Ita/506/2023 Of The Pr. Commissioner Of Income Tax v. M/S Ingersoll Rand Technologies And Services Pvt Ltd

Digitallysigned by BLAVANYALocation:HIGHCOURT OFKARNATAKA NC: 2024:KHC:40489-DBITA No. 506 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26 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.506 OF 2023 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX, 5 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, 80 FEET ROAD, KORMANGALA, BENGALURU - 560 095. 2. THE ASST. COMMISSIONER OF INCOME -TAX, CIRCLE-3(1)(1), 2 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560 095. …APPELLANTS (BY SRI. DILIP M., A/W SRI. RAVIRAJ Y.V., ADVOCATES) AND: M/S. INGERSOLL-RAND TECHNOLOGIES AND - 2 - SERVICES PVT. LTD., 8 FLOOR, TOWER D, IBC KNOWLEDGE PARK, NO.4/1, BANNERGHATTA MAIN ROAD, BENGALURU - 560 029. PAN: AAACI 2961B. …RESPONDENT (BY SMT. TANMAYEE RAJKUMAR, ADVOCATE) THIS ITA / INCOME TAX APPEAL IS FIELD UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 04/01/2023 PASSED IN ITA NO.2499 /BANG/2019, FOR THE ASSESSMENT YEAR PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ETC. 2015-2016. THIS APPEAL, COMING ON FOR ORDERS, 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.Dilip.M., along with Sri. Raviraj.Y.V., learned counsel 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’) questioning the correctness and legality of order dated 04.01.2023 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.2499/Bang/2019 for the assessment year 2015-16, raising 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 directing Transfer Pricing Officer (for short TPO) to determine the ALP of the international transactions pertaining to cost contribution charges by adopting Transaction Net Margin Method (for short TNMM) as the most appropriate method the case, the Tribunal's order can be said as perverse in directing Transfer Pricing Officer (for short TPO) to determine the ALP of the international transactions pertaining to cost contribution charges by adopting Transaction Net Margin Method (for short TNMM) as the most appropriate method ignoring that where two international transactions are independent of each other, the ALP of each of them must be determined separately and not doing so would result in a skewed picture"? 2."Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in not appreciating that under similar circumstance a uncontrolled comparable would not incur such expenditure, then the ALP will be Nil and there is no necessary to apply a particular method to arrive at such conclusion and when Transfer Pricing Officer has adopted most appropriate method considering the parameters set out in Section 92C of the Act and Rules framed thereunder"? the case, the Tribunal's order can be said as perverse in not appreciating that under similar circumstance a uncontrolled comparable would not incur such expenditure, then the ALP will be Nil and there is no necessary to apply a particular method to arrive at such conclusion and when Transfer Pricing Officer has adopted most appropriate method considering the parameters set out in Section 92C of the Act and Rules framed thereunder"? 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