Date Of Judgment 20-07-2018, Ita v. M/S. Novo Nordisk India Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 20 DAY OF JULY 2O18| PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A.No.675/2015 BETWEEN : 1.Pr. COMMISSIONER OFINCOME TAX-VII,CENTRAL REVENUE BUILDINGS, |QUEENS ROAD,BANGALORE-5D6000| «|DEPUTY COMMISSIONEROF INCOME TAX.CIRCLE 12(2),BANGALORE.». APPELLANTS| (BY SRI E.L.SANMATHI, ADV.) AND : M/s. NOVO NORDISK INDIA PVT. LTD.,|PLOT NO.32, 47-50,EPIP AREA, WHITEFIELD, |BANGALORBE-560066PAN NO: AAACN 7425M. _. RESPONDENT. (BY SRI MALLAHARAO.K., ADV. FOR SRI NAGESWAR RAO, ADV.) THIS INCOMB TAX APPBAL IS FILED UNDER SECTION|260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER|DATED 08/05/2015, PASSED IN ITA NO.122/BANG/2014, FOR.THE ASSESSMENT YEAR 2009-2010, ANNEXURE-A, PRAYINGTO:1}. DECIDE THE FOREGOING QUESTION OF LAW AND / OR: Date of Judgment 20-07-2018, ITA No.675/2015 Pr. Commissioner of Income Tax-VII & Another Vs. M/s. Novo Nordisk India Pvt. Ltd., SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED|BY THE HONBLE COURT AS DEEMED FIT; 2]. SET ASIDE THE.APPELLATE ORDER DATED: 08/09/2015 PASSED BY THE ITAT,'B' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO. ITANO.122/BANG/2014 FOR ASSESSMENT YEAR 2009-2010, AS.SOUGHT FOR IN THIS APPEAL.| THIS APPEAL COMING ON FOR HEARING, THIS DAY,|S. SUJATHA, J., DELIVERED THE FOLLOWING: JU DBiGMENT Mr. E.I.Sanmathi, Adv. for Appellants — Revenue.Mr. Mallaharao.K,Adv. for Mr.Nageswar Rao,Adv. for Respondent — Assessee. This Appeal is filed by the Revenue purportedlyraising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal, Bangalore Bench ‘B’, Bangalore, inIT[TP|A No.122/Bang/2014dated|08.05.2015, relating to the Assessment Year2009-10. 2.TheappealhasbeenadmittedOT)17.03.2016TO consider.thefollowingsubstantialquestion of law: “Whether,OF.thefactsandinthecircumstances of the case, the Tribunal was right Date of Judgment 20-07-2018, ITA No.675/2015 Pr. Commissioner of Income Tax-VII & Another Vs. M/s. Novo Nordisk India Pvt. Ltd., 3/8 in holding that the size and turnover of thecompany are deciding factors for treating acompany as a comparable and consequently|erred|in|excludingInfosysBPOLtd.,aS|comparable in the case of taxpayer?” 3.Learned counsel for the Appellants-Revenue has raised additional substantial question of law, which has been quoted hereunder: “WhetherON.thefactsandin|thecircumstances of the case, the Tribunal ts right in|law in excluding comparable’s namely, AccentiaTechnologies Ltd., Cosmic Global Ltd., and Eclerxservices Ltd., by following the decision ofHyderabad Income Tax Tribunal in the case ofParaxel International [India/ Put. Ltd., withoutconsidering the materials/FAR analysis broughton record by Transfer Pricing Officer?’| 4The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings asunder: Date of Judgment 20-07-2018, ITA No.675/2015 Pr. Commissioner of Income Tax-VII & Another Vs. M/s. Novo Nordisk India Pvt. Ltd., 4/8 Regarding both the Substantial Questions of Law: has been quoted hereunder: “WhetherON.thefactsandin|thecircumstances of the case, the Tribunal ts right in|law in excluding comparable’s namely, AccentiaTechnologies Ltd., Cosmic Global Ltd., and Eclerxservices Ltd., by following the decision ofHyderabad Income Tax Tribunal in the case ofParaxel International [India/ Put. Ltd., withoutconsidering the materials/FAR analysis broughton record by Transfer Pricing Officer?’