Ita/460/2019 Of Principal Commissioner Of Income Tax-4 v. M/S Metricstream Infotech (India)

Digitally signedby BHARATHISLocation: HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23 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. 460 OF 2019 BETWEEN: 1. PRINCIPAL COMMISSIONER OF INCOME TAX -4 BMTC COMPLEX, KORAMANGALA BENGALURU INCOME TAX -4 BMTC COMPLEX, KORAMANGALA BENGALURU 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -4(1) (2), BMTC COMPLEX , KORAMANGALA , BENGALURU INCOME TAX CIRCLE -4(1) (2), BMTC COMPLEX , KORAMANGALA , BENGALURU …APPELLANTS (BY SRI. SANMATHI E I.,ADVOCATE) AND: M/S METRICSTREAM INFOTECH (INDIA) PVT. LTD. AMR TECH PARK, 4B, NO 23 & 24, HONGASANDRA VILLAGE, BEGUR HOBLI, BENGALURU SOUTH TALUK BENGALURU - 560068 PAN: …RESPONDENT (BY SMT. GEETHA RANI K., AND SRI. NARENDRA KUMAR J JAIN, ADVOCATES) THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, PRAYING TO SET ASIDE THE APPELLATE ORDER DATED 27.02.2019 PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, ‘C’ BENCH, BENGALURU IN IT(TP)A. No.1418/BANG/2017 (ANNEXURE-A) FOR ASSESSMENT YEAR 2013-2014 AS SOUGHT FOR IN THIS APPEAL, AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE AND ETC., THIS APPEAL, COMING ON FOR FINAL 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. Geetha Rani K. and Sri Narendra Kumar J. Jain, learned counsels 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 27.02.2019 passed by the Income Tax Appellate Tribunal, “C” Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP) A No.1418/Bang/2017 for the assessment year 2013-14, raising the following substantial questions of law: 1. Whether on the facts and circumstances of the case and in law, the Tribunal correct in holding that Larsen and Toubro Infotech Ltd and Persistent Systems Ltd cannot be taken as comparable holding that these companies are functionally dissimilar ignoring the materials brought on record by Transfer Pricing Officer? 2. Whether on the facts and circumstances of the case and in law, the Tribunal’s order can be said as perverse in nature as Tribunal has ignored material evidences and has only followed previous orders without appreciating that Transfer Pricing Officer has applied required tests as prescribed in Rules? 3. Whether in the facts and circumstances of the case and in law, the Tribunal was right in excluding certain comparable’s without considering the materials brought on record by Transfer Pricing Officer? 4. Whether on the facts and circumstances of the case in law, the Tribunal was right in not acknowledging that determination of ALP by carrying out comparability analysis of the comparable companies is an art and not exact science as no two companies are exactly same? 5. Whether on the facts and circumstances of the case and in law, the Tribunal was right in law in demanding comparability standards that may itself defeat the purpose of law relating to determination of ALP under the Act? 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 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. 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 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 BS List No.: 1 Sl No.: 60