Ita/494/2018 Of Pr Commissioner Of Income Tax-5 v. M/S Nvidia Graphics Pvt Ltd

Digitally signedby BHARATHISLocation: HIGHCOURT OFKARNATAKA NC: 2024:KHC:40084-DB 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. 494 OF 2018 BETWEEN: 1. PR. COMMISSIONER OF INCOME TAX-5, BMTC COMPLEX, KORAMANGALA, BANGALORE. 2. THE INCOME TAX OFFICER WARD-12(1), BANGALORE …APPELLANTS (BY SRI. SANMATHI E.I., ADVOCATE) AND: M/S. N VIDIA GRAPHICS PVT LTD., C1, JACARANDA, WING A, OUTER RING ROAD, MANYATA EMBASSY BUSINESS PARK, OUTER RING ROAD, BENGALURU-560 045. PAN: …RESPONDENT (BY SRI. VIKRAM UNNI RAJAGOPAL, ADVOCATE) THIS ITA / INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT 1961, ARISING OUT OF THE ORDER DATED 09.02.2018 PASSED IN ITA NO. 1412/BANG/2010 FOR THE ASSESSMENT YEAR 2006-2007, PRAYING 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 ETC. 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 - 3 - ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri. Sanmathi.E.I., for appellants/Revenue and learned counsel Sri. Vikram Unni Rajagopal for 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 09.02.2018 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short ‘Appellate Authority’) in IT(TP)A.No.1412/Bang/2010 for the assessment year 2006-07. 3. This Court, admitted the appeal on 29.3.2021 to consider the following substantial questions of law: "(1) Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in excluding comparable's M/s. Kals Information Systems Ltd, Accel Transmatics Ltd, Flextronics Software Ltd, Persistent Systems Ltd, Tata Elxsi and Megasoft Ltd as functionally not similar to that of assessee, turnover filter, RPT and NC: 2024:KHC:40084-DB margin filters? on the basis of functionally dissimilarity? (2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in deciding M/s. Kals Information Systems Ltd, M/s. Bodhtree Consulting Ltd and other comparable's as functionally not comparable, turnover, RPT filter ad margin filters even when the assessing authority has rightly chosen the comparable by applying all tests and considering the all relevant data's? (3) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in rejecting Infosys Ltd as comparable on ground of high turnover without acknowledging that there is no direct relationship between brand value and margin earned by the Company, brand may generate revenue of the Company but does not increase the profit margin and as such the order passed by the Tribunal is perverse in nature?" 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 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 SMJ