Ita/575/2022 Of The Pr. Commissioner Of Income Tax v. M/S First Advantage Global Operating Centre Private Limited

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. 575 OF 2022 BETWEEN: BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEES CASE, IN APPEAL PROCEEDINGS IN ITA NO. 370/BANG/2015 (ANNEXURE-A) FOR A.Y.2010-2011 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.Vanaja M.R. 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 02.11.2021 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.370/Bang/2015 for the assessment year 2010-11. NC: 2024:KHC:39742-DBITA No. 575 of 2022 3. This Court, admitted the appeal on 24.06.2024 to consider the following substantial question of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding the comparable’s, M/s.Persistent Systems Ltd and M/s.Larsen Infotech on basis of decision in a different financial year when the comparable is qualifying all qualitative filters applied by the Transfer Pricing Officer? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in including comparable, M/s.Silverline Technologies Ltd. & R Systems International Ltd., even when though the comparable have a different accounting year than the taxpayer and also while the comparable is falling a qualitative filter applied by Transfer Pricing Officer? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in rejecting M/s.Accentia Technologies Ltd. As comparable on the ground that it is functionally different when the primary source of income of the comparable-companies are from provision of ITES? 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in remitting the inclusion of comparables namely M/s.R.Systems International Pvt. Ltd. And Caliber Point business solutions Ltd. Back to the taxpayer and also the comparable is falling a qualitative filter applied by transfer pricing officer? 5. 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 not appreciated the findings of Transfer Pricing Officer which are well supported with materials and after application of Rule 10B of I.T. Rules?” 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 CT:VN List No.: 2 Sl No.: 51