Date Of Judgment 25-07-2018, Ita v. M/S.igs Imaging Services (I) Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 25 DAY OF JULY 2O18| PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A. No.472/2016 BRIWEHEN 1.THE PR. COMMISSIONER OF INCOME —- TAX,k FLOOR, BMTC BUILDING,80 FEET ROAD, KORAMANGALA,BBNGALURU - 560095 2.THE DEPUTY COMMISSIONER OF INCOME - TAX, |CIRCLE - 11(4), PRESENT ADDRESSCIRCLE -3(1) (1).5[‘T]FLOOR, BMTC BUILDING,80 FEET ROAD, KORAMANGALA~BENGALURU —- 560095.. APPELLANTS (BY SRI.ARAVIND K. V., ADV.) AND:M/S. IGS IMAGING SERVICES (I) PVT. LTD.,(NOW INDECOMM GLOBAL SERVICES (I) PVT. LTD.,)30 INDECOMM HOUSE, |LASKAR, HOSUR ROAD,AUDUGODI, BENGALURU — 960 O30PAN: AABCIQJ902H_. RESPONDENT(BY SRI.ANKUR PAI, ADV. FOR.SRIL.K.R.VASUDEVAN, ADV.) Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., 2/10 THIS [TA IS FILED UNDER SECTION 260-A OF INCOME|TAX ACT 1961, ARISING OUT OF ORDER DATED:10/02/2016.PASSED IN IT(TP)A NO.470/BANG/2013, FOR THE ASSESSMENTYRAR JOO8-2009 ANNBXURE -C. PRAYING TO: 1. FORMULATE|THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. 2.ALLOW THE APPBAL AND SBT ASIDE THR ORDERS PASSED BYTHE ITAT, BENGALURU IN IT(TP)A NO. 470/BANG/2013DATED:10/02/2016 ANNEXURE -C CONFIRMING THE ORDEROF THR APPRLLATK COMMISSIONBR AND CONFIRM THRORDER PASSED BY THR DBPUTY COMMISSIONBR OF INCOMBTAX, CIRCLE-3(1)(1), BENGALURU. THIS APPEAL COMING ON FOR HEARING, THIS DAY,| S. SUJATHA, J., DELIVERED THE FOLLOWING: JU DBiGMENT Mr. K.V. Aravind, Adv. for Appellants — Revenue. |Mr. Ankur PaliAdv. forMr. K.R. Vasudevan,Adv., for.Respondent — Assessee. This Appeal is filed by the Revenue purportedly raising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal, Bangalore Bench ‘A’, Bangalore inIT|TPIA No.470/Bang/2013 dated|10.02.2016, relating to the Assessment Year2008-09 Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., 3/10 a2ThisAppealhas|beenadmitted|OTL 13.12.2017|to consider the following substantial|questions of law, “1.Whether on the facts and circumstances of|the case and in law, the Tribunal was right inseeking exact comparability while searching forcomparable companies of the assessee underTNMM method whereas requirement of law andinternationaljurisprudencerequireseekingsimilar comparable companies? D2 Whether on the facts and circumstances ofthe case and in law, the Tribunal was right in lawinexcludingcomparablesnamely,Accentiatechnologies Ltd, Coral Hubs Ltd, Eclerx ServicesLtd, Genesys International Corporation Ltd, Mold-Tek Technologies Ltd, Infosys BPO Ltd, Wipro Ltdby relying upon the decisions which have notreached finality and even when the TPO hadchosen the said comparables by applying therequiredTtesTsandwithoutapplyingFARanalysis?” Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., 4/10 3.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue andRespondent-Assessee, has returned findings as under: “25. Vis-a-vis ground.3 raised by the Revenue,Ld. DR had argued that exclusion of the M/s.Accentia Technologies Ltd, was inappropriate. Wefind that Ld. AR has placed before us a decisionof the coordinate bench in the case of SymphonyMarketingSolutionsIndia.P.|Ltd,HT(TPJA.1316/ Bang/ 2012, dt.14.08.2013]. Saidcompany was also providing ITES services to itsAE abroad and the list of comparables considered|bytheTPOforanalysingthevalue|ofinternational transactions also included M/s.Accentia Technologies Ltd. Case before theTribunal was also for the very same assessmentyear. Therefore in our opinion the decision of theTribunal mentioned supra would apply here aswell. In relation to M/s. Accentia TechnologiesLtd, it was held as under at para 10 and 11 ofthe order dt.1¢.08.2013 as under :NXXXXXKXX “25. Vis-a-vis ground.3 raised by the Revenue,Ld. DR had argued that exclusion of the M/s.Accentia Technologies Ltd, was inappropriate. Wefind that Ld. AR has placed before us a decisionof the coordinate bench in the case of SymphonyMarketingSolutionsIndia.P.|Ltd,HT(TPJA.1316/ Bang/ 2012, dt.14.08.2013]. Saidcompany was also providing ITES services to itsAE abroad and the list of comparables considered|bytheTPOforanalysingthevalue|ofinternational transactions also included M/s.Accentia Technologies Ltd. Case before theTribunal was also for the very same assessmentyear. Therefore in our opinion the decision of theTribunal mentioned supra would apply here aswell. In relation to M/s. Accentia TechnologiesLtd, it was held as under at para 10 and 11 ofthe order dt.1¢.08.2013 as under :NXXXXXKXX We are therefore of the opinion that CIT (A) wasjustified in direction exclusion of M/s. AccentiaTechnologies Ltd, Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., 5/10 26. Vide ground 4, Revenue is assailing exclusionof Genesys International Corporation Ltd, fromthe list of comparables. We find that the saidcompany was also considered by the Tribunal inthe.decisionof M/s.symphonyMarketingsolutions India P. Ltd (supra). In relation toGenesys International Corporation Ltd,it was heldas under at para 22 and 23 of the order : XXXXXXXXX| We are therefore of the opinion that CIT (A) wasjustified in directing exclusion of this company aswell. 30. A reading of ground 1 show that assessee isseeking exclusion of M/s. Coral Hub Ltd, andM/s. Eclerx Services Ltd, which come back to thelust of comparables. In the case of M/s. Coral HubLtd, assessee says that it was functionallyuncomparable and in the case of Eclerx ServicesLtd, it says that there were extra-ordinary eventsduring the relevant previous year which took itout of the realm of comparable. In this regard, Ld.AR placed reliance on the decision of coordinatebench in the case of M/s. Symphony MarketingSolutions India P. Ltd. Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., 6/10 Ol. As against this Ld. DR submitted thatfunctional comparability was never seen by theCIT (A) while adjudicating the issue. Similarlyaccording to him, CIT (A) also did not verify thecomparability of M/s. Eclerx Services Ltd, on thecriteria of extra ordinary circumstances applicable|to the said company during the relevant previousYyedr. 32. We have heard the rival contentions. In so faras M/s. Coral Hub Ltd, ts concerned, thecoordinate bench in the case of M/s. Symphonysymphony Marketing Solutions India P. Ltd,(supra) has held as under at paras 14 to 17 of itsorder: NXXXXKXXXX 33. In so far as M/s. Eclerx Services Ltd, isconcerned, in the very same _ decision thiTribunal had held as under at paras 20 and 21 ofits order:XXXXXXXXX| Following the above we are of the opinion thatM/s. Coral Hub Ltd, and M/s. Eclerx ServicesLtd, have to be excluded from the lst ofcomparables for reasons other than abnormallosses. Directed accordingly. Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., 7/10 34. In relation to ground 2, Ld. AR submitted thatM/s. Moldtek Technologies Ltd, had to beexcluded since it had income from derivativetrading and demerger during the previous year. 36. We have heard the rival contentions.Comparability of M/s. Moldtek Technologies Ltd,had come up before the Tribunal in the case ofM/s. Symphony Marketing Solutions India p. Ltd(supra). Coordinate bench at para 25 had held asunder : Accordingly we are of the opinion that M/s.Moldtek Technologies Ltd, cannot be consideredas a proper comparable. Ordered accordingly. 37.In so far as M/s. Infosys BPO is concerned,ground taken by the assessee is infructuous. Itgets excluded by application of turnoverfilter. 34. In relation to ground 2, Ld. AR submitted thatM/s. Moldtek Technologies Ltd, had to beexcluded since it had income from derivativetrading and demerger during the previous year. 36. We have heard the rival contentions.Comparability of M/s. Moldtek Technologies Ltd,had come up before the Tribunal in the case ofM/s. Symphony Marketing Solutions India p. Ltd(supra). Coordinate bench at para 25 had held asunder : Accordingly we are of the opinion that M/s.Moldtek Technologies Ltd, cannot be consideredas a proper comparable. Ordered accordingly. 37.In so far as M/s. Infosys BPO is concerned,ground taken by the assessee is infructuous. Itgets excluded by application of turnoverfilter. 38. In its ground 3, assessee is aggrieved thatCIT (A) had not adjudicated the comparability ofM/s. Wipro Ltd (seg), but had directed exclusionbased on its turnover. Since we have alreadyheld that turnover filter was properly applied bythe CIT (A), this ground, in our opinion, isinfructuous.”~ 4The controversy involved herein is no moreres integrain view ot the decision of this Court inI1.T.A. Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., 8/10 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: oo. A substantial quantum of international tradeand transactions depends upon the fair and quick|judicial dispensation in such cases. Had it beena case of substantial question of interpretation ofprovisions of Double Taxation Avoidance Treaties(DTAA), interpretation of provisions of the IncomeTax Act or Overriding Effect of the Treaties overthe Domestic Legislations or the questions likeTreaty Shopping, 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 and)answering such substantial question of law. On Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., 9/10 the other hand, the appeals of the present tenoras to whether the comparables have been rightlypicked up or not, Filters for arriving at the correctlist 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 consideredopinion 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-A.of the Act and thus the appealsfiled by the Revenue are found to be devoid ofmerit 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 theAssessees, because, there may be cases wherethe Tribunal giving its own reasons and findingshas found certain comparables to be goodcomparables to arrive at an‘Arm’s LengthPrice“ in the case of the assessees with whichthe assessees may not be satisfied and have filedsuch appeals before this Court. Therefore weclarify that mere dissatisfaction with the findingsoffacts arrived at by the learned Tribunal is not Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., at all a sufficient reason to invokeSection 260-Aof the Act before this Court. o8. The appeals filed by the Revenue are)therefore dismissed with no order as to costs.” 5.In the circumstances, having heard the Date of Judgment 25-07-2018, ITA No.472/2016 The Pr. Commissioner of Income-tax & anr. Vs. M/s.IGS Imaging Services (I) Pvt. Ltd., at all a sufficient reason to invokeSection 260-Aof the Act before this Court. o8. The appeals filed by the Revenue are)therefore dismissed with no order as to costs.” 5.In the circumstances, having heard the learned Counsel appearing for both the parties, We areof the considered opinion that no substantial questionof law arises for consideration in the present case. 6.Hence, the Appeal filed by the Appellants-Revenue is liable to be dismissed and is accordinglydismissed. Nocosts. AN/- Sd/-.JUDGE| Sd/-.JUDGE|