Date Of Judgment 31-08-2018, Ita v. M/S. Cae Simulation Technologies 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.73/2018 BETWEEN : 1.|THE PR. COMMISSIONER OF INCOME TAX,|![‘T]FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|![‘T]FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA| BBENGALURU-560 095. «|THE INCOME-TAX OFFICKRWARD-11(1), PRESENT ADDRESS~ FLOOR, BMTC BUILDING |WARD-11(1), PRESENT ADDRESS~ FLOOR, BMTC BUILDING | 80 FEET ROAD, KORMANGALA|BENGALURU-560 OOD.BENGALURU-560 OOD. _. APPBLLANTS (BY SRI. DILIP, ADV. FOR SRI. K.V. ARAVIND, ADV.) AND: M/S. CAE SIMULATION TECHNOLOGIES PVT. LTD.,SY. NO. 26/27~ AND 3 KFLOOR|BANDARAMANAHALLI VILLAGE|DHVANAHALLIBBENGALURU-560 078PAN: AACCC 60864. ... RESPONDENT Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 2/9 THIS INCOMB TAX APPBAL IS FILED UNDER SECTION|2600-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDERDATED:01/09/2017 PASSED IN IT(TP)A NO. 141/BANG/2014,|FOR THE ASSESSMENT YEAR 2009-2010, VIDE ANNEXURE-D|PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF|LAW STATEBD ABOVE. ll. ALLOW THR APPBAL AND SBT ASIDE THR ORDERS PASSEDBY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN|IT(TP)ANO.141/BANG/2014DATED:01/09/2017|VIDEANNBXURE-‘D’ CONFIRMING THR ORDER OF THER DRP ANDCONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER,WARD-2(1)(1), BENGALURU AND ETC. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,S. SUATHA, J., DELIVERED THE FOLLOWING: JU DGMENT Mr. Dilip, for Mr. K.V.Aravind,Adv. for Appellants —|Revenue. This Appeal is filed by the Revenue purportedlyraising substantial questions of law arising from the Order of the Income Tax Appellate Tribunal, Bangalore Bench ‘A’, Bangalore, inIT[TP|A No.141/Bang/2014 dated01.09.2017, (The Income-Tax Officer Vs. M/s.CAE Simulation Technologies Pvt. Ltd.,) forAY 2009- 10 Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 3/9 2. The proposed substantial question of law framed1nthe.Memorandum|oT Appealby|the.Appellant/sRevenue1S.quotedbelowfor.ready|reference: _ 1. “Whether on the facts and in_ thecircumstances of the case, Tribunal ts right in|law in setting aside the re-computation of 10Adeduction made by assessing authority by|following the judgment of this Hon’ble HighCourt in the case of CIT V/s. Tata Elxsi even|though the said decision has not reached|finalityand|the|aSSeSSINngauthority|recomputed the 10A deduction as per the|provisions of the ActP” 3. The learned counsel for the Appellants-Revenue seeks to raise additional substantial questionof law. The same is quoted hereunder: eyWhether on the facts and in _ thcircumstances of the case, The Tribunal is|right in law in excluding Bodhtree consulting| Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 4/9 Ltd and Infosys Technologies Ltd on the basisof high fluctuation margin and imposing|condition beyond law bty following its earlier|judgments which has not reached finality andeven when the Transfer Pricing Officer has|considered the comparables on the basis of|qualitative and quantitative filters?” 4. The learned counsel appearing for the Appellants - Revenue, Mr. Dilip for K.V. Aravindsubmitted that he does not press the first SubstantialQuestion of Law raised by him in the present appeal. —The same is placed on record. oO. The learned Tribunal, after discussing the rival contentions of both the Appellants/Revenue and theRespondent-Assessee, has given the following findings:relating to the Assessment Year2009-10. Regarding Addl. Substantial Question of Law: Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 5/9 4. The learned counsel appearing for the Appellants - Revenue, Mr. Dilip for K.V. Aravindsubmitted that he does not press the first SubstantialQuestion of Law raised by him in the present appeal. —The same is placed on record. oO. The learned Tribunal, after discussing the rival contentions of both the Appellants/Revenue and theRespondent-Assessee, has given the following findings:relating to the Assessment Year2009-10. Regarding Addl. Substantial Question of Law: Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 5/9 “31. Ground No.13, ts on the tssue whetherInfosys Technologies Ltd., can be taken as acomparable. — 31.1. After hearing rival contentions, we findthat Infosys Technologies Ltd., cannot be|taken as a comparable for the reason that the|brand value of Infosys is much higher than|the brand value of the assessee company. For this proposition of law, we place relianceon the judgment of the Hon'ble Delhi High|Court in the case of CIT vs. Agnity India|Technologies Pot. Ltd., being|ITANo. 1204/2011, dt: 1[th]July, 2013 wherein it|has been held as follows: XXXXKX |XXXX XXXX Respectfully following the same, we allowthis ground of the assessee.” 6. However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015delivered on25.06.2018 (Prl. Commissioner of Income Tax & Anr. Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 6/9 —v- M/s Softbrands India Pvt. Ltd.») has held that in these type of cases, unless an ex-iacie perversity in thefindings of the learned Income Tax Appellate Tribunal isestablished by the appellant, the appeal at the instanceof an assessee or the Revenue under Section 260-A otthe Act is not maintainable. The relevant portion of the said judgment isquoted below for ready reference: “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| Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies 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|law.andthe|Suggested|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 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 8/9 06. Weare therefore of the consideredopinion that the present appeals filed by the|Revenue do not give rise to any substantialquestionof|law.andthe|Suggested|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 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies 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.” 7. 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-| Date of Judgment 31-08-2018, ITA No.73/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 9/9 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/-.JU DGE Sd/-.JU DGE