Date Of Judgment 31-08-2018, Ita v. M/S. Ariba Technologies India Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 31 DAY OF AUGUST 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS.JUSTICEK S.SUJATHA I.T.A. No.232/2018 BETWEEN : 1.THE PR. COMMISIONER OF INCOME TAX![‘T]FLOOR, BMTC BUILDING80 FEET ROAD, KORAMANGALABBENGALURU 560 095.![‘T]FLOOR, BMTC BUILDING80 FEET ROAD, KORAMANGALABBENGALURU 560 095. «|THE INCOME TAX OFFICERWARD 11(1), PRESENT ADDRESS|WARD 1(1)(2), 2 KFLOOR|WARD 11(1), PRESENT ADDRESS|WARD 1(1)(2), 2 KFLOOR| BMTC BUILDING, 80 FEET ROADKORAMANGALA,BBENGALURU 560 095.KORAMANGALA,BBENGALURU 560 095. _. APPBLLANTS (BY SRI.DILIP, ADV. FOR SRI. K.V. ARAVIND, ADV.) AND: M/S. ARIBA TECHNOLOGIES INDIA PVT. LTD.,RMZ ICON, # 51.PALACE ROAD, BENGALURU-560 052.PAN AADCA O9Q1IS8P ... RESPONDENT THIS INCOMB TAX APPBAL IS FILED UNDER SECTION|260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER|DATED:11/10/2017 PASSED IN IT(TP)A NO.1592/BANG/2014,FOR THE ASSESSMENT YEAR 2009-2010 (VIDE ANNEXURE-D)_ Date of Judgment 31-08-2018, ITA No.232/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. Ariba Technologies India Pvt. Ltd., PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF|LAW STATEBD ABOVE. Il ALLOW THERE APPEAL AND SEI ASIDE THE ORDERS PASSEDBY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU INIT(TP)ANO.|1592 /BANG/2014DATED:11/10/2017ANT)CONFIRM THR ORDEBR OF THR APPKRHLLATKH COMMISSIOCONFIRMING THR ORDBR PASSBD BY THR INCOMB TAX!OFFICER, WARD-1(1)(2), BENGALURU AND ETC. THIS APPEAL COMING ON FOR ORDERS, THIS DAY,S. SUJATHA, J©, DELIVERED THE FOLLOWING: JU DGMENT Mr. Dilip, Adv. for Mr. K.V.Aravind,Adv. for.Appellants — Revenue.| ThisAppeal1S.filed|by theRevenlUEpurportedly raising substantial questions of law arisingfrom the Order of the Income Tax Appellate Tribunal,Bangalore|Bench‘B,Bangalore,>8IT[TPIA No.1592/Bang/2014dated11.10.2017» (M/s Ariba|Technologies India Pvt. Ltd., Vs. The Income-TaxOfficer) for AY 2009-10 2. The proposed substantial questions of lawframedin.theMemorandumoT|Appealby|the Date of Judgment 31-08-2018, ITA No.232/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. Ariba Technologies India Pvt. Ltd., 3/8 Appellant/s Revenue are quoted below tor readyreference: _ “1.WhetherOrtthefactsandcircumstances of the case, the Tribunal 1iscorrect|in|confirmingtheorderof|Commissionerof|IncomeTax(Appeals)directing the assessing officer to exclude|expenses in foreign currency and_ otherexpenses that has been excluded from ETO, from the total turnover also and accordinglyrecomputed the deduction under Section|TOA?” D2 “Whether on the facts and in|circumstances of the case, the Tribunal 1isright in law in excluding certain comparable’s|on the ground of functional dis-similarity by|following its earlier decision which has notreached finality?” 3. The learned counsel appearing for the Appellants - Revenue, Mr. Dilip for K.V. Aravind Date of Judgment 31-08-2018, ITA No.232/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. Ariba Technologies India Pvt. Ltd., 4/8 submitted that he does not press the first SubstantialQuestion of Law raised by him in the present appeal. —The same is placed on record. 4. The learned Tribunal, after discussing the rivalcontentions of both the Appellants/Revenue and theRespondent-Assessee, has given the following findings: Regarding Substantial Question of Law No.2: “¢ 11. #=As far as exclusion of Bodhtree.Consulting Ltd., is concerned, we find thatthis issue was examined by the Tribunal intheCASEoT M/sInfineraIndia.Pvt.Ltd.,(supra), wherein the Tribunal followingthe order of the Tribunal in the case of Ciscosystems India Pvt. Ltd.,(supra) has directedthe exclusion of Bodhtree Consulting Ltd.from the list of comparables. The relevantobservations of the Tribunal are extracted|hereunder: KRAXKXXAXXXAKAXAXAXN Date of Judgment 31-08-2018, ITA No.232/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. Ariba Technologies India Pvt. Ltd., 5/8 4. The learned Tribunal, after discussing the rivalcontentions of both the Appellants/Revenue and theRespondent-Assessee, has given the following findings: Regarding Substantial Question of Law No.2: “¢ 11. #=As far as exclusion of Bodhtree.Consulting Ltd., is concerned, we find thatthis issue was examined by the Tribunal intheCASEoT M/sInfineraIndia.Pvt.Ltd.,(supra), wherein the Tribunal followingthe order of the Tribunal in the case of Ciscosystems India Pvt. Ltd.,(supra) has directedthe exclusion of Bodhtree Consulting Ltd.from the list of comparables. The relevantobservations of the Tribunal are extracted|hereunder: KRAXKXXAXXXAKAXAXAXN Date of Judgment 31-08-2018, ITA No.232/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. Ariba Technologies India Pvt. Ltd., 5/8 12. Accordingly, following the order of the)Tribunal in the case of.Infinera India Pvt.Ltd. (supra),We|directthatBodhtreeConsulting Ltd. be excluded from the list of|comparables.” Oo. However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015delivered on25.06.2018 (Pri. Commissioner of Income Tax & Anr. -—v- M/s Softbrands India Pvt. Ltd,) has held)that in these type of cases, unless an ex-facieperversity in the findings of the learned Income TaxAppellate Tribunal is established by the appellant,the appeal at the instance of an assessee or theRevenue under Section JYJ60-A of the Act is nomaintainable. The relevant portion of the said judgment is quoted below for ready reference: Date of Judgment 31-08-2018, ITA No.232/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. Ariba Technologies India Pvt. Ltd., 6/8 “Conclusion: 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| Date of Judgment 31-08-2018, ITA No.232/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. Ariba Technologies India Pvt. Ltd., 7/8 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 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 | “ALength 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.” 6. Having heard the learned counsel appearing 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 | “ALength 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.” 6. 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. The copy of this judgment be sent to the Respondent — Assessee forthwith. Psg* Sd/-.JUDGE. Sd/-.JU DGE