Date Of Judgment 08-08-2018, Ita v. M/S Axa Business Services Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 8 DAY OF AUGUST 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A. No.321/2017 BETWEEN : 1.THE Pr. COMMISSIONER OF INCOME TAX.![‘T]FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA,BBNGALURU - 560 O95.![‘T]FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA,BBNGALURU - 560 O95. «|THERE DEPUTLY COMMISSIONER OF INCOME TCIRCLE - 11(1), PRESENT ADDRESSCIRCLE - 11(1), PRESENT ADDRESS CIRCLE - 1(1)(1), 2 FLOOR, ~ BMTC BUILDING, | 80 FEET ROAD, KORMANGALA, |BBNGALURU - 560 O95. _ APPBLLANTS| (BY SRI K.V.ARAVIND, ADV.) AND : M/s AXA BUSINESS SERVICES PVT. LTD.,|bJR PLAZA, MUNICIPAL NO.1, ©PA[‘L]MAIN, BIM LAYOUT 1[S|]STAGE,BHNGALURU - 560 O68... RESPONDENT. (BY SRI SANDEEP HUILGOL, ADV. FOR SRI T.SURYANARAYANA, ADV.) THIS TTA IS FILED UNDER SECIION 2J6O0-A OF INCOMTAX ACT 1961, ARISING OUT OF ORDER DATED 29/11/2016PASSED IN ITA NO.484/BANG/2013, FOR THE ASSESSMENT Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. YREAR 2JOO8B-2009 ANNEXURE-D. PRAYING TO: [I. FORMULTHE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II.|ALLOW THEHK APPEAL AND SEI ASIDE THE ORDERS PASSED BTHE ITAT, BENGALURU IN ITA NO.484/BANG/2013 DATED)29/11/2016 ANNEXURE-D CONFIRMING THE ORDER OF THE.APPBERELLATK COMMISSIONBR AND CONFIRM THR ORDPASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX,|CIRCLE-1(1)(1), BENGALURU. THIS APPEAL COMING ON FOR HEARING, THIS DAY,|S. SUATHA, J., DELIVERED THE FOLLOWING: JU DGMENT Mr. K.V.Aravind,Adv. for Appellants — Revenue. Mr. Sandeep Huilgol,Adv. forMr. T.Suryanarayana, Adv. Respondent — Assessee. | This Appeal is filed by the Revenue purportedlyraising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal,SA?Bench,Bangalore, in|IT A No.334/Bang/2013dated| 29.11.2016relating to the Assessment Year2008-09. 2. The appeal is admitted on 95.6.2018 _ toconsider the following substantial question of law: “1.Whetherin|the factsandcircumstances of the case, the Tribunal ts right inlaw in excluding the comparables, namely, M/s.Cross Domain Solutions Ltd., M/s. E-Clerx Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. 3/8 Services|Ltd.,M/s.|GenesysInternationalCorporation Ltd., and M/s. Wipro Ltd., on theground offunctional dissimilarity by following its|earlier order which has not reached finality andeven when the TPO had chosen the comparablesas it satisfies qualitative and quantitative filters|applied by the TPO and Tribunal ought to havedecided the comparability of these companies onthe basis of specific facts brought out on recordby the TPO in the case of the assessee?P 3. The learned Tribunal, after discussing the rival contentionsoT|boththeAppellant-RevenueandRespondent-Assessee, has returned the findings as.under: ey(v) Crossdomain Solutions Ltd. 40.1. This company was selected by theTPO and also retained by the CIT (Appeals). The|assessee has raised the objection regarding the|comparability of this company and submitted that|this company is engaged in providing KPOservices and thus is not comparable to the|aSsSSCSSCE Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. 40.) |The ld. AR of the assessee has reliedupon the decision of the co-ordinate bench of this|Tribunal dt. 14.8.2013 in the case of SymphonyMarketing solutions Ltd. Vs. ITO in ITI(TIP) No.1316/ Bang/ 2012 40.3 On the other hand, the ld. DR hasrelied upon the orders of authorities below andSubmitted that the TPO has examined the!functional comparability of this company and_found that this company satisfied all the filters|and criteria of the comparability. Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. 40.) |The ld. AR of the assessee has reliedupon the decision of the co-ordinate bench of this|Tribunal dt. 14.8.2013 in the case of SymphonyMarketing solutions Ltd. Vs. ITO in ITI(TIP) No.1316/ Bang/ 2012 40.3 On the other hand, the ld. DR hasrelied upon the orders of authorities below andSubmitted that the TPO has examined the!functional comparability of this company and_found that this company satisfied all the filters|and criteria of the comparability. 40.4|HavingconsideredtherivalSubmissions as well the relevant materiaql hasbeen examined by the co-ordinate bench of this|Tribunalin case ofSymphony MarketingSolutions India Pvt. Ltd. -v- ITOin IT(TP)ANo.1316/Bang/ 2012 dt. 14.08.2013 (supra) inparas 18 & 19 as under: XAXXKX Thus it is clear that this company is engaged inthe business of providing services ranges fromhigh end KPO Services to development of product|and routine low and high end services. By|following the order of the co-ordinate bench| Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. 