Date Of Judgment 21-08-2018, Ita v. M/S. Ue Development India Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 21 DAY OF AUGUST 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS.JUSTICEK S.SUJATHA I.T.A. No.953/2017 BETWEEN : 1.PR. COMMISSIONER OF INCOME TAX-/ BMTC COMPLEX, KORMANGALA| BANGALORE. «|DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-12[5} BANGALORE. _ APPBLLANTS| (BY SRI SANMATHI.E.I., ADV.) AND : M/s. UE DEVELOPMENT INDIA PVT. LTD., No.60, WELLINGTON STREET|RICHMOND TOWN.BANGALORE-560025... RESPONDENT. THIS INCOMB TAX APPBAL IS FILED UNDER SECTION|2600-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDERDATED 095.095.2017 PASSED IN IT/TP|A No.347/BANG/2014, FOTHE ASSESSMENT YEAR 2009-2010, VIDE ANNEXURE-A,|PRAYING TO: |1]| DECIDE THE FOREGOING QUESTION OF LAWAND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE.FORMULATED BY THR HON’BLE COURT AS DBEMED FIT AND.SEIT ASIDE THK APPELLATE ORDER DATED 05.05.2017 PASSEDBY THE INCOME TAX APPELLATE TRIBUNAL, “‘B’ BENCH, Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., 2/8 BANGALORE,AS|SOUGHTFOR,|IN|TH ERBESPONDENTASSESSEE’S CASE, IN APPEAL PROCEEDINGS IN IT/TP|A.No.347/BANG/2014 FOR A.Y. 2009-2010 & GRANT SUCH.OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OFJUSTICE. THIS APPEAL COMING ON FOR ORDERS, THIS DAY,|S. SUJATHA, J., DELIVERED THE FOLLOWING: JU DBiGMENT Mr. Sanmathi.E.I.,|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, BangaloreBench ‘B’, Bangalore, inIT[TP|A No.347/Bang/2014dated|05.05.2017, relating to the Assessment Year2009-10. 2.The substantial question of law framed by the Revenue in the Memorandum of Appeal is as under: “WhetherON.thefactsandin|thecircumstances of the case the Tribunal ts right inlaw in holding that in mirror transactions ALPadjustmentscannotbe|done,Leé.,ytOTULtransaction is treated as at Arm’s Length, no Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., 3/8 adjustment can be made on the other relatedcorresponding transaction of the AE withoutappreciating that this stand is against theprovisions of Section 92/3/ of the ActP” 3.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings asunder: “AWe|haveheardthe|learnedDepartmental Representative as well as learnedAuthorised Representative and considered herelevant material on record. The assessee is asubsidiary of United Engineers Mauritius Co. Ltd.,which in turn a subsidiary of United EngineersMalaysia [UEM/, Berhad. In order to participate inthe international bidding for the development,maintenanceandmanagementOf|NationalHighways under National Highway Authority ofIndia , UEM had formed a joint venture with© R Projects Limited and along with the jointventure partner has secured three highwayprojects in India for the purpose of improving andfour laning of national highways under thecontract awarded under NHAI. Part of theworkwas givenTO theasSSCSSCCthrough Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., 4/8 supplementary arrangement which was reportedas international transaction. The issue 1s arisingfromtheSaInearrangement|betweentheassessee and the Associated Enterprise which was considered by this Tribunal inassessee’s own case for the Assessment Years2004-05 to 2OO7-O8 vide order dated 30.08.2013 in ITITP/A Nos.284 to 286/Bang/2012 in paras13 to 15 as under: KVeVNKK” Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., 4/8 supplementary arrangement which was reportedas international transaction. The issue 1s arisingfromtheSaInearrangement|betweentheassessee and the Associated Enterprise which was considered by this Tribunal inassessee’s own case for the Assessment Years2004-05 to 2OO7-O8 vide order dated 30.08.2013 in ITITP/A Nos.284 to 286/Bang/2012 in paras13 to 15 as under: KVeVNKK” since the issue arising from the identicalfacts and circumstances and therefore it iscovered by the decision of the co-ordinate benchof this Tribunal in assessee’s own case. Hence,following the earlier order of this Tribunal, we do)not find any reason to interfere with theimpugned order of the CIT [Appeals]. ~ 4However, 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 the Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., 5/8 findings of the learned Income Tax Appellate Tribunal isestablished by the appellant, the appeal at the instanceof an assessee or the Revenue under Section J60-A ofthe Act is not maintainable. The relevant portion of the said judgment isquoted 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.), tf based on relevant facts, such|substantial questions of law could beraised before the High Court underSection Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., 6/8 260-4of 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.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. Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., where the Tribunal giving its own reasons|and findings has found certain comparables|to be good comparables to arrive at an|7S. “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. o8. The appeals filed by the Revenueare therefore dismissed with no order as to|costs.” 5.Having heard the learned counsel appearing Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., where the Tribunal giving its own reasons|and findings has found certain comparables|to be good comparables to arrive at an|7S. “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. o8. The appeals filed by the Revenueare therefore dismissed with no order as to|costs.” 5.Having heard the learned counsel appearing for the Appellants-Revenue, we are therefore of theopinion that no substantial question of law arises in thepresent case also. The Appeal filed by the Appellants-|Revenue is liable to be dismissed and it is dismissed|accordingly. No costs. Date of Judgment 21-08-2018, ITA No.953/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. UE Development India Pvt. Ltd., 8/8 Copy of this Order be sent to the Respondent- Assessee forthwith. NGC. Sd/-.JUDGE. Sd/-.JUDGE|