Ita/314/2023 Of The Pr Commissioner Of Income Tax v. M/S Wipro Ge Healthcare Pvt Ltd

Digitallysigned byBHARATHI SLocation:HIGH COURTOFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26 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. 314 OF 2023 BETWEEN: 1. THE PR COMMISSIONER OF INCOME TAX 5 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU - 560 095. 2. THE ASST. COMMISSIONER OF INCOME - TAX, OF INCOME - TAX, CIRCLE-7 (1)(1), 2 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU - 560 095. …APPELLANTS (BY SRI. DILIP.M, ADVOCATE ALONG WITH SRI.RAVIRAJ Y.V., ADVOCATE) - 2 - AND: M/S.WIPRO GE HEALTHCARE PVT. LTD., NO.04, KADUGODI INDUSTRIAL AREA, WHITEFIELD, BENGALURU-560 067 PRESENTLY AT PRESTIGE SHANTHINIKETAN, 6 FLOOR, CRESCENT 4, ITPL WHITEFIELD, BENGALURU - 560 048 PAN AAACW 1685J …RESPONDENT (BY SRI. K.R.PRADEEP, ADVOCATE AND SMT.GIRIJA G.P. ADVOCATE) SMT.GIRIJA G.P. ADVOCATE) THIS APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961, PRAYING TO ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU, IN IT(TP)A NO.701/BANG/2021 DATED 05.08.2022 FOR ASSESSMENT YEAR 2005-2006 (ANNEXURE-D) AND ETC., THIS APPEAL IS COMING ON FOR 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 - 3 - ORAL ORDER (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri. Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for appellants/Revenue and learned counsel Sri. K.R.Pradeep and Smt. Girija.G.P., learned counsel for caveator/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 05.8.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.701/Bang/2021 for the assessment year 2005-06. 3. This Court, admitted the appeal on 19.6.2023 to consider the following substantial questions of law: 1. "Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in nature in directing the assessing officer/Transfer Pricing Officer to consider Royalty as part of operating cost with respect to trading segment even when if taxpayer has not received any economic value from the AE for payment of Royalty"? 2. "Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in nature in directing Transfer Pricing Officer for comparison of margins with the comparable Company with an opinion to consider the royalty payment as an operating cost and has to verify whether the margin of the assesse is higher than the margin declared by the comparable company i.e M/s.Advance Micronic Devices Ltd according without considering that TPO's observation made in TPO's order"? 3. "Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in law in setting aside disallowance made under aforesaid provisions ignoring nature of payments and without analyzing contents of agreement entered into between parties"? 4. "Whether on the facts and in the circumstances of the case, the Tribunal in law in setting aside disallowance made under aforesaid provisions ignoring nature of payments and without analyzing contents of agreement entered into between parties"? 5. "Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in as Tribunal has given positive direction to TPO without being matter re-investigated by TPO de disallowances made under section 40(a)(ia) of the Act ignoring that assesse had made the payments relating to training, importing of knowledge of knowhow/management ability satisfying conditions set out in Section 9 of the Act"? 4. "Whether on the facts and in the circumstances of the case, the Tribunal in law in setting aside disallowance made under aforesaid provisions ignoring nature of payments and without analyzing contents of agreement entered into between parties"? 5. "Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in as Tribunal has given positive direction to TPO without being matter re-investigated by TPO de disallowances made under section 40(a)(ia) of the Act ignoring that assesse had made the payments relating to training, importing of knowledge of knowhow/management ability satisfying conditions set out in Section 9 of the Act"? 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 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