5/8 (supra), we direct the A.O/TPO to exclude this|company from the set of comparables.| 43.3. Having considered the rival submissionsas well as the relevant material on record, we note|that the functional comparability of this companyhas been examined by this Tribunal in the case of Symphony Marketing Solutions India Put. Ltd.Vs. ITO(supra) in paras 22 & 23 as under: XXX| Following the earlier order of this Tribunal, we|direct the Assessing Officer to exclude this|company from the set of comparables.” 4. For the similar reasons, the learned Tribunal|has excluded other comparables also. Oo. However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015delivered on 25.06.2018 (Prl. Commissioner of Income Tax & Anr. —v- M/s Softbrands India Pvt. Ltd.») has held that inthese type of cases, unless an ex-facie perversity in thefindings of the learned Income Tax Appellate Tribunal is" Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. 6/8 established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A otthe Act is not maintainable. The relevant portion of the said judgment isquoted below for ready reference: “Conclusion:| 05. A substantial quantum of internationaltrade and transactions depends upon the fair andquick judicial dispensation in such cases. Had itbeen|(CCaASEof|Substantialquestionof|interpretation of provisions of Double Taxation|AvoidanceTreaties(DTAA),interpretationof|provisions of the Income Tax Act or QOverridingEffectof|theTreatiesOVEeTthe|DomesticLegislations:OLrthequestions|likeTreatyShopping, Base Erosion and Profit Shifting (BEPS),Transfer of Shares in Tax Havens (like in the case.of Vodafone etc.), if based on relevant facts, such |substantial questions of law could _ be raised|before the High Court underSection 260-A of the Act, the Courts could have embarked upon such|exerciseof|framingand|answeringsuch Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. substantial question of law. On the other hand,|the appeals of the present tenor as to whether thecomparables have been rightly picked up or not,|Filtersforarrivingatthe|correct|list.of|comparables have been rightly applied or not, do|not in our considered opinion, give rise to any.substantial 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 substantial|question of law and the suggested substantial|questions of law do not meet the requirements ofSection 260-Aof the Act and thus the appeals|fled by the Revenue are found to be devoid of|merit and the same are liable to be dismissed. Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. substantial question of law. On the other hand,|the appeals of the present tenor as to whether thecomparables have been rightly picked up or not,|Filtersforarrivingatthe|correct|list.of|comparables have been rightly applied or not, do|not in our considered opinion, give rise to any.substantial 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 substantial|question of law and the suggested substantial|questions of law do not meet the requirements ofSection 260-Aof the Act and thus the appeals|fled by the Revenue are found to be devoid of|merit and the same are liable to be dismissed. o7. We make it clear that the same yardsticks|and parameters will have to be applied, even tfsuch appeals are filed by the Assessees, because,there may be cases where the Tribunal giving itsown reasons and findings has found certain|comparables to be good comparables to arrive at|an‘Arm’s Length Price“ in the case of theassessees with which the assessees may not besatisfied and have filed such appeals before this| Date of Judgment 08-08-2018, ITA No.321/2017 The Pr. Commissioner of Income Tax & another Vs. M/s AXA Business Services Pvt. Ltd. 8/8 Court. Therefore|WE|clarifythatTYrltdissatisfaction with the findings offacts arrived at|by the learned Tribunal is not at 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.” 6. Having heard the learned counsels appearingfor the parties, we are therefore of the opinion that no substantial question of law arises in the present casealso. The Appeal filed by the Appellants-Revenue isliable to be dismissed and it is dismissed accordingly. —No costs. Sd/-.JUDGE. Sd/-.JUDGE.