Date Of Judgment 31-07-2018, Ita v. M/S. Logica Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 31 DAY OF JULY 2O18| PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A. No.521/2016 BETWEEN : 1.THE Pr. COMMISSIONEROF INCOME-ITAXOF INCOME-ITAX [‘T]FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA| BENGALURU-560095.. «|THE Dy. COMMISSIONER.OF INCOME-TAX.CIRCLE-11]5}], PRESENT ADDRESSCIRCLE-2]1]}1], 2 KLOOR,BMTC BUILDING, 80 FEET ROADKORMANGALAOF INCOME-TAX.CIRCLE-11]5}], PRESENT ADDRESSCIRCLE-2]1]}1], 2 KLOOR,BMTC BUILDING, 80 FEET ROADKORMANGALA BBENGALURU-560095. _ APPBLLANTS| (BY SRI K.V.ARAVIND, ADV.) AND ; M/s. LOGICA PVT. LTD.,INOW MERGED WITH CGIINFORMATION SYSTEMS AND |MANAGEMENT CONSULTANTS PVT. LTD.,]E-CITY, TOWER 2, 95/1 & 95/2ELECTRONIC CITY PHASE 1 BENGALURU, PAN: AAACL 3330M. _. RESPONDENT. (BY SRI SANDEEP HUILGOL, ADV. FORSRI T.SURYANARAYANA, ADV.) Date of Judgment 31-07-2018, ITA No.521/2016 The Pr. Commissioner of Income-tax & Another Vs. M/s. Logica Pvt. Ltd., 2/9 THIS INCOMB TAX APPBAL IS FILED UNDER SECTION|2600-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDERDATED 18.03.2016 PASSED IN ITA No.1621/BANG/2014, FOR:THE ASSESSMENT YEAR 2009-10, ANNEXURE-D, PRAYING TO:1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAWSTATED ABOVE; 2. ALLOW THE APPEAL AND SET ASIDE THEORDERS PASSED BY THE ITAT, BENGALURU IN IT|TPIANo.1621/BANG/2014 DATED 18.03.2016, ANNEXURE-D ANDCONFIRM THR ORDBR OF THR APPBELLATK COMMISSIONERCONFIRMINGTHEORDERPASSEDBY|THEASST..COMMISSIONER OF INCOME TAX, CIRCLE-2]1]/1], BENGALURU;AND BIC. THIS APPEAL COMING ON FOR HEARING, THIS DAY,|S. SUATHA, J., DELIVERED THE FOLLOWING: JU DGMENT Mr. K.V.Aravind,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, Bangalore Bench ‘B’, Bangalore, inIT[TP|A No.1621/Bang/2014 dated18.03.2016, relating to the Assessment Year 2009-1]. Date of Judgment 31-07-2018, ITA No.521/2016 The Pr. Commissioner of Income-tax & Another Vs. M/s. Logica Pvt. Ltd., 3/9 a2Theappealhas|beenadmitted|OTL09.01.2018TO consider.thefollowingsubstantial questions of law: “1.Whether on the facts and in thecircumstances of the case, the Tribunal erred indirecting the TPO to exclude comparables such asM/s.|KalsInformationoystems,BodhtreeConsulting Ltd., Tata Elxsi Ltd., and InfosysTechnology Ltd., Wipro Ltd., on the basis offunctional dissimilarity and has erred in directingthe TPO to include comparables such as M/s.Thinksoft Global Services Put. Ltd., FCS Softwaresolutions Ltd., on the ground that they arefunctionally similar even when the TPO hasrightly chosen the said comparables by applyingall the required tests and FAR analysis in eachcase? D2 Whether on the facts and in thecircumstances of the case, the Tribunal erred indirecting the TPO to exclude comparables M/s.Accentia Technologies Ltd., Cosmic Global andFEclerx Services Ltd., Infosys BPO Ltd., and BirlaMinacs World Wide Ltd., by following its earlierorders which have not reached finaility evenwhen the TPO has rightly chosen the _ sai Date of Judgment 31-07-2018, ITA No.521/2016 The Pr. Commissioner of Income-tax & Another Vs. M/s. Logica Pvt. Ltd., 4/9 comparables by applying all the required testsand Tribunal erred in not appreciating FARanalysis in each case?”| 3.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings as under: Regarding Substantial Question of Law No.1: “11.2. The above three comparables were|already considered and rejected in M/s. CISCOsystems (India) Private Ltd., in IIT(TP)A_ No271/Bang/2014 dt. 14-08-2014 by the Co-ordinate Bench and the decision is as under: KVeVNKK” Date of Judgment 31-07-2018, ITA No.521/2016 The Pr. Commissioner of Income-tax & Another Vs. M/s. Logica Pvt. Ltd., 4/9 comparables by applying all the required testsand Tribunal erred in not appreciating FARanalysis in each case?”| 3.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings as under: Regarding Substantial Question of Law No.1: “11.2. The above three comparables were|already considered and rejected in M/s. CISCOsystems (India) Private Ltd., in IIT(TP)A_ No271/Bang/2014 dt. 14-08-2014 by the Co-ordinate Bench and the decision is as under: KVeVNKK” 11.3. Since the objections of assessee aresimilar and facts being same AO/TPO its directedto exclude the above three companies. 11.5. Inclusion of these two companies onsimilar submissions was already considered inthe decision of ARM Embedded Technologies Put.Ltd., in ITA No. 1659/ Bang/ 14 dt. 31-08-2015 fothe same assessment year as under: 5/9 KVeVNKK” Respectfully following the above decisionwe direct the TPO to include them in the list ofcomparable companies for working out averagePLI.” Regarding Substantial Question of Law No.2: “12.1. Assessee ts objecting to the inclusionof three comparables: (1) Accentia TechnologiesLtd., ; (2) Cosmic global : (3) E-clerx Services Ltd.,on the basis of decisions of Capital IQ in ITA No.170/Hyd/2014 and other decisions. 12.2. Co-ordinate Bench at Hyderabad has.already considered (one of us, AM is the author)the same comparables in the case of Capital IQInformation Systems (India) P. Ltd., in ITA No.124/ Hyd/ 2014 dt. 31-07- 2014 as under KVeVNKK” 12.3. Respectfully following the above, wedirect the TPO to exclude the above comparablesand arrive at the addition, if any, on the basis ofprovisions of Section 92C. Ordered accordingly.77 Date of Judgment 31-07-2018, ITA No.521/2016 The Pr. Commissioner of Income-tax & Another Vs. M/s. Logica Pvt. Ltd., 6/9 4The controversy involved herein is no moreres integrain view ot the decision of this Court inI1.T.A. Nos.536/2015 c/w 537/2015dated95.06.2018[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|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| Date of Judgment 31-07-2018, ITA No.521/2016 The Pr. Commissioner of Income-tax & Another Vs. M/s. Logica Pvt. Ltd., 7/9 etc.), uf based on relevant facts, such|substantial questions of law could beraised before the High Court underSection260-4of 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 anysubstantial 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. 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. Date of Judgment 31-07-2018, ITA No.521/2016 The Pr. Commissioner of Income-tax & Another Vs. M/s. Logica Pvt. Ltd., 8/9 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|7s “ArmLength 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.In the circumstances, having heard the learned Counsel appearing for both the sides, we are of the considered opinion that no substantial question oflaw arises for consideration in the present case. M/s. Logica Pvt. Ltd., 9/9 6.Hence, the Appeal filed by the Appellants- Revenue is liable to be dismissed and is accordinglydismissed. No costs. | NC. Sd/-.JUDGE. Sd/-.JUDGE.