Ita/104/2023 Of The Pr Commissioner Of Income Tax v. M/S Bostik India Pvt Ltd

Digitallysigned by BLAVANYALocation:HIGHCOURT OFKARNATAKA NC: 2024:KHC:41833-DB ITA No. 104 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30 DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 104 OF 2023 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU 560095 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(1)(2) PRESENT ADDRESS ACIT CIRCLE -1(1)(1), 2ND FLOOR BMTC BUILDING, 80 FEET ROAD KORMANGALA BENGALURU 560095 …APPELLANTS (BY SRI. DILIP M.,ADVOCATE A/W SRI. RAVIRAJ Y V, ADVOCATE) SRI. RAVIRAJ Y V, ADVOCATE) AND: M/S BOSTIK INDIA PVT LTD NO 124/4 AND 124/4A KACHANAYAKANAHALLI OFF HOSUR ROAD, BOMMASANDRA POST ANEKAL TALUK BENGALURU 560099 PAN AABCB 4627N …RESPONDENT (BY SRI. RAVI RAGHAVAN.,ADVOCATE) - 2 - THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO. 837/BANG/2016 DATED 10/05/2022 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1)(1), BENGALURU AND ETC. THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri. Dilip. M., along with Sri. Raviraj. Y.V., for appellants/Revenue and learned counsel Sri. Ravi Raghavan., learned counsel for the respondent/assessee. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 10.05.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A No.837/Bang/2016 for the assessment year 2011- 12, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal in law directing the Assessing Officer/Transfer Pricing Officer to adopt Transaction Net Margin Method as most appropriate method for ascertaining Arm’s Length Price as against CUP method adopted by Transfer Pricing Officer for intra group transaction by not appreciating that the said transactions were entered by the assesse by way of independent agreements and which cannot be aggregated with manufacturing activity under TNMM and that to when no payments were made in earlier years also? 2. Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature in law directing the Assessing Officer/Transfer Pricing Officer to adopt Transaction Net Margin Method as most appropriate method for ascertaining Arm’s Length Price as against CUP method adopted by Transfer Pricing Officer ignoring that when TPO had rightly chosen CUP method considering factual matrix of the case and parameters set out in Section 92C and Rules framed there under.” 3. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 4. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. - 5 - 3. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 4. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. - 5 - 5. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the questions of law are kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE BS List No.: 4 Sl No.: 0