Date Of Judgment 25-07-2018, Ita v. M/S. Soceite Generale Global Solution Centre 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.494/2016 BETWEEN: 1.PRINCIPAL COMMISSIONEROF INCOMB TAX - 6C.R. BUILDING, QUEENS ROAD,|OF INCOMB TAX - 6C.R. BUILDING, QUEENS ROAD,| BANGALORE - 560 OO] 2.DBPUTY COMMISSIONEROF INCOME TAX, CIRCLE —- 12 (3) BANGALORE_. APPBLLANTS| (BY SRI.E I SANMATHI, ADV.) AND: M/S. SOCEITE GENERALE |GLOBAL SOLUTION CENTRE PVT. LITD.,"INVENTOR" BLDG., 6 FLOOR,INTERNATIONAL TECH PARK,WHITE FIELD ROAD,BANGALORE - 560 OO6PAN: AAECS 6764L .. RESPONDENT (BY SRI.SANDEEP HUILGOL, ADV. FOR SRI.SURYANARAYANA T, ADV.) THIS TTA IS FILED UNDER SECIION 2J6O0-A OF INCOMTAX ACT 1961, ARISING OUT OF ORDER DATED :22/04/2016.PASSEDIN|IT(TP)ANO.1188/BANG/2011,KOR.THEASSEHKESSMENT YEAR 2007-2008 ANNEXURE - A. PRAYING TDECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH. Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd., 2/8 OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THEHON'BLBE COURT AS DBEBMEBD FIT. SET ASIDE THR APPELLAORDER DATED:22/04/2016 PASSED BY THE ITAT, ‘A’ BENCH,BENGALURU,IN|APPKBALPROCHBDINGS|NO.IT(TP)ANO.1188/BANG/2011 FOR THE ASSESSMENT YEAR 2007-08.ANNEXURE-A AS SOUGHT FOR IN THIS APPEAL; AND TOGRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE)INTKBREST OF JUSTICE 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. Sandeep Huilgol,Adv. for|Mr. T. Suryanarayana,|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, ‘A’ Bench, —Bangalore|1nIT[TPIANo.1188/Bang/2011dated22.04.2016, relating to the Assessment Year2007-08. 2.ThisAppealhasbeenadmittedOTL24.10.2017to consider the following substantial|question of law. Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd., 3/8 “2. Whether, on the facts and in the|circumstances of the case, the Tribunal is right|in law in directing the TPO to exclude Avantsimcom Technologies Ltd, E-zest Solutions Ltd.,Helios and Metheson Information Technologies|Ltd., Persistent Systems Ltd., Wipro Ltd.,|Bodhtree Consulting Ltd., Exlerx Services Ltd.,|Moldtech Technologies Ltd Accel Transmatics|Ltd., KALS Information Systems Lucid Software|Ltd., Infosys Technologies Ltd., and Tata Elxst'Ltd., as comparable in the case of the taxpayer|on the ground of functional dis-similarity even|with the TPO has rightly chosen the sameconsidering the functions, FAR analysis and|applying the required test?” 3.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue andRespondent-Assessee, has returned findings as under: “12. Now, we shall deal with each of them.Bodhtree Consulting Ltd., Eclerx Services Ltd.,and Mold-Tek Technologies Ltd., were excludedfrom the list of comparables by this Tribunal inthe case of First Advantage Offshore ServicesPut.Ltd.(supra) on the ground of functional Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd., 3.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue andRespondent-Assessee, has returned findings as under: “12. Now, we shall deal with each of them.Bodhtree Consulting Ltd., Eclerx Services Ltd.,and Mold-Tek Technologies Ltd., were excludedfrom the list of comparables by this Tribunal inthe case of First Advantage Offshore ServicesPut.Ltd.(supra) on the ground of functional Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd., dissimilarity. The Tribunal further observed thatthese companies are into the business’ ofKnowledgeProcess”Outsourcing(KPO).Accordingly,the.Tribunalheldthatthesecompanies cannot be compared with assessee-company which is engaged in IT enabledservices. The relevant paras of the order of theTribunal in the case of First Advantage Offshoreservices Put.Ltd. (supra) are extracted hereunder: XXXXXXXXXX The Hon'ble Delhi High Court in the case of|Rampgreen Solutions Ltd. (supra) held that KPOcompany cannot be compared with BPO companyextracted supra. The learned DR has_ notcontroverted that these companies are KPOcompanies. In the result, we hold that thesecompanies cannot be considered as comparablesfollowing the ratio laid down in the cases citedSUPT. Infosys BPO Ltd. and Wipro Ltd. 13.This|Tribunalexcludedthesecompanies from the list of comparables in thecase of Symphony Marketing Solutions India Pvt.Ltd.(supra) holding that Infosys BPO Ltd., was asubsidiary of Infosys Ltd., and having brand)value etc. Similar observations were made by the Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd., Tribunal in the case of Capital IQ Informationsystems (India) Put.Ltd. [TS 720 ITAT 2012(Hyd)TP]. Hon'ble Delhi High Court in the case ofAgnityIndia Technologies P.Ltd.(supra) held that thesecompanies cannot be compared with smallercompanies. Following the decision of Hon'bleDelht High Court as well as the Tribunal in theabove|citedCases,WE|directIT(TP)ANo.1188/ Bang/ 2011 thTPO/AOTo|exclude.these companies from the list of comparables.” 4The controversy involved herein is no moreres integrain view of the decision of this Court in|L.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. A substantial quantum of international tradeand transactions depends upon the fair and quick|judicial dispensation in such cases. Had it been Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd., a 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. Onthe 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 appeals Date of Judgment 25-07-2018, ITA No.494/2016 Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd., filed by the Revenue are found to be devoid ofmerit and the saqme are liable to be dismissed. 57. We make it clear that the same'|yardsticks and parameters will have to _ bapplied, 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 which|the assessees may not be satisfied and have filedsuch appeals before this Court. Therefore we.clarify that mere dissatisfaction with the findingsoffacts arrived at by the learned Tribunal ts notat alla sufficient reason to invokeSection 260-Aof the Act before this Court. o8. The appeals filed by the Revenue aretherefore 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 question of law arises for consideration in the present case. _ Principal Commissioner of Income Tax-6 & Anr. Vs. M/s. Soceite Generale Global Solution Centre Pvt. Ltd., 8/8 6.Hence, the Appeal filed by the Appellants- Revenue is liable to be dismissed and is accordingly dismissed. Nocosts. AN/- Sd/-.JUDGE| Sd/-.JUDGE|