Ita/842/2008 Of The Commissioner Of Income Tax v. M/S Sap Labs Pvt Ltd

IN THR HIGH COURT OF KARNATAKA AT BANGALORE DATBD THIS THR 25[th]DAY OF AUGUST, 2014. PRESENT THR HON' BLE MR. JUSTICK N.KUMAR AND THR HON' BLE MRS. JUSTICK RATHNAKALA| Income Tax Appeal No 842 OF 2008 "+, Income Tax Appeal No.339 OF 2010 In Income Tax Appeal No 842 OF 2008: BRBITWE 1.THE COMMISSIONER OF INCOME TAX.C R BUILDINGQUEENS ROADBANGALORE 2THR ASSISTANT COMMISSIONER OF INCOME TAXCIRCLE-12(2)C.R. BUILDINGQUEENS ROADBANGALORE,_. APPKBLLANTS(BY SRI K V ARAVIND, ADVOCATE) AND M/S SAP LABS PVT LTD138, EXPORT PROMOTIONINDUSTRIAL PARKWHITKFRIBLDBANGALORE... RESPONDENT (BY SRI A. SHANKAR & M.LAVA, ADVOCATES) This Income Tax Appeal is filed under Section260-A of Income Tax Act, 1961 praying to formulate|the substantial questions of law and to allow the|appeal and set aside the Order dated 30-04-2008|passed by the ITAT, Bangalore in ITA No.|199/BNG/2007 and confirm the order passed by theAssistant Commissioner of Income Tax , Circle-12(2),|Bangalore. In Income Tax Appeal No.339 OF 2010 BRBITWE 1.THE COMMISSIONER OF INCOME TAX.CR BUILDINGSQUEENS ROADBANGALORE-560 OO1. 2 ‘THR DRBEPUTY COMMISSIONEBR OF INCOMB CIRCLE-12(3)BANGALORE,_. APPKBLLANTS (BY SRI E.I. SANMATHI, ADVOCATE) ANT M/S SAP LABS PVT LTDNo.138, EXPORT PROMOTIONINDUSTRIAL PARKWHITKRIBLDBANGALORE-560 OO9... RESPONDENT (BY SRI A. SHANKAR & M.LAVA, ADVOCATES) This Income Tax Appeal is filed under Section260-A of Income Tax Act, 1961 praying to formulate|the substantial questions of law and to allow the|appeal and set aside the Order dated 22-04-2010|passed by the ITAT, Bangalore in ITA No.|1193/BANG/2009 for the assessment year 2002-03. | These Income Tax Appeals coming on _ fo Hearing this day, N. Kumar J., delivered the)following: JUDGMENT The revenue has preferred these appealschallenging the order passed by the Tribunal which|has set aside the order passed by the Appellate|Commissioner under Section 263 ot the Income Tax|Act (hereinaiter referred to as ‘the Act). | 2. The assessee in ITA No. 842/2008 filed itsreturn of income for the assessment year 2002-03 on31[St]October, 2002. The same was processed undersection 143(1) of the Income Tax Act. The assessee|received notices dated 1[St]of April, 2004 underSection 148 of the Act and 12[th]April 2004 undersection 92CA of the Act from the Transfer Pricing|Officer seeking details about the _ internationatransactions entered into by the assessee with the| eroup companies on a reference made by the|Assessing Authority. At the time of issue of notice|under Section 92CA of the Act, no valid return was|pending on the basis of which notice under Section|QQOCA ot the Act could have been issued. Since no/notice under Section 143(2) of the Act was issued|pursuant to filing of the original return, the)assessment is deemed to have become final. In reply|to the notice issued under Section 148 of the Act, theassessee filed a letter dated 21[St]April, 2004requesting the Assessing Authority to treat the returnfiled on 31-10-2002 as return in compliance with thenotice under Section 148 of the Act. I[n fact the!Transier Pricing Officer on 20.1.2005 passed an orderunder Section 92CA of the Act accepting the pricing|ottheAssessing|Authority.However,theCommissioner of Income Tax invoking his power|under Section 263 of the Act initiated proceedings|and set aside the order of the Assessing Authority onthe ground that it is erroneous and prejudicial to the interest of the revenue. It is against that order, the|assessee preferred an appeal to the Tribunal. interest of the revenue. It is against that order, the|assessee preferred an appeal to the Tribunal. 3. The Tribunal has held that when two views|are possible and when the Transfer Pricing Authority|has accepted valuation by the Assessing Authority|determiningthe.arm’slengthprice,theCommissioner had no jurisdiction to interfere with|the said order under Section 263 oft the Act andmoreover on the day the reference was made by the|Assessing Authority, there was no return pending for|consideration and therefore, the Tribunal has setaside the order of the Commissioner. It is against thesaid order, the revenue is before this Court. 4. From the aforesaid facts, it is clear that onthe day the reference was made by the Assessing|Authority to the Transfer Pricing Authority, there wasno return pending for consideration by him and_therefore, the very reference was_ bad. Even| otherwise, the said Transfer Pricing Authority did notfind fault with the adjudication of determining arms|length price by the Assessing Authority. In those)circumstances, the Commissioner committed an|error in exercising his power under Section 263 of theAct and the Tribunal was justified in interfering with|the said order. Therefore, we do not see any merit in|appeal No. 842/2008. Accordingly, it is dismissed. Oo. Consequently, the impugned order which isthe subject matter of ITA 339/2010 which is a|consequential order is also dismissed.| od/-|Judge od/-—Judge Nsu/-