Date Of Judgment 09-08-2018 I.t.a v. M/S. Inteva Products India Automotive Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU. DATED THIS THE O0 DAY OF AUGUST 2018. PRESENT THE HON'BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA| I.T.A.No.588/2017 BETWEEN: 1.THE PR. COMMISSIONER OF INCOME-TAX,|k FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA,BBENGALURU-560 095.k FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA,BBENGALURU-560 095. 2.THE DEPUTY COMMISSIONER OF INCOME-TAX,|CIRCLE-3(1)(1), 2 FLOOR,BMTC BUILDING, 30 FEET ROAD,KORMANGALA, BENGALURU-560 095.CIRCLE-3(1)(1), 2 FLOOR,BMTC BUILDING, 30 FEET ROAD,KORMANGALA, BENGALURU-560 095. .. APPBLLANT (By Mr. K.V. ARAVIND, ADV.) AND: M/s. INTEVA PRODUCTS INDIA AUTOMOTIVE PVT. LTD.,(FORMERLY KNOWN AS MERITOR LVS INDIA PVT.LTD.,)NO.69, AL-AMEEN TOWERS, HOSUR ROAD,NEAR LALBAGH MAIN GATE,BENGALURU-560 O27. . RESPONDENT (By Mr. ANKUR PAI, ADV., FOR. Mr. K.R.VASUDEVAN, ADV.,) THIS I.T.A. IS FILED UNDER SECTION 260-A OF THE IT|ACT, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONSOF LAW. ALLOW THE APPEAL AND SET ASIDE THE ORDERS| Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 2/8 PASSED)BYTHEINCOME-TAX.APPBRLLATBTRIBUNAL, BENGALURU IN M.P.NO.125/BANG/2016 (IN IT(TP)A NO.83 &136/BANG/2015|DATED:20/01/2017ANNE XU RE-HANDCONFIRM THR ORDER OF THR DRP CONFIRMING THR ORDER|PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX,|CIRCLE-3(1)(1), BENGALURU & ETC. THIS L.T.A. COMING ON FOR ORDERS THIS DAY, |S. SUJATHAJT DRBLIVERBD THE FOLLOWING : JUDGMENT Mr. K.V. Aravind,Adv. for Appellants-Revenue |Mr. Ankur Pai, forMr. K.R.Vasudevan,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 arisingfrom the order of theITAT, Bangalore Bench ‘B’,Bangalore>.dated|20.01.2017passed1nNM.P.No.125/Bang/2016_(IT(TP)ANos.83ra 136/Bang/2015] (M/s.Inteva Products India Automotive Private. Limited., vs. The Dy.Commuissioner of Income-taxforA.Y.JZO010-1 2. The proposed substantial questions of lawframed.1n theMemorandumoT|appealby the Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 3/8 Appellants-RevenueaTe€quotedbelowfor. ready reference: - “1. Whether, on the facts and in thecircumstances of the case, the Tribunal ts right|inlawin|settingaside.the|ISSUEofdetermination of Arms Length Price of theinternational transaction when the BangaloreBench of the ITAT in similar case, in the case of|M/s Gemplus India Pvt Ltd in 2010-PII--55-BANG-TP has given the decision in favour of the|Revenue as the assessee could not prove before|the TPO that the payment that were made arecommensurate to the volume and quality of|ServVICeS? D2 Whether on the facts and in the|circumstances of the case, the Tribunal ts right|inlawin|settingasidetheISSUE|of|determination of Arms Length Price of theinternational transaction directing the TPO to re-examine the issue in the light of TP Order'passedunderSectionQ?|CA.for|the assessment year 2012-135 in the case of theassessee when the principle of Res Judicata itsnot applicable in the income tax proceedings? Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 4/8 3. Whether on the facts and in thecircumstances of the case, the Tribunal ts right|in law in holding that the transfer pricing Officeris required to determine the ALP of theinternational transaction but cannot examine|whetherthereWasanyinternationaltransaction between the assessee and the|Associated Enterprises? Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 4/8 3. Whether on the facts and in thecircumstances of the case, the Tribunal ts right|in law in holding that the transfer pricing Officeris required to determine the ALP of theinternational transaction but cannot examine|whetherthereWasanyinternationaltransaction between the assessee and the|Associated Enterprises? 4. Whether on the facts and in thecircumstances of the case, the Tribunal ts right|in not appreciating that it is not possible todecide the value as “Nil” of an internationaltransaction in the nature of royalty and servicecharges without looking into the benefit derived|there from as benefits test is integral aspect ofthe TP analysis?.”| 3. The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and theRespondent-Assessee, has given the following findings:- | “AHavingconsideredthe.rivalSubmissions as well as the relevant material onrecord, we find that the Ground Nos.5 & 6regarding Arm’s Length Price(‘ALP’) of royalty andservice charges are taken up together. However, Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 5/8 the Tribunal in the finding in para 20 of theimpugned order has set aside the issue ofALP ofroyalty to the record of the TPO/A.O for re-examination by holding that the ALP of theroyalty cannot be treated at NIL. Therefore wefind that there is a mistake so far as _ thconcluding finding in respect of service chargeshas not been given in Para No.20 of the impugnedorder. We note both these aspects are identicaland has been adjudicated on similar lines by theauthorities below. The Tribunal has also taken upthese issues together therefore the finding inrespect of royalty is also applicable in the case ofservice charges. Accordingly, we modify theimpugned order of the Tribunal and set aside theissue of service charges to the record of the TPOfor re-examination in terms of the directions of theTribunal in para 20 of the impugned order. 4. However, this Court in a recent judgment in ITA No.536/2015 C/w ITA No.537/2015delivered on25.06.2018 (Pri. Commissioner of Income Tax &Anr. Vs. M/s. Softbrands India Pvt. Ltd.,)1 has heldthat in these type of cases, unless anex-facleperversityin the findings of the learned Income Tax Appellate Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 6/8 Tribunal is established by the appellant, the appeal at 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: 038. 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 OverridingEffectofthe 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.), | 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 rightly Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 7/8 picked up or not, Filters for arriving at the correctlust of comparables have been rightly applied ornot, do not in our considered opinion, give rise toany substantial question of law. Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 7/8 picked up or not, Filters for arriving at the correctlust 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 theRevenue do not give rise to any substantialquestion of law and the suggested substantialquestions of law do not meet the requirements ofSection 260-Aof the Act and thus the appealsfiled by the Revenue are found to be devoid of|merit and the same are liable to be dismissed. | 57. We make it clear that the same'|yardsticks and parameters will have to _ bapplied, even tf such appeals are filed by theAssessees, because, there may be cases wherethe Tribunal giving its own reasons and findings|has found certain comparables to be goodcomparables to arrive at an'‘Arm’s LengthPrice~ in the case of the assessees with which|the assessees may not be satisfied and have filed|such appeals before this Court. Therefore we.clarify that mere dissatisfaction with the findingsoffacts arrived at by the learned Tribunal is notat alla sufficient reason to invokeSection 260-Aof the Act before this Court. Date of Judgment 09-08-2018 I.T.A.No.588/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Inteva Products India Automotive Pvt. Ltd., 8/8 o8. The appeals filed by the Revenue aretherefore dismissed with no order as to costs.” So. Having heard the learned counsels for the parties, we are therefore of the opinion that nosubstantial question of law arises in the present case also. The appeal filed by the Appellants-Revenue isliable to be dismissed and it is-+"A+"".-accordinglyNo costs. Srl. Sd/-. JUDGE Sd/-|JUDGE