Date Of Judgment 12-07-2018, Ita v. M/S Apotex Research Private Limited

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 12 DAY OF JULY 2O18| PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A. No.63/2014 BETWEEN : 1.THERE COMMISSIONER OF INCOME TAXC.R. BUILDING, QUEENS ROADC.R. BUILDING, QUEENS ROAD BANGALORE, «|THE INCOME TAX OFFICERWARD-11(1)WARD-11(1) RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE _ APPBLLANTS| (BY SRI K.V.ARAVIND, ADV.) AND : M/s APOTEX RESEARCH PRIVATE LIMITED| PLOT NO. ]BOMMASANDRA INDL. ESTATE.BANGALORE -562 15_. RESPONDENT. (RESPONDENT SERVED & UNREPRESENTED.) THIS [TA IS FILED UNDER SECTION 260-A OF INCOME|TAX ACT 1961, ARISING OUT OF ORDER DATED 20.09.2013|PASSED IN ITA NO.1602/BANG/2012, FOR THE ASSESSMENTYRAR JOO8S-2JOO9 ANNBXURE-D. PRAYING TO: 1. FORMULATTHE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. 2.RFLLOW THR APPBAL AND SBT ASIDE THR ORDER PASSBD BY Date of Judgment 12-07-2018, ITA No.63/2014 The Commissioner of Income Tax & another Vs. M/s Apotex Research Private Limited 2/7 THE ITAT, BANGALORE IN IT(TP)A NO.1602/BANG/2012 DATED)20.09.2013 ANNBEXURE-D AND CONFIRM THR ORDER OF THRAPPELLATE COMMISSIONER CONFIRMING THR ORDER PASSEDBY THE INCOME TAX OFFICER, WARD-11(1), BANGALORE. THIS APPEAL COMING ON FOR HEARING, THIS DAY,|S. SUATHA, J., DELIVERED THE FOLLOWING: JU DGMENT Mr. K.V.Aravind,Adv. for Appellants — Revenue. This Appeal is filed by the Revenue purportedlyraising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal,‘BpBench,Bangalore, inIT A No.1602/Bang/2012dated 20.09.2013relating to the Assessment Year|2008-09. a2ThisAppealhas|beenadmitted|OTL 13.03.2015to consider the following substantialquestion of law as framed by the Revenue in theMemorandum of Appeal: “Whether,OTLthe factsandinthecircumstances of the case, the Tribunal was rightin holding that Celestial Biolabs Ltd., ought to beexcluded from the list of comparables withoutappreciatingthe.factthatthe.comparable Date of Judgment 12-07-2018, ITA No.63/2014 The Commissioner of Income Tax & another Vs. M/s Apotex Research Private Limited 3/7 Celestrial|BiolabsLtds.,satisfies allthequalitative and quantitative filter applied by theTPO and TP regulations provide for selection ofcomparables in a case of assessee specific FARanalysis P~ 3.The learned Tribunal, after discussing therival contentions of both the Appellant-Revenue andRespondent-Assessee, has returned the findings as.under: “7.9 We have heard both parties andperused and carefully considered the materialon record including the judicial decisions|cited. There is merit in the contention of the|learned D.R. that the ruling of the co-ordinate|bench in the case of Triology E-Business|software India Put. Ltd. (supra) was rendered|with respect to the facts relevant to an earlier|financial year and therefore there cannot bean assumption that it would continue to be|applicable to all other assesses for this year|as well. However, we observe that besides.relying on the decision in the case of Triology|F-Business Software India Put. Ltd., the 4/7 learned|AuthorisedRepresentativehas|brought on record substantial evidence, by|reference from various parts of the Annual|Report to demonstrate that this company is.functionally dis-similar and different from the.assessee in the present case and hence is not|comparable. In view of the fact that the|functional profile and other parameters of‘Celestial’ have not changed during the year|underconsideration,whichhasbeen|demonstrated by the assessee, following the|decision of the co-ordinate bench of this|Tribunal in the case of Triology E-Business|Software India Put. Ltd. (supra), we hold that|this company, ‘Celestial’ ought to be excluded|from the list of comparables. It is orderedaccordingly”. 4/7 learned|AuthorisedRepresentativehas|brought on record substantial evidence, by|reference from various parts of the Annual|Report to demonstrate that this company is.functionally dis-similar and different from the.assessee in the present case and hence is not|comparable. In view of the fact that the|functional profile and other parameters of‘Celestial’ have not changed during the year|underconsideration,whichhasbeen|demonstrated by the assessee, following the|decision of the co-ordinate bench of this|Tribunal in the case of Triology E-Business|Software India Put. Ltd. (supra), we hold that|this company, ‘Celestial’ ought to be excluded|from the list of comparables. It is orderedaccordingly”. 4. The controversy involved herein is no moreTeSintegrain view of the decision of this Court inI1.T.A.Nos.536/2015 c/w 537/2015dated|25.06.2018 (Prl.Commissioner of Income Tax & Anr. -v- M/s)Softbrands India Pvt. Ltd.,) Wherein it has beenobserved that unless the finding of the Tribunal is found Date of Judgment 12-07-2018, ITA No.63/2014 The Commissioner of Income Tax & another Vs. M/s Apotex Research Private Limited 5/7 ex facie perverse, the Appeal u/s. 260-A of the Act, isnot maintainable. The relevant portion of the Judgmentis quoted below for ready reference: “Conclusion: 55.Asubstantial quantumof|international trade and transactions depends|upon the fair and quick judicial dispensation|in such cases. Had it been a case oOf|Substantialquestionof|interpretation|of|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.), uf based on relevant facts, such|substantial questions of law could beraised before the High Court underSection260-4of 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. Date of Judgment 12-07-2018, ITA No.63/2014 The Commissioner of Income Tax & another Vs. M/s Apotex Research Private Limited 6/7 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|consideredopinion,|giverisetO arysubstantial question of law. 06. Weare therefore of the consideredopinion that the present appeals filed by the|Revenue do not give rise to any substantialquestionof|lawand.theSuggested|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 it clear that the same'§yardsticks and parameters will have to beapplied, 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 before Date of Judgment 12-07-2018, ITA No.63/2014 The Commissioner of Income Tax & another Vs. M/s Apotex Research Private Limited 7/7 this Court. Therefore we clarify that mere|dissatisfaction with the findings of facts|arrived at by the learned Tribunal ts not at all| a sufficient reason to invoke.Section 260-A of the Act before this Court. o8. The appeals filed by the Revenue are|therefore dismissed with no order as_ tocosts.” o. In the circumstances, having heard the learnedCounsel appearing for both the sides, We are of theconsidered opinion that no substantial question of lawarises for consideration in the present case. Hence, the Appeal filed by the Appellant-Revenueis liable to be dismissed and is accordingly dismissed. —No costs. Copy of this order be sent to the respondent-Assessee, forthwith. Sd/-.JUDGE. 7/7 this Court. Therefore we clarify that mere|dissatisfaction with the findings of facts|arrived at by the learned Tribunal ts not at all| a sufficient reason to invoke.Section 260-A of the Act before this Court. o8. The appeals filed by the Revenue are|therefore dismissed with no order as_ tocosts.” o. In the circumstances, having heard the learnedCounsel appearing for both the sides, We are of theconsidered opinion that no substantial question of lawarises for consideration in the present case. Hence, the Appeal filed by the Appellant-Revenueis liable to be dismissed and is accordingly dismissed. —No costs. Copy of this order be sent to the respondent-Assessee, forthwith. Sd/-.JUDGE. Sd/-.JUDGE. In.