Ita/395/2023 Of The Prl. Commissioner Of Income Tax v. M/S Motorola Solutions Kodiak Networks India Pvt.ltd

Digitallysigned by BLAVANYALocation:HIGHCOURT OFKARNATAKA 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. 395 OF 2023 BETWEEN: 1. THE PRL. COMMISSIONER OF INCOME-TAX, 5 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560 095. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 4 (1) (1), 2 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560 095. …APPELLANTS (BY SRI. DILIP M., A/W SRI. RAVIRAJ Y.V., ADVOCATES) - 2 - NC: 2024:KHC:40518-DB AND: M/S. MOTOROLA SOLUTIONS KODIAK NETWORKS INDIA PVT. LTD., 9 FLOOR, GREENHEART PHASE IV MFAR, MANYATA TECH PARK, NAGAWARA, BENGALURU - 560 001. PAN. . (RESPONDENT SERVED) …RESPONDENT THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND ETC. TO 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 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 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 10.01.2023 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.816/Bang/2022 for the assessment year 2018-19. 3. This Court, admitted the appeal on 12.06.2023 to consider the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case the Tribunal is correct in law directing transfer Pricing Officer to exclude comparable's namely, Exhilent Technologies Ltd, L & T Infotech Ltd, Mindtree Ltd, Persistent systems Ltd, Wipro Ltd, Tata Elxsi Ltd, Nihilent Ltd, Infosys Ltd, Cybage Software Pvt Ltd, Tech Mahindra Ltd on basis of Turnover filter having more than 200 cr ignoring that Transfer Pricing Officer had made Transfer Pricing Adjustment in accordance with Rule 10B(2) of I.T.Rules and when earlier order has not reached finality. 2. Whether on the facts and in the circumstances of the case the Tribunal is correct in law in directing Transfer Pricing Officer to exclude comparables though the said comparables are excluded by TPO as per parameters of Rule 10B and after applying required tests"? 3. Whether on the facts and in the circumstances of the case the Tribunal is correct in law in directing Transfer Pricing Officer to in directing Transfer Pricing Officer to exclude comprables on basis of turnover filter by holding that there exists a co-relation between turnover and operating margin of entity when turnover is not cridetiria for deciding the comparability"? 4. Whether the order of the Tribunal can be said as perverse in nature in setting aside Transfer Pricing adjustment made in assessment order on basis of TPO's order when Transfer Pricing Adjustment is on basis of parameters set out in Rule 10B"? 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