Ita/212/2021 Of The Commissioner Of Income Tax Cit (A) v. M/S Mind Tree Ltd

Digitally signedby BHARATHISLocation: HIGHCOURT OFKARNATAKA 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. 212 OF 2021 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX CIT (A) CENTRAL CIRCLE, C R BUILDING, QUEEN'S ROAD, BENGALURU-560001 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE- 11(1) C R BUILDING, QUEEN'S ROAD, BENGALURU-560001 …APPELLANTS (BY SRI RAVIRAJ Y V, ADVOCATE A/W SRI. M DILIP .,ADVOCATE) AND: M/S MIND TREE LTD (PREVIOUSLY KNOWN AS M/S AZTECSOFT LIMITED, NOW MERGED WITH MIND TREE LIMITED) GLOBAL VILLAGE, RVCE POST, MYSORE ROAD, BENGALURU-560059 PAN …RESPONDENT (BY SRI. TATA KRISHNA.,ADVOCATE) THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO. 349/BANG/2014 DATED 22/10/2020 FOR ASSESSMENT YEAR 2005-2006 ANNEXURE-D AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1)(1), BENGALURU 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 Raviraj Y.V, along with learned counsel Sri Dilip M, for appellants/Revenue and learned counsel Sri Tata Krishna, 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 22.10.2020 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.349/Bang/2014 for the assessment year 2005-2006, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal erred in directing the TPO to exclude comparable namely, IGate Global Solutions, Flextronics Software Systems Ltd., L & T Infotech Ltd and Infosys Ltd by applying turnover filter when TPO had rightly chosen to exclude the said comparable considering materials available on record satisficing all the required tests as prescribed in Rule 10B and when brand value and profit margin are not determining factors for excluding the comparable? 2. Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature as Tribunal has ignored the findings rendered by Transfer Pricing Officer and also materials brought on record by said officer which establishes that exclusion of comparable was in accordance with parameters of Rule 10B? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the Transfer Pricing Officer to exclude Bodhtree Consulting Ltd., Tata Elxsi Ltd., Expenses Software Ltd and Third ware Solutions Ltd on the ground of functional dissimilarity without considering the Transfer Pricing analysis made by TPO and ignoring materials brought on record by said authority?" 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. 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 questions of law are kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE ND List No.: 3 Sl No.: 16