Ita/190/2021 Of Pr. Commissioner Of Income Tax-2 v. M/S. Kodiak Networks India Pvt. Ltd

Digitallysigned by BLAVANYALocation:HIGHCOURT OFKARNATAKA NC: 2024:KHC:39708-DBITA No. 190 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24 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. 190 OF 2021 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX-2, BMTC COMPLEX, KORAMANGALA, BANGALORE. BMTC COMPLEX, KORAMANGALA, BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), BENGALURU. CIRCLE-4(1)(1), BENGALURU. …APPELLANTS (BY SRI. SANMATHI E I.,ADVOCATE) AND: 1. M/S. KODIAK NETWORKS INDIA PVT. LTD., 9 FLOOR, MFAR MANYATA TECH PARK GREEN HEART, PHASE IV, NAGWARA, BANGALORE-45, PAN- . 9 FLOOR, MFAR MANYATA TECH PARK GREEN HEART, PHASE IV, NAGWARA, BANGALORE-45, PAN- . …RESPONDENT (BY SRI NARENDRA KUMAR J JAIN,ADVOCATE) THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 30/06/2020 PASSED IN IT(TP)A NO. 284/BANG/2017, FOR THE ASSESSMENT YEAR 2012-2013, PRAYING THIS HONBLE COURT TO: 1. DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT 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.Sanmathi.E.I., for appellants/Revenue and learned counsel Sri.Narendra Kumar Jain for 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 30.06.2020 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.284/Bang/2017 for the assessment year 2012-13. 3. This Court, admitted the appeal on 11.01.2022 to consider the following substantial question of law: “1. Whether the Tribunal was right in law to ignore the parameters of analysis prescribed under Rule 10b, which are exhaustive and if so, whether it is legally permissible to bypass the same partially or by implication? 2. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in excluding comparable’s by ignoring the parameters of analysis prescribed under Rule 10B, which are exhaustive and, if so, whether it is legally permissible to bypass the same partially or by implication? 3. Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse since Tribunal has excluded certain comparable’s without going into reasons assigned by Transfer Pricing Officer? 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in rejecting Infosys Ltd on ground of high turnover without acknowledging that there is no direct relationship between brand value and margin earned by the Company, brand may generate revenue of the Company but does not increase the profit margin?” 4. 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. 5. 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. 6. 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 question of law is kept open to be adjudicated in an appropriate proceeding. 5. 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. 6. 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 question of law is kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE MPK CT:VN List No.: 2 Sl No.: 24