Date Of Judgment 20-08-2018, Ita v. M/S .Sanyo Bpl P. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 20 DAY OF AUGUST 2018. PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS.JUSTICEK S.SUJATHA I.T.A. No.925/2017 BETWEEN : 1.PR. COMMISSIONER OF | INCOME TAX -6 BMTIC COMPLEX KORAMANGALA, BANGALORE 2.DEPUTY COMMISSIONEROF INCOME TAX.OF INCOME TAX. CIRCLE -12 (3) BANGALORE _. APPBELLANTS (BY SRI. SANMATHI E I, ADV.) AND: M/S. SANYO BPL P. LTD., —JUBILEE BUILDING|p KHLOOR NO.45_MUSEUM ROAD,BANGALORE - 560 O25)PAN: AAJGCSO 339 —. RBSPONDBENT THIS INCOMB TAX APPBAL IS FILED UNDER.SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF|ORDERDATED:09/06/2017PASSEDINIT(TP)A Date of Judgment 20-08-2018, ITA No.925/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd. NO.1627/BANG/2014, FOR THE ASSESSMENT YEAR 2009-2010 VIDE ANNEXURE —- A, PRAYING TO: (A) DECIDE THEFOREGOING QUESTION OF LAW AND / OR SUCH OTHER|QUESTIONS OF LAW AS MAY BE FORMULATED BY THE|HON'BLE COURT AS DEEMED FIT. (B) SET ASIDE THEAPPELLATE ORDER DATED:09/060/2017 PASSED BY THEINCOME|TAX|APPBHRLLATTRIBUNAL,‘A!BENCH,BENGALURU, IN APPEAL PROCEEDINGS NO.IT(TP)A NO.|1627/BANG/2014 FOR ASSESSMENT YEAR 2009-2010VIDE ANNEXURE -A, AS SOUGHT FOR IN THIS APPEAL. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,|S. SUJATHA, J., DELIVERED THE FOLLOWING: JU DBiGMENT Mr.E.I.Sanmathi , 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,SA?Bench, Bangalore, inIT A No.1627/Bang/2014dated 09.06.2017relating to the Assessment Year2009-10. 2. The substantial question of law framed by the.Revenue in the Memorandum of Appeal is as under: Date of Judgment 20-08-2018, ITA No.925/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd. 3/7 oeWhether on the facts and in the circumstances|of the case and in law, the Tribunal ts right in lawin directing the Transfer Pricing Officer to carryout the working capital adjustment on the basisof actual workings on the financials of the finalcompanies remained as comparable withoutappreciating that Transfer Pricing Officer hadrightly passed order under section 92CA wherebyno adjustment of working capital was grantedsince the assessee had failed to give properjustification|anddetailed|computationofadjustment of fixed expenses and as such theTribunal ought to have upheld the approach of theTPOinnot|grantingtheworking capitaladjustment?” 3. The learned Tribunal, after discussing the rival contentions oT boththeAppellant-Revenueand Respondent-Assessee, has returned the findings as.under: “10. We have gone through the record as well asthe direction issued by the CIT (A). In our view,the CIT(A) has not directed the TPO in the way ithas been portrayed by the Ld. DR. In fact, thedirection issued by the CIT (A) was only to theeffect to calculate the working capital adjustment Date of Judgment 20-08-2018, ITA No.925/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd. and grant it to the assessee. Even otherwise inour view, working capital adjustment is requiredto be granted on the basis of the actual workingof the financials of the finally company remainedas comparable and Workmen’s CompensationAct,1923 is required to be given by the TPO onactual basis. Therefore in the light of the above,this ground of the Revenue is also devoid offactand therefore dismissed.” 4. However, this Court in a recent judgment inI.T.A. Nos.536/2015 c/w 537/2015delivered on25.06.2018 (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"established by the appellant, the appeal at the instanceof an assessee or the Revenue under Section J60-A otthe Act is not maintainable. The relevant portion of the said judgment is. quoted below for ready reference: 4. However, this Court in a recent judgment inI.T.A. Nos.536/2015 c/w 537/2015delivered on25.06.2018 (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"established by the appellant, the appeal at the instanceof an assessee or the Revenue under Section J60-A otthe Act is not maintainable. The relevant portion of the said judgment is. quoted below for ready reference: “Conclusion: Date of Judgment 20-08-2018, ITA No.925/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd. 5/7 55.ASubstantialquantumof|international trade and transactions dependsupon 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, Futers for|arriving at the correct list of comparables|have been rightly applied or not, do not in our|consideredopinion, giveriseTo anysubstantial question of law. Date of Judgment 20-08-2018, ITA No.925/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd. 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 cleqr that the sameyardsticks 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 “Arm Length 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. Date of Judgment 20-08-2018, ITA No.925/2017 Pr. Commissioner of Income Tax -6 & another Vs. M/s .Sanyo BPL P. Ltd. 7/7 o8. The appeals filed by the Revenue are|therefore dismissed with no order as_ tocosts.” Oo. Having heard the learned counsel for the appellants-Revenue, 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 is dismissed accordingly. —No costs. Copy of this order be sent to the respondent- Assessee, forthwith. Sd/-.JUDGE. Sd/-.JU DGE