Ita/433/2022 Of The Pr. Commissioner Of Income Tax v. Tesco Bengaluru Pvt Ltd

Digitallysigned by BLAVANYALocation:HIGHCOURT OFKARNATAKA 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. 433 OF 2022 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX, KORAMANGALA, BANGALORE. KORAMANGALA, BANGALORE. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(1)/12(4), BMTC COMPLEX, KORAMANGALA, BANGALORE …APPELLANTS (BY SRI SANMATHI E I, ADVOCATE) AND: 1. TESCO BENGALURU PVT LTD., (FORMERLY KNOWN AS TESCO HINDUSTHAN SERVICE CENTRE PVT LTD)., NO.81 7 82 EPIP AREA, WHITEFIELD, BENGALURU-560006, PAN- . (FORMERLY KNOWN AS TESCO HINDUSTHAN SERVICE CENTRE PVT LTD)., NO.81 7 82 EPIP AREA, WHITEFIELD, BENGALURU-560006, PAN- . …RESPONDENT (BY SMT TANMAYEE RAJKUMAR, ADVOCATE) THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 25/10/2021 PASSED IN IT(TP)A NO.262/BANG/2014 FOR THE ASSESSMENT YEAR 2009-2010, PRAYING THAT THIS HON’BLE COURT MAY - 2 - BE PLEASED TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HONBLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 25/10/2021 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEES CASE, IN APPEAL PROCEEDINGS IN IT(TP)A NO. 262/BANG/2014 FOR ASSESSMENT YEAR 2009-2010 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. 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.Sanmathi.E.I., for appellants/Revenue and learned counsel Smt.Tanmayee Rajkumar for respondent/assessee. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) - 3 - questioning the correctness and legality of order dated 25.10.2021 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.262/Bang/2014 for the assessment year 2009-10. 3. This Court, admitted the appeal on 01.04.2024 to consider the following substantial questions of law: “1. Whether in the present facts and circumstances of the case, the Tribunal is correct in law allowing appeal of the assessee by directing Transfer Pricing Officer to consider other jurisdictional international transactions which are not covered under MAP by adopting same profit margin as agreed by taxpayer under MAP with UK transactions ignoring that there is no direct relationship of profit margin between the transaction covered under MAP with specific country and the country's whose transaction are not covered under MAP unless the cost base of both countries would be same? 2. Whether in the present facts and circumstances of the case, the order passed by Tribunal can be said as perverse law in setting directing Transfer Pricing Officer to consider other jurisdictional international transactions which are not covered under MAP by adopting same profit margin as agreed by taxpayer under MAP with UK transactions ignoring the parameters of analysis prescribed under Rule 10B, which are exhaustive and if so, whether it is legally permissible to bypass the same partially or by implication?” 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. Tribunal can be said as perverse law in setting directing Transfer Pricing Officer to consider other jurisdictional international transactions which are not covered under MAP by adopting same profit margin as agreed by taxpayer under MAP with UK transactions ignoring the parameters of analysis prescribed under Rule 10B, which are exhaustive and if so, whether it is legally permissible to bypass the same partially or by implication?” 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 List No.: 2 Sl No.: 46