| 4The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings asunder: Date of Judgment 20-07-2018, ITA No.675/2015 Pr. Commissioner of Income Tax-VII & Another Vs. M/s. Novo Nordisk India Pvt. Ltd., 4/8 Regarding both the Substantial Questions of Law: “86. Before us the learned counsel for the|Assessee prays for exclusion of 4 comparablecompanies out of the & comparable companiesfinally chosen by the TPO for the purpose ofcomparison. A chart was filed before us showinghow the 4 comparable companies which theAssessee seeks to exclude were also consideredby ITAT Hyderabad Bench in the case of ParaxelInternational [India] Private Limited Vs. ACIT ITANo.144/Hyd/2014 order dated 30.09.2014 aITES service providers such as the Assessee. Wedeal with the comparable companies which theAssessee seeks exclusion. 1. Infosys BPO Ltd: 2.Accentia Technologies Ltd. 3. Cosmic Global Ltd.4. Eclerx Solutions Ltd. The comparability of thesecompany with a ITES company was consideredbythtsTribunal in|the.CAaSEofParaxelInternational [India/ Put. Ltd., /supra/ and theTribunal held as follows on the comparability ofthe.aforesaidcompanieswithCmCOMmpay?providing ITES in the following manner:- Myer” 5S.The facts and circumstances and theAY in which the aforesaid companies were Date of Judgment 20-07-2018, ITA No.675/2015 Pr. Commissioner of Income Tax-VII & Another Vs. M/s. Novo Nordisk India Pvt. Ltd., excluded as not comparable with ITES company,are identical as in the case of the Assessee in this|appeal. Respectfully following the decision of theTribunal referred to above, we direct that theaforesaid 4 companies be excluded from the listof comparable companies for the purpose ofcomputing arithmetic mean for comparabilitypurpose. The TPO is directed to give effectaccordingly.” 5.The controversy involved herein is no moreres integrain view oft the decision of this Court inI1.T.A. Nos.536/2015 c/w 537/2015dated25.06.2018 [Prl. Commissioner of Income Tax & Anr. V/s. M/s.Softbrands India Pvt. Ltd.,]wherein it has beenobserved that unless the finding of the Tribunal is foundex 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| Date of Judgment 20-07-2018, ITA No.675/2015 Pr. Commissioner of Income Tax-VII & Another Vs. M/s. Novo Nordisk India Pvt. Ltd., 6/8 upon the fair and quick judicial dispensation|in such cases. Had it been a case oOf|substantial questionof|interpretationof|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.), tf based on relevant facts, such|substantial questions of law could beraised before the High Court underSection260-Aof 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.been rightly picked up or not, Filters for|arriving at the correct list of comparables|have been rightly applied or not, do not in our|consideredopinion,|giverisetO arysubstantial question of law. Date of Judgment 20-07-2018, ITA No.675/2015 Pr. Commissioner of Income Tax-VII & Another Vs. M/s. Novo Nordisk India Pvt. Ltd., 7/8 06. Weare therefore of the consideredopinion that the present appeals filed by the|Revenue do not give rise to any substantialquestionof|law.andthe|Suggested|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|7¢§ “ArLength Price“in the case of the assesseeswith which the assessees may not be|satisfied and have filed such appeals beforethis 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-Aof the Act before this Court. 8/8 o8. The appeals filed by the Revenueare therefore dismissed with no order as to|costs.” 6.In the circumstances, having heard the learned Counsel appearing for both the sides, we are ofthe considered opinion that no substantial question oflaw arises for consideration in the present case. [.Hence, the Appeal filed by the Appellants- Revenue is liable to be dismissed and is accordinglydismissed. No costs... NC. Sd/-.JUDGE. Sd/-.JUDGE.