Ita/226/2021 Of Pr Commissioner Of Income Tax - 2 v. M/S Ims Health Analytics Services Pvt Ltd

Digitally signedbyMARIGANGAIAHPREMAKUMARILocation: HIGHCOURT OFKARNATAKA NC: 2024:KHC:39696-DBITA No. 226 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. 226 OF 2021 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX - 2 BMTC COMPLEX, KORAMANGALA, BMTC COMPLEX, KORAMANGALA, BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX OFFICER INCOME TAX OFFICER CIRCLE 3(1)(4), BMTC COMPLEX, KORMANGALA, BENGALURU. …APPELLANTS (BY SRI. SANMATHI E. I., ADV.) AND: M/S. IMS HEALTH ANALYTICS SERVICES PVT. LTD., (IMS HEALTH TECHNOLOGY SOLUTIONS INDIA PVT. LTD., MERGED WITH M/S. IMS HEALTH ANALYTICS SERVICES PVT LTD.,) EMBASSY TECHSQUARE, MARATHHALLI, SARJAPUR RING ROAD KADUBEESANAHALLI, BENGALURU- 560103 PAN: . …RESPONDENT (BY SRI. K.R. VASUDEVAN A/W SRI ANKUR P.D., ADVS.) - 2 - THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 04/09/2020 PASSED IN IT(TP)A NO.490/BANG/2017, FOR THE ASSESSMENT YEAR 2012-2013, PRAYING TO (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND ETC. THIS APPEAL, COMING ON FOR ORDERS, 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.K.R.Vasudevan along with Sri.Ankur.P.D., learned counsel 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 04.09.2020 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in - 3 - IT(TP)A.No.490/Bang/2017 for the assessment year 2012- 13, raising the following substantial questions 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 such as M/s.Genesis International Sefvices, M/s. Persistent Systems Ltd and M/s. L & T 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? 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 exclude M/s.Infosys Technology Ltd on the ground of Turnover filter without appreciating that that there is no direct relationship between turnover of comparable and the margin earned by the companies engaged in Software Development Services and as such excluding of comparable- companies on ground of turnover filter is unwarranted? 5. 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?” 3. Learned counsel for the assessee submits that Technology Ltd on the ground of Turnover filter without appreciating that that there is no direct relationship between turnover of comparable and the margin earned by the companies engaged in Software Development Services and as such excluding of comparable- companies on ground of turnover filter is unwarranted? 5. 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?” 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 MPK CT:bms List No.: 2 Sl No.: 7