Ita/228/2021 Of The Pr. Commissioner Of Income Tax v. M/S. Sonus Networks India Pvt Ltd

Digitallysigned byBHARATHI SLocation:HIGHCOURT OFKARNATAKA NC: 2024:KHC:39407-DB ITA No. 228 of 2021 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. 228 OF 2021 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560095 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560095 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-6(1) (2), PRESENT ADDRESS, DCIT, CIRCLE 1(1) (1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560095 …APPELLANTS (BY SRI. RAVI RAJ Y V, ADVOCATE A/W SRI. DILIP M .,ADVOCATE) AND:M/S. SONUS NETWORKS INDIA PVT LTD SWARNA LATHA P V, 2ND FLOOR, DELTA BLOCK, EMBASSY TECH SQUARE, KADUBEESENAHALLI VILLAGE, OUTER RING ROAD,VARTHUR HOBLI, BENGALURU-560103 PAN (BY SRI. K R VASUDEVAN.,ADVOCATE) …RESPONDENT - 2 - 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, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO. 396/BANG/2019 DATED 14/10/2020 FOR ASSESSMENT YEAR 2009-2010 ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), BENGALURU AND ETC. TO 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 K.R.Vasudevan, 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 14.10.2020 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in - 3 - IT(TP)A.No.396/Bang/2019 for the assessment year 2009- 10, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal excluding six comparable’s without considering that said companies are dissimilar to that of assessee and TPO had satisfied qualitative and quantitative tests to consider them as comparable’s, the same has resulted in passing a perverse order in nature? 2. Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in law in deleting comparable’s without acknowledging the fact that the said comparable’s were chosen by TPO on the basis of materials on record and after applying the requires tests prescribed under the Rules and as such order passed by Tribunal is perverse in nature? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding companies on the ground of RPT filter even when they were chosen in accordance with parameters of Rule 10B? 4. Whether on the facts and in the circumstances of the case, the Tribunal erred in directing the Assessing Officer/Transfer Pricing Officer to exclude six comparables on the ground of functional dissimilarity and RPT filter even when TPO had chosen comparable’s as per parameters set out in Rule 10B and as such order passed by Tribunal is perverse in nature?” 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. Whether on the facts and in the circumstances of the case, the Tribunal erred in directing the Assessing Officer/Transfer Pricing Officer to exclude six comparables on the ground of functional dissimilarity and RPT filter even when TPO had chosen comparable’s as per parameters set out in Rule 10B and as such order passed by Tribunal is perverse in nature?” 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.: 18