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.74/2018 BETWEEN : 1.THE PR. COMMISSIONER OF INCOME TAX![‘T]FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|BBENGALURU-560 095.![‘T]FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|BBENGALURU-560 095. «|THE INCOME-TAX OFFICERWARD-11(1), PRESENT ADDRESSWARD-1(1)(2), 2 FLOOR, ©BMTC BUILDING80 FEET ROAD, KORMANGALA|BBENGALURU-560 095.WARD-11(1), PRESENT ADDRESSWARD-1(1)(2), 2 FLOOR, ©BMTC BUILDING80 FEET ROAD, KORMANGALA|BBENGALURU-560 095. _. APPBLLANTS (BY SRI. DILIP, ADV. FOR SRI. ARAVIND. K.V, ADV.) AND: M/s. CAE SIMULATION TECHNOLOGIES PVT. LTD.,SY. NO. 26/27~ AND 3 KFLOOR|BANDARAMANAHALLI VILLAGE.DBVANAHALLIBBENGALURU-560 078PAN: AACCC 60864. ... RESPONDENT THIS INCOME TAX APPEAL IS FILED UNDER SECTION|260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER| Date of Judgment 31-08-2018, ITA No.74/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., DATED 01/09/2017 PASSED IN C.O.No.42/BANG/2016, FOR:THE ASSESSMENT YEAR 2009-2010, VIDE ANNEXURE-D|PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OFLAW STATED ABOVE. Il. ALLOW THR APPEAL AND SKIT ASIDETHR ORDBRS PASSBED BY THR [INCOMB TAX APPELLATTRIBUNAL, BENGALURU IN C.O.No.42/BANG/2016 DATED01/09/2017 CONFIRMING THE ORDER OF THE DRP ANDCONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER,WARD-2(1)(1), BENGALURU (VIDE ANNEXURE-D) AND ETC. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,S. SUATHA, J., DELIVERED THE FOLLOWING: JU DBiGMENT Mr. Dilip, Adv. for Mr. K.V.Aravind,Adv. for.Appellants — Revenue. This Appeal is filed by the Revenue purportedly raising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal, BangaloreBench ‘A’, Bangalore, inC.O.No.42/Bang/2016 A/o| IT[TPIA No.141/Bang/2014dated|01.09.2017(TheIncome.Tax|Officer,Vs.M/sCAESimulationTechnologies Pvt. Ltd.) for|AY 2009-10 2. The proposed substantial question of law.framedin.theMemorandumoT|Appealby|the Date of Judgment 31-08-2018, ITA No.74/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 3/7 Appellant/sRevenue1S.quotedbelowfor.ready|reference: _ FWhetherOTLthefactsandinthecircumstances of the case, the Tribunal is right inlaw in excluding certain comparables on the basisoffunctional dissimilarity by following its earlierjudgments which has not reached finality andeven when the Transfer Pricing Officer hasconsidered the comparables on the basis ofqualitative and quantitative filters?’ 3. The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and the Respondent-Assessee, has given the following findings: Regarding Substantial Question of Law: “31. Ground No.13, ts on the tissue whetherInfosys Technologies Ltd., can be taken as acomparable. — 31.1. After hearing rival contentions, wefind that Infosys Technologies Ltd., cannot betaken as a comparable for the reason that thebrand value of Infosys is much higher than thebrand value of the assessee company. Date of Judgment 31-08-2018, ITA No.74/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 4/7 For this proposition of law, we _ placreliance on the judgment of the Hon’ble DelhtHigh Court in the case of CIT us. Agnity IndiaTechnologies Put. Ltd., being ITA No.1204/2011,at: 10[th]July, 2013 wherein it has been held asfollows: XXXXX| Respectfully following the same, we allowthis ground of the assessee. " 4. However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015delivered on 25.06.2018 (Prl. Commissioner of Income Tax & Anr. —v- M/s Softbrands India Pvt. Ltd.») has held that in Date of Judgment 31-08-2018, ITA No.74/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 4/7 For this proposition of law, we _ placreliance on the judgment of the Hon’ble DelhtHigh Court in the case of CIT us. Agnity IndiaTechnologies Put. Ltd., being ITA No.1204/2011,at: 10[th]July, 2013 wherein it has been held asfollows: XXXXX| Respectfully following the same, we allowthis ground of the assessee. " 4. However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015delivered on 25.06.2018 (Prl. Commissioner of Income Tax & Anr. —v- M/s Softbrands India Pvt. Ltd.») has held that in these type of cases, unless an ex-facie perversity in thefindings of the learned Income Tax Appellate Tribunal is"established by the appellant, the appeal at the instanceof an assessee or the Revenue under Section J60-A ofthe Act is not maintainable. The relevant portion of the said judgment is. quoted below for ready reference: Date of Judgment 31-08-2018, ITA No.74/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 5/7 “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.74/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 6/7 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| Date of Judgment 31-08-2018, ITA No.74/2018 The Pr. Commissioner of Income Tax & Another Vs. M/s. CAE Simulation Technologies Pvt. Ltd., 7/7 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.” Oo. Having heard the learned counsel appearingfor 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. Sd/-.JU DGE Sd/-.JUDGE.