Ita/246/2022 Of The Pr. Commissioner Of Income Tax v. M/S Autodesk India Pvt Ltd

Digitally signedbyMARIGANGAIAHPREMAKUMARILocation: HIGHCOURT OFKARNATAKA NC: 2024:KHC:39754-DBITA No. 246 of 2022 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. 246 OF 2022 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX CIT (A), 5 FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU- 560095. 2. THE INCOME TAX OFFICER WARD- 1(1)(1) PRESENT ADDRESS: DCIT, CIRCLE 1(1)(1) 2 FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560095. …APPELLANTS (BY SRI. RAVIRAJ Y.V., ADV. A/W SRI DILIP M., ADV.) AND: M/S. AUTODESK INDIA PVT. LTD., UNIT A-4, ‘A’ WING, 2 FLOOR DIVYASHREE CHAMBERS LANGFORD ROAD BANGALORE-560025 PAN:AABCA 6924B. …RESPONDENT THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 23/09/2021 - 2 - NC: 2024:KHC:39754-DB PASSED IN IT(TP)A NO.42/BANG/2019, FOR THE ASSESSMENT YEAR 2014-2015. PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO. 42/BANG/2019 DATED 23/09/2021 FOR ASSESSMENT YEAR 2014-2015 ANNEXURE-D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), BENGALURU 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.Raviraj.Y.V., along with Sri.Dilip.M., learned counsel 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 23.09.2021 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.42/Bang/2019 for the assessment year - 3 - 2014-15, raising the following substantial questions of law: “1. 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 certain comparables namely, M/s. Infosys Ltd, M/s. L 7 T Infotech Ltd, M/s.Persistent Systems Ltd, M/s.Thirdware Solutions Ltd, even when the said comparable satisfies qualitative and quantitative filters and as per Rule 10B of I.T. Rules? 2. 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 comparables even when the TPO had considered the said comparables after satisfying all the required tests and ignoring the reasoning's assigned by Transfer Pricing Officer ? 3. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in directing Transfer Pricing Officer to grant working capital adjustment and excluding comparables ignoring findings of Transfer Pricing Officer and Dispute Resolution Panel? 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that there is no basis for the Transfer Pricing Officer to grant working capital adjustments after verification of claim made by assessee when the Transfer Pricing Officer has rightly verified and examined all the materials on record? 5. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that M/s.Infosys Ltd cannot be held as comparable-company on the ground of high turnover when the same cannot be criteria for excluding comparable as per Rule 10B of I.T. Rules?” 3. 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 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that there is no basis for the Transfer Pricing Officer to grant working capital adjustments after verification of claim made by assessee when the Transfer Pricing Officer has rightly verified and examined all the materials on record? 5. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that M/s.Infosys Ltd cannot be held as comparable-company on the ground of high turnover when the same cannot be criteria for excluding comparable as per Rule 10B of I.T. Rules?” 3. 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. 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.: 0