ‘B’, Bangalore>.dated|03.11.2016passedin.IT(TP)ANo.46/Bang/2014(TheDeputyCommissionerof|Income-tax vs. M/s.Broadcom India Research Put. Ltd.,)forA.Y.2008-09. 2. This appeal has been admitted on|06.02.2018 to consider the following substantial question of law Date of Judgment 07-08-2018 I.T.A.No.364/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Broadcom India Research Pvt. Ltd., 3/7 framed by the learned counsel for the Appellants-Revenue: - “Whether in the facts and circumstances ofthe case, the Tribunal erred in excluding thecomparables, namely, in not considering theground raised by Revenue with respect toworking capital adjustment by holding that thesame is decided in appeal preferred by assesseeeven when the same was required to beadjudicated and Tribunal ought to have seen thatassessee had not been able to demonstrate thatthe working capital differences had impacted itsprofits?” 3. The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and the Respondent-Assessee, has given the following findings:-| “23. The Grounds of appeal raised by|the Revenue are as under:- dL. XXKXXK 2. The DRP erred in directing the AO to|carry out the working capital adjustment as perthe actual figures worked out by the assessee Date of Judgment 07-08-2018 I.T.A.No.364/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Broadcom India Research Pvt. Ltd., 4/7 without putting any cap without appreciating thefact that the TPO had put a cap as the averagecost of working capital of the comparablesselected by the TPO was 1.71%. 25,GroundNo. 2raisedbythe.Departmentbecomes|InfructuoussinceWE|decided the issue in IT (TIP)No.62/Bang/ 201being assessee’s appeal for the assessment year|2OOI-10”. 4. It is pertinent to note that the appeal filed bythe Appellants-Revenue challenging the order of thelearned Tribunal inITA No.308/2017has been)dismissed by this Court on06.08.2018placing relianceon the judgment of this Court inITA No.536/2015C/w ITA No.537/2015delivered on25.06.2018 (Prl.| Date of Judgment 07-08-2018 I.T.A.No.364/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Broadcom India Research Pvt. Ltd., 4/7 without putting any cap without appreciating thefact that the TPO had put a cap as the averagecost of working capital of the comparablesselected by the TPO was 1.71%. 25,GroundNo. 2raisedbythe.Departmentbecomes|InfructuoussinceWE|decided the issue in IT (TIP)No.62/Bang/ 201being assessee’s appeal for the assessment year|2OOI-10”. 4. It is pertinent to note that the appeal filed bythe Appellants-Revenue challenging the order of thelearned Tribunal inITA No.308/2017has been)dismissed by this Court on06.08.2018placing relianceon the judgment of this Court inITA No.536/2015C/w ITA No.537/2015delivered on25.06.2018 (Prl.| Commissioner of Income Tax & Anr. Vs. M/s.Softbrands India Put. Ltd.,]| wherein it has been held|that in these type of cases, unless an|ex-factlperversityin the findings of the learned Income Tax AppellateTribunal is established by the appellants, the appeal at Date of Judgment 07-08-2018 I.T.A.No.364/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Broadcom India Research Pvt. Ltd., 5/7 the instance ot an assessee or the Revenue under! Section 260-Aot the Act is not maintainable. The relevant portion of the said judgment is. quoted below for ready reference: §— 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 Overriding|Effectofthe TreatiesOVEeCtheDomestic.Legislations or _ the questions like TreatyShopping, Base Erosion and Profit Shifting(BEPS), Transfer of Shares in Tax Havens (like inthe case of Vodafone etc.), if based on relevantfacts, such substantial questions of law couldbe raised before the High Court underSection260-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 correct Date of Judgment 07-08-2018 I.T.A.No.364/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Broadcom India Research Pvt. Ltd., 6/7 list 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 consideredopinion that the present appeals filed by theRevenue 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 where)the 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 findingsoffacts arrived at by the learned Tribunal is notat all a sufficient reason to invokeSection 260-Aof the Act before this Court. Date of Judgment 07-08-2018 I.T.A.No.364/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Broadcom India Research Pvt. Ltd., 7/7 o8. The appeals filed by the Revenue aretherefore dismissed with no order as to costs.” Oo. Having heard the learned counsels for the parties, 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 isliable to be dismissed and it is0.$B.$$10accordinglyNo costs. Sd/-. JUDGE Sd/-| JUDGE Srl.