Ita/206/2022 Of Pr Commissioner Of Income Tax-3 v. M/S Ims Health Analytics Services 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. 206 OF 2022 BETWEEN: 1. PR.COMMISSIONER OF INCOME TAX-3, BMTC COMPLEX, KORAMANGALA, BANGALORE. 2. THE DEPUTY COMMISSIONR OF INCOME TAX, CIRCLE 5(1)(2), BMTC COMPLEX, KORAMANGALA, BENGALURU. …APPELLANTS (BY SRI SANMATHI E I, ADVOCATE) AND: Digitally1. M/S IMS HEALTH ANALYTICS SERVICES PVT.LTD., signed by B(IMS HEALTH TECHNOLOGY SOLUTIONS INDIA LAVANYAPVT.LTD., MERGED WITH M/S.IMS HEALTH Location:ANALYTICS SERVICES PVT.LTD.) HIGHEMBASSY TECHSQUARE, COURT OFKARNATAKAMARATHAHALLI, SARJAPUR RING ROAD, KADUBEESANAHALLI, BENGALURU-560103. …RESPONDENT THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 25/09/2020 - 2 - PASSED IN IT(TP)A NO.496/BANG/2015, 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. 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 25.09.2020 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate - 3 - Authority’) in IT(TP)A.No.496/Bang/2015 assessment year 2011-12. for the 3. This Court, admitted the appeal on 04.07.2023 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? 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 directing the TPO to delete entire TP adjustment as assessee is paying cost plus 5% markup to its Associated Enterprises and further holding that as per the second proviso to Section 92C(2), fi the variation between Arm's Length Price and price at which international transaction has actually been undertaken does not exceed 5% of the transaction price, there should not be a TP adjustment ignoring variation in nature function, profit ratios of foreign comparables-companies due to geographical variation with that of the Indian Company and Indian condition? 3. Whether the Tribunal's order can be said as perverse since Tribunal has assumed that the cost incurred by the Associate Enterprises of the Assessee is the Arms' Length Price cost which is incorrect and Tribunal ignored parameters of analysis prescribed under Rule 10B which is exhaustive?” 4. It is noticedthat the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable 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. 4. It is noticedthat the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable 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.: 40