Ita/191/2022 Of Pr. Commissioner Of Income Tax v. M/S Lsi India Research And Development Pvt. Ltd

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. 191 OF 2022 BETWEEN: (BY SMT TANMAYEE RAJKUMAR, ADVOCATE) - 2 - THIS APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 29/10/2020 PASSED IN IT(TP)A NO.482/BANG/2016, FOR THE ASSESSMENT YEAR 2011-2012, PRAYING THIS HON’BLE COURT TO 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 Smt.Tanmayee Rajkumar 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 29.10.2020 passed by the Income Tax Appellate - 3 - NC: 2024:KHC:39731-DBITA No. 191 of 2022 Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.482/Bang/2016 for the assessment year 2011-12. 3. This Court, admitted the appeal on 20.07.2022 to consider the following substantial question of law: “i. Whether on the facts and in the circumstances of the case and in law, the Tribunal is correct in holding that, ICRA Technol Analytics ltd, E-Zest Ltd, Infosys Ltd, M/s.Acropetal Technologies Ltd, M/s.L & T Infotech Ltd Larsen and Tata Elxsi Ltd cannot be taken as comparable on the ground of functional dissimilarity though the Transfer Pricing Officer has chosen the same as per parameters of Rule 10B of I.T Rules"? ii. Whether on the facts and in the circumstances of the case and in law, the Tribunal is correct in holding that, E-Infochips Ltd cannot be taken as comparable on the ground that it fails service income filter though the Transfer Pricing Officer has chosen the same as per parameters of Rule 10B of I.T. Rules"? iii. Whether on the facts and in the circumstances of the case and in law, the Tribunal's order can be said as perverse in law in excluding comparable's chosen by Transfer Pricing Officer even ignoring the findings of Transfer Pricing Officer which are based on Companies activities set out in annual reports and other data?” 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. - 5 - 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 List No.: 2 Sl No.: 39