Ita/277/2021 Of Pr Commissioner Of Income Tax - 2 v. M/S Parametrics Technology Pvt Ltd

Digitallysigned byBHARATHI SLocation:HIGHCOURT OFKARNATAKA ITA No. 277 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. 277 OF 2021 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX – 2, BMTC COMPLEX, KORAMANGALA, BANGALORE. BMTC COMPLEX, KORAMANGALA, BANGALORE. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -5(1) (2), BMTC COMPLEX, CIRCLE -5(1) (2), BMTC COMPLEX, KORAMANGALA, BENGALURU. …APPELLANTS (BY SRI SANMATHI E I, ADVOCATE) AND: 1. M/S PARAMETRICS TECHNOLOGY PVT LTD., 4 FLOOR, PHOENIX TOWERS, NO.16 AND 16/1, MUSUEM ROAD, BANGALORE - 560025, PAN . …RESPONDENT (BY SMT TANMAYEE RAJKUMAR, ADVOCATE) THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 13/05/2020 PASSED IN ITA NO.359/BANG/2016, FOR THE ASSESSMENT TAX ACT 1961, ARISING OUT OF ORDER DATED 13/05/2020 YEAR 2011-2012, PRAYING THIS HON’BLE COURT TO: (1) 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. THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: - 2 - 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 Smt.Tanmayee Rajkumar 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 13.05.2020 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.359/Bang/2016 for the assessment year 2011-12. 3. This Court, admitted the appeal on 17.02.2022 to consider the following substantial question of law: “i) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding Transfer pricing adjustment that the Transfer pricing Officer has already accepted the payment of 40% of maintenance services by the assessee in the earlier year, therefore, there is no reason to take a different view for this year ignoring that in taxation matters, each year is difference and there is no res-judicata in tax matter? ii) Whether on the facts in the circumstances of the case, the order of the Tribunal can be said as perverse in nature as Tribunal has set aside Transfer pricing adjustment made by Transfer Pricing officer by ignoring findings of the TPO was based on critical inputs gathered through various questionnaires issued to assessee and the information collected, whereas the TPO purely based on the facts applied the profit split method logically and allotted only 10% of the technical services fees received from the maintenance services receipts from the customers to AE?” 4. 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 - 4 - 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. 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.: 29