Nc: 2024:Khc:41160-Dbita v. Acit (2011) 46 Sot 48 (Mumbai)?"

Digitallysigned by BLAVANYA Location:HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1 DAY OF OCTOBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO.269 OF 2023 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX 5 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU -560 095. OF INCOME TAX 5 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU -560 095. 2. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE -7 (1) (1), 2 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU -560 095. OF INCOME TAX CIRCLE -7 (1) (1), 2 FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU -560 095. …APPELLANTS (BY SRI. DILIP M., ADVOCATE ALONG WITH SRI. RAVIRAJ.Y.V., ADVOCATE) SRI. RAVIRAJ.Y.V., ADVOCATE) - 2 - ITA No. 269 of 2023 AND: M/S. TYCO FIRE AND SECURITY INDIA PVT. LTD., D-601, RMZ CONTENNIAL, KUNDALAHALLI MAIN ROAD, BENGALURU-560 048, PAN: AABCT 0087C. …RESPONDENT (SERVED) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN M.P. NO. 57/BANG/2022 (IN IT(TP)A NO.3363/BANG/2018) DATED 06.09.2022 FOR ASSESSMENT YEAR 2014-2015 (ANNEXURE-E) AND CONFIRM THE ORDER OF THE DRP CONFIRMING THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-7(1) (1), BENGALURU AND ETC. THIS APPEAL IS 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.Dilip.M., along with Sri. Raviraj.Y.V., learned counsel 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 06.09.2022 passed by the Income Tax Appellate Tribunal, Bengaluru, (for short, ‘Appellate Authority’) in M.P.No.57/Bang/2022 (in IT(TP)A.No.3363/Bang/2018) for the assessment year 2014-15. 3. This Court, admitted the appeal on 12.02.2024 to consider the following substantial questions of law: "1. Whether on the facts and in the circumstances of the case, the Tribunal is right on law by relying upon the decision in the case of Huawei Technologies India (P) Ltd., wherein the Tribunal held that the working capital adjustment is to be allowed as per actual on the final set of comparables? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in fact and in law in directing to allow working capital adjustments without considering that the average working capital may not show the actual working capital employed during the year? 3. Whether on the facts and in the circumstances of the case the Tribunal was right in fact and in law in providing working capital adjustment to the taxpayer without considering that the disclosures in the Annual report does not contain a breakup of trade and non-trade Debtors and Creditors? 4. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in providing working capital adjustment to the taxpayer without considering that Cost of capital is different for different companies? 5. Whether on the facts and circumstances of the case, the Tribunal's order can be said as perverse in nature in ordering grant of Risk Adjustment when it is not possible to calculate in terms of numbers the differences in risk so that adjustment can