Ita/432/2022 Of The Pr. Commissioner Of Income Tax v. M/S 3M India Limited

Digitallysigned by BLAVANYALocation:HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25 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.432 OF 2022 BETWEEN: THE PR. COMMISSIONER OF INCOME TAX, KORMANGALA, BANGALORE. …APPELLANT (BY SRI. SANMATHI E.I, ADVOCATE) AND: M/S. 3M INDIA LIMITED, CONCORDE BLOCK, UB CITY, 24, VITTAL MALLYA ROAD, BENGALURU - 1, PAN: . …RESPONDENT (BY SRI. TANMAYEE RAJKUMAR, ADVOCATE) THIS ITA / INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961, ARISING OUT OF ORDER DATED 24/08/2021 PASSED IN ITA NO.654/BANG/2017, FOR THE ASSESSMENT YEAR 2010-2011 PRAYING TO SET ASIDE THE APPELLATE ORDER DATED 24/08/2021 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN ITA NO. 654/BANG/2017 FOR ASSESSMENT YEAR 2010-2011 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. THIS APPEAL IS COMING ON FOR ADMISSION, 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.E.I.Sanmathi for appellant/Revenue and Smt.Tanmayee Rajkumar, learned counsel for the 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 24.08.2021 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short ‘Appellate Authority’) in ITA.No.654/Bang/2017 for the assessment year 2010-11, raising the following substantial questions of law: 1. "Whether in the present facts and circumstances of the case, the Tribunal is correct in law in allowing appeal of the assessee by setting aside the order under section 263 of the Act by relying on the decision of Hon'ble Apex Court in case of Malabar Industries (reported in 243 ITR page 83) without appreciating that this was a case of incorrect assumption of facts or incorrect application of law which satisfied the requirement of the order being erroneous and prejudicial to the Revenue, in terms of said decision"? 2. "Whether in the present facts and circumstances of the case, the order passed by Tribunal can be said as perverse in law in setting aside the order passed under section 263 of the Act without appreciating that the allowing claim of assessee relating to Corporate Management Fees under section 40(a)(ia) of the Act this year would result in unjustifiably negating the Transfer Pricing adjustment made by transfer pricing officer in preceding"? 3. "Whether on the facts and in the circumstances of the case in law in deleting addition of Rs.2,80,00,000 claimed as Management Fees by erroneously hold holding that order of passed under Section 263 is erroneous though conditions set out in said section are fully satisfied in instant case"? 4. "Whether on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition of Rs.2,56,46,834/- claimed as same is relating to support services by holding that order passed under section 263 is erroneous without appreciating the findings rendered by Commissioner in said order"? 3. 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 - 5 - 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. 4. "Whether on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition of Rs.2,56,46,834/- claimed as same is relating to support services by holding that order passed under section 263 is erroneous without appreciating the findings rendered by Commissioner in said order"? 3. 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 - 5 - 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. 4. 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. 5. 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