Ita/39/2020 Of The Pr. Commissioner Of Income Tax v. M/S Ipass India Pvt Ltd

Digitallysigned by BLAVANYA Location:HIGH COURT OFKARNATAKA NC: 2024:KHC:40447-DB ITA No. 39 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27 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.39 OF 2020 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX, 5 FLOOR, BMTC BUILDING, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095. KORMANGALA, BENGALURU-560 095. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1)(1), OF INCOME-TAX, CIRCLE-3(1)(1), 2 FLOOR, BMTC BUILDING, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095. KORMANGALA, BENGALURU-560 095. …APPELLANTS (BY SRI. DILIP M ., ADVOCATE A/W SRI. RAVIRAJ Y.V., ADVOCATE) ITA No. 39 of 2020 AND: M/S. IPASS INDIA PVT. LTD., LEVEL 5, PRESTIGE SOLITAIRE, BRUNTON ROAD, BENGALURU-560 025. PAN-AABCG 3659H …RESPONDENT (RESPONDENT-SERVICE HELD SUFFICIENT V/O 05.11.2020) THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 19/07/2019 PASSED IN ITA NO.2112/BANG/2017, FOR THE ASSESSMENT YEAR 2012-2013 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND ETC. THIS APPEAL, 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 JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri.Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for the 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 19.07.2019 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.2112/Bang/2017 for the assessment year 2012-13. 3. This Court, admitted the appeal on 04.12.2020 to consider 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 excluding certain comparable's from list of comparable on the ground of functional dissimilarity by following its earlier orders when the said companies satisfied qualitative and quantitative filters applied by Transfer Pricing Officer and they are functionally similar to that of assessee? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that negative working capital adjustment cannot be granted in the case of the assessee without considering that allowing working capital adjustment would result into better comparison?" 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 - 5 - 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 SMJ