Ita/493/2022 Of The Pr Commissioner Of Income Tax v. M/S Adc India Communications Ltd

Digitallysigned byBHARATHI SLocation:HIGH COURTOFKARNATAKA ITA No. 493 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30 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. 493 OF 2022 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560095. 2. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-1(1) (1) 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560095. …APPELLANTS (BY SRI. DILIP M, ADVOCATE A/W SRI. RAVI RAJ Y V .,ADVOCATE) AND: M/S ADC INDIA COMMUNICATIONS LTD 485/8A AND 8B 14TH CROSS 4TH PHASE, P B NO.8512 PEENYA INDUSTRIAL AREA BENGALURU-560058 PAN- …RESPONDENT (BY SRI. NIKHILESH RAO M.,ADVOCATE) THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED TO - 2 - BY THE INCOME TAX APPELLATE TRIBUNAL, BENGLAURU IN IT(TP)A NO. 41/BANG/2016 DATED 29/04/2022 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-D CONFIRMING THE ORDER OF THE DRP AND CONFIRM THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), BENGLAURU AND ETC. THIS APPEAL, 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.Dilip M. along with Sri.Raviraj Y.V., for appellants/Revenue and learned counsel Sri.Nikhilesh Rao, 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 29.4.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP) A No.41/Bang/2016 for the assessment year 2011-12, raising the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law include/exclude comparable's namely, M/s.Dynalog (India) Ltd & M/s.Spanco Limited on the ground that functional dissimilarity when the Transfer Pricing Officer had chosen comparables after satisfying required tests namely, qualitative and quantitative filers and considering their functions and as such the order passed by Tribunal is perverse in nature? 2. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature as Tribunal has directed the assessing authority to exclude comparable even when the TPO has chosen proper comparable by application of all required tests? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority/transfer pricing officer to exclude comparables on basis of turnover even though the assessing authority/Transfer Pricing Officer had passed order in accordance with Rule 10B of the Rules and byapplying RPM method as most appropriate method? 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority to exclude comparable in list even when the TPO has chosen proper comparable by application of all required tests? 5. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority to exclude certain comparable in list even when the TPO has chosen proper comparable by application of all required tests"? 6. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in setting aside disallowance made under section 40(a)(ia) read with section 9(1)(vii) of the Act to an extent of Rs.1,36,42,976 as assessee failed to deduct TDS on said payment 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority to exclude comparable in list even when the TPO has chosen proper comparable by application of all required tests? 5. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority to exclude certain comparable in list even when the TPO has chosen proper comparable by application of all required tests"? 6. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in setting aside disallowance made under section 40(a)(ia) read with section 9(1)(vii) of the Act to an extent of Rs.1,36,42,976 as assessee failed to deduct TDS on said payment which is towards fees on technical serves ignoring that conditions set out in said provisions were fully satisfied in case of assessee to make such disallowance? 7. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in setting aside disallowance made under section 40A(7) of the Act on claim of contribution made to approved gratuity fund ignoring that that conditions set out in said provisions were fully satisfied in case of assessee to make such disallowance? 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 - 5 - the revenue. However, the questions of law are kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE BS List No.: 4 Sl No.: 17