Ita/328/2019 Of The Pr Commissioner Of Income Tax v. M/S.csg Systems International Pvt. Ltd

Digitally signedbyMARIGANGAIAHPREMAKUMARILocation: HIGHCOURT OFKARNATAKA NC: 2024:KHC:39751-DBITA No. 328 of 2019 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. 328 OF 2019 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX CIT(A), 5 FLOOR BMTC BUILDING, 80 FEET ROAD KORAMANGALA BENGALURU-560095. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2(1)(1) 2 FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU-560095. …APPELLANTS (BY SRI. SUSHAL TIWARI N., ADV.) AND: M/S. CSG SYSTEMS INTERNATIONAL PVT. LTD., (FORMERLY KNOWN AS M/S. INDEPENDENT TECHNOLOGY SYSTEMS (INDIA) PVT. LTD.,) DIVYASHREE TOWERS, 4 FLOOR NO.55, GURUPPANNA PALYA MADIVALA RANGE BENGALURU-560029 PAN: AABCI 2954B. …RESPONDENT (BY SRI. K.R.VASUDEVAN, ADV. A/W SRI ANKUR P.D., ADV.) - 2 - THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 16/11/2018 PASSED IN IT(TP)A NO.1086/BANG/2013, FOR THE ASSESSMENT YEAR 2008-2009, PRAYING TO 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO. 1086/BANG/2013 DATED 16/11/2018 FOR ASSESSMENT YEAR 2008-2009 ANNEXURE-D CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(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.Sushal Tiwari, for appellants/Revenue and learned counsel Sri.K.R.Vasudevan along with Sri.Ankur.P.D., learned counsel for respondent/assessee. - 3 - 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 16.11.2018 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.1086/Bang/2013 for the assessment year 2008-09. 3. This Court, admitted the appeal on 05.07.2019 to consider the following substantial question of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding certain comparables on thebasis of functional dissimilarity by following its earlier judgment which has not reached finality and even when the Transfer Pricing Officer has considered the comparables on the basis of qualitative and quantitative filters? 2. Whether on the facts and in the circumstances of the case, Tribunal is right in law in directing Transfer Pricing Officer to exclude certain comparable’s on basis of turnover filter even when the TPO has rightly chosen the comparable’s in - 4 - NC: 2024:KHC:39751-DBITA No. 328 of 2019 accordance with provisions of the Act and rules prescribed thereunder? 3. Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse Tribunal has not considered the materials brought on record by TPO to select comparable’s and ignoring the same has resulted in passing a perverse order?” 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. 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 MPK CT:bms List No.: 2 Sl No.: 0