Ita/70/2023 Of The Pr. Commissioner Of Income Tax v. M/S. Nuance Transcription Services India Pvt Ltd

Digitallysigned byBHARATHI SLocation:HIGH COURTOFKARNATAKA NC: 2024:KHC:40427-DBITA No. 70 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27 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.70 OF 2023 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX 5 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU-560 095. 2. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-5(1)(1), PRESENT ADDRESS DCIT, CIRCLE-2(1)(1), 2 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU-560 095. …APPELLANTS (BY SRI. DILIP M.,ADVOCATE) AND: M/S. NUANCE TRANSCRIPTION SERVICES INDIA PVT LTD - 2 - FIRST FLOOR, BLOCK B, SALARPURIA AURA, KHATA NO. 434/170, MARATHAHALLI-SARJAPURA OUTER RING ROAD, KAVERAPPA LAYOUT, BENGALURU-560 103. PAN: AAACF 3465 F …RESPONDENT (BY SRI. PAI DHUNGAT ANKUR DEEPAK.,ADVOCATE) THIS ITA/INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENAGALURU IN IT(TP)A NO. 173/BANG/2017 DATED 10.08.2022 FOR ASSESSMENT YEAR 2012-2013 ANNEXURE D AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2 (1) (1), BENGALURU 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. Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for the appellants/Revenue and learned counsel Sri. K.R.Vasudevan along with Sri. Ankur.P.D., 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 10.08.2022 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.173/Bang/2017 for the assessment year 2012-13. 3. This Court, admitted the appeal on 22.08.2023 to consider the following substantial questions of law: "1. Whether on the facts and in the circumstances of the case, the Tribunal excluding comparable's without considering that companies are similar to that of assessee and TPO had satisfied qualitative and quantitative tests to consider them as comparable's, the same has resulted in passing a perverse order in nature? 2. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in deleting comparable's Infosys BPO Ltd, Microland Ltd and Crossdomains Solutions Pvt Ltd without acknowledging the fact that the said comparable's were chosen by TPO on the basis of materials on record and after applying the requires testes prescribed under the Rules and as such order passed by Tribunal is perverse in nature? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding companies in excluding comparable Directing Transfer Pricing Officer to exclude comparables namely, as comparable's on ground of functional dissimilarity ignoring that transfer pricing is not an - 5 - exact science and no two entities can be exact replicas? 4. 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 ignored the findings rendered by Transfer Pricing Officer and also materials brought on record by said officer which establishes that exclusion of comparable was in accordance with parameters of Rule 10B?" 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding companies in excluding comparable Directing Transfer Pricing Officer to exclude comparables namely, as comparable's on ground of functional dissimilarity ignoring that transfer pricing is not an - 5 - exact science and no two entities can be exact replicas? 4. 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 ignored the findings rendered by Transfer Pricing Officer and also materials brought on record by said officer which establishes that exclusion of comparable was in accordance with parameters of Rule 10B?" 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