Date Of Judgment 6-8-2018, Ita v. M/S. Jda Software Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 6 DAY OF AUGUST 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A. No.270/2017 BETWEEN: 1.PR. COMMISSIONER.OF INCOMB TAX - 4)OF INCOMB TAX - 4) BMTC COMPLEX.KORAMANGALA>KORAMANGALA> BANGALORE 2.DBPUTY COMMISSIONBR OFINCOME TAX, CIRCLE-11(4)INCOME TAX, CIRCLE-11(4) BANGALORE_. APPBLLANTS| (BY SRI.SANMATHI E I, ADV.) AND:| M/S JDA SOFTWARE PVT. LTD.(SINCE MERGED WITH JDA SOFTWAREPVT. LTD.ERSTWHILE [12 TECHNOLOGIESINDIA PVT. LTD.)NO.132, 133, DIVYASHREETECHNOLOGIES, YAMLUR POSTOFF OLD AIRPORT ROADBANGALORE -— 37_. RESPONDENT(BY SRI SANDEEP HUILGOL, ADV. FORSRI. T. SURYANARAYANA, ADV..,) Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. JDA Software Pvt. Ltd., 2/8 THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A|OF INCOME TAX ACT 1961, ARISING OUT OF ORDERDATED:21/09/2016 PASSED IN IT(TP)A NO.56/BANG/2014, FOR:THRE ASSESSMENT YEKEAR 2OO9-2010 ANNEXURE -—- A. PRATO: (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR:SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATEDBY THR HON'BLE COURT AS DBEBMEBED FIT AND SKHT ASIDE APPELLATE ORDER DATED:21/09/2016 PASSED BY THE.INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BENGALURU,AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN|APPEAL PROCEEDINGS IN IT(TP)A NO.56/BANG/2014 FOR A.Y..A2009-10 ANNBEXUREB -—- A & GRANT SUCH OTHBR RELIEDEEMED FIT, IN THE INTEREST 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., forMr. T. Suryanarayana,Adv. for Respondent — Assessee. | This Appeal is filed by the Revenue purportedlyraising substantial question of law arising from theOrder of the Income Tax Appellate Tribunal, Bench ‘B’,Bangalore|1nIT/TP|ANo.56/Bang/2014dated 21.09.2016, relating to the Assessment Year2009-10. Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. JDA Software Pvt. Ltd., 3/8 a2ThisAppealhas|beenadmitted|OTL 05.12.2017|to consider the following substantial|question of law. “WhetherOnthefactsandinthe|circumstances of the case, the Tribunal erred|in holding that certain companies are different|from assessee — company by following itsearlier orders, when it satisfies all _ thqualitative and quantitative filters applied bythe TPO and the Tribunal has used qinarrower functionality filter that the TPO, but|has not tested other comparables against the|narrower functionality filter applied by it?”| 3.The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue andRespondent-Assessee, has returned findings as under: “11. KALS Information Systems Ltd.,has been considered in assessee’s own case|in|JDAsoftwarePot.Ltd.,in|ITANo. 1428/ Bang/ 2010 for asst. year 2006-and JDA has merged with 12 Technologies|India|Pvt..Ltd., in|IT/TPJA Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. JDA Software Pvt. Ltd., 4/8 No.1189/ Bang/ 201ASST.|YE|YIOO7-O8similar issue has been dealt with. 12.Respectfully following the decision|of co-ordinate Bench in the assessee’s own|case, we direct the Assessing Officer to follow|the same. XXXX XKKXX 16.Persistent|oystems|Ltd.,thecomparable is functionally dissimilar as the|company is engaged in product design|SeCTVICEeand|intosoftwareproductdevelopment. The issue is covered by the|decision of 12 Tech. Vs. DCIT, in IT/TP|No.1189/ Bang/ 2011 for asst. year 2007-08 Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. JDA Software Pvt. Ltd., 4/8 No.1189/ Bang/ 201ASST.|YE|YIOO7-O8similar issue has been dealt with. 12.Respectfully following the decision|of co-ordinate Bench in the assessee’s own|case, we direct the Assessing Officer to follow|the same. XXXX XKKXX 16.Persistent|oystems|Ltd.,thecomparable is functionally dissimilar as the|company is engaged in product design|SeCTVICEeand|intosoftwareproductdevelopment. The issue is covered by the|decision of 12 Tech. Vs. DCIT, in IT/TP|No.1189/ Bang/ 2011 for asst. year 2007-08 1] 7Tata|Elxs1Ltd.,[Seg]1S|functionally dissimilar as the company is.engaged in the development NACH product|and development services. Further the|company is engaged in product design|services. This comparable is covered by thedecision of JDA Software Put. Ltd., in IT/TP|1428/ Bang/ 2010 for asst. year 2006-07 an Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. 5/8 M/s. JDA Software Pvt. Ltd., JDA has merged with 12 Technologies Pvt.Ltd., Vs. DCIT in IT/TP] No.1189/ Bang/ 201asst. year 2007-08. The TPO is directed to|follow the order in assessee’s own case./supral]. IS.The ld TPO shall also follow the|decision in the case of McAfee Software|[Indial Pvt. Ltd., /supra/ with respect to|rejection of Tata Elxsi.” 4For the similar reasons, the Tribunal hasexcluded other comparables also. 5.However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015delivered on 25.06.2018 (Pri. Commissioner of Income Tax & Anr. —v- M/s Softbrands India Pvt. Ltd.») has held that inthese 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 ot Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. JDA Software Pvt. Ltd., 6/8 the Act is not maintainable. The relevant portion of thesaid judgment is quoted below for ready reference: “Conclusion: 55.Asubstantial quantumof|international trade and transactions dependsupon 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|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. Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. JDA Software Pvt. Ltd., 7/8 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 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. Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. JDA Software Pvt. Ltd., 7/8 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 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 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 before Date of Judgment 6-8-2018, ITA No.270/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s. JDA Software Pvt. Ltd., 8/8 this 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 Revenue are|therefore dismissed with no order as_ tocosts.” 6.Havingheardthelearnedcounsels. appearing for the parties, we are therefore of the opinionthat no substantial question of law arises in the presentcase also. The Appeal filed by the Appellants-Revenueis liable to be dismissed and it is dismissed accordingly. —No costs. AN/- Sd/-.JUDGE. Sd/-.JUDGE|