Ita/194/2022 Of Pr. Commissioner Of Income Tax-2 v. M/S Harman Connected Services Corporation Private Limited

Digitallysigned byBHARATHI SLocation:HIGHCOURT OFKARNATAKA ITA No. 194 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23 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. 194 OF 2022 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX-2 BMTC COMPLEX KORAMANGALA BANGALORE 2. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-12, BENGALURU BENGALURU …APPELLANTS (BY SRI. SANMATHI E I.,ADVOCATE) AND: M/S HARMAN CONNECTED SERVICES CORPORATION PRIVATE LIMITED (FORMERLY KNOWN AS CORE OBJECTS INDIA PVT LTD.,) PLOT NO.3 AND 3A EOIZ, INDUSTRIAL AREA VILLAGE KRISHNARAJAPURAM HOBLI BANGALORE - 66 …RESPONDENT (BY SMT. TANMAYEE RAJKUMAR.,ADVOCATE) THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING 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 SET ASIDE THE APPELLATE ORDER TO DATED 12/02/2020 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'A' BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN IT(TP)A NO. 305/BANG/2014 (ANNEXURE-A) FOR ASSESSMENT YEAR 2009-2010 AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, INTEREST OF JUSTICE AND ETC. THIS APPEAL, COMING ON FOR FINAL 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, 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 12.02.2020 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP) A No.305/Bang/2014 for the assessment year 2009-10, raising the following substantial questions of law: - 3 - “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? 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 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? the case and in law, the Tribunal is right in law in excluding comparable’s 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 comparable’s without going into reasons assigned by Transfer pricing Officer and as such order passed by Tribunal is perverse in nature? circumstances of the case, the Tribunal’s order can be said as perverse since Tribunal has excluded comparable’s without going into reasons assigned by Transfer pricing Officer and as such order passed by Tribunal is perverse in nature? 4. Whether on the facts and circumstances of the case and in law, Tribunal’s order can be said as perverse in nature as Tribunal has directed Transfer Pricing Officer to the case and in law, Tribunal’s order can be said as perverse in nature as Tribunal has directed Transfer Pricing Officer to 6. 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 comparable’s without going into reasons assigned by Transfer pricing Officer and as such order passed by Tribunal is perverse in nature? circumstances of the case, the Tribunal’s order can be said as perverse since Tribunal has excluded comparable’s without going into reasons assigned by Transfer pricing Officer and as such order passed by Tribunal is perverse in nature? 4. Whether on the facts and circumstances of the case and in law, Tribunal’s order can be said as perverse in nature as Tribunal has directed Transfer Pricing Officer to the case and in law, Tribunal’s order can be said as perverse in nature as Tribunal has directed Transfer Pricing Officer to 6. exclude comparable’s on the basis of RPT filter without appreciating that Transfer Pricing Officer had included comparable on the basis of prowess database which established that comparable does to fail the filter of 25% RPT as suggested by assessee and reasons assigned by TPO proves that RPT filter is not violated by comparable and moreover when comparable passed all the required qualitative and quantitative filters? Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing Transfer Pricing Officer to exclude comparable’s when TPO has satisfied all required tests set out in Rule 10B and as such, the order passed by Tribunal is perverse as Tribunal has ignored the materials brought on record by TPO? Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority to allow set off and carry forward of loss of Noida Unit which was - 5 - adjusted against the loss of Noida Unit and balance amount of loss was claimed for carry forward by relying on Circular No.7/DV/2013 dated 16.7.2013 when assessing authority disallowed the same as same is not permitted under Section 70 and 10A of the Act?” 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. 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 BS List No.: 1 Sl No.: 44