Ita/579/2023 Of The Pr Commissioner Of Income Tax-2 v. M/S Yokogawa India Ltd

Digitallysigned byBHARATHI SLocation:HIGH COURTOFKARNATAKA NC: 2024:KHC:39692-DBITA No. 579 of 2023 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. 579 OF 2023 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX-2 KORAMANGALA BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX LTU, BMTC COMPLEX, KORMANGALA, BANGALORE. …APPELLANTS (BY SRI. SANMATHI E. I., ADV.) AND: M/S. YOKOGAWA INDIA LTD., PLOT NO.96, 3 CROSS, ELECTRONIC CITY, HOSUR ROAD, BENGALURU-560100 PAN: . …RESPONDENT THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 14/02/2023 PASSED IN IT(TP)A NO.2608/BANG/2019, FOR THE ASSESSMENT YEAR 2015-2016, PRAYING TO (1) DECIDE THE - 2 - FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 14/02/2023 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S CASE, IN APPEAL PROCEEDINGS IN IT(TP)A NO.2608/BANG/2019 FOR ASSESSMENT YEAR 2015-2016 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. 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 ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri.E.I.Sanmathi., for appellants/Revenue. 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 14.02.2023 passed by the Income Tax Appellate Tribunal, - 3 - NC: 2024:KHC:39692-DBITA No. 579 of 2023 ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.2608/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 nature in law in directing the Transfer Pricing Officer to exclude comparable namely, Concord United Pvt Ltd & Sharpline Automation Pvt Ltd on ground of functional dissimilarity, on applying turnover filter without appreciating that the selection of comparables in a case depends on transfer pricing on assessee's specific FAR analysis and specific facts brought out on record by the TPO and as per Rule 10B of 1.T.Rules? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in erred in setting aside addition made under section 40(a)(ia) of the Act by holding that services rendered does not full fill the criteria of "make available" as mandated under Double Taxation Avoidance Agreement when the materials on record and findings of the assessing authority establish the same whereby it is observed that technical services are rendered attracting 9(1) of the Act read with Article 12 of the DTAA for which assesse failed to deduct TDS on payments made to non resident company? 3. Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in holding that the relationship between the secondee and assesse is employer-employee ignoring that both the parties are separate entities and had separate set of obligations to be performed?” 3. It is noticedthat the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable 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. Article 12 of the DTAA for which assesse failed to deduct TDS on payments made to non resident company? 3. Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in holding that the relationship between the secondee and assesse is employer-employee ignoring that both the parties are separate entities and had separate set of obligations to be performed?” 3. It is noticedthat the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable 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 MPK CT:bms List No.: 2 Sl No.: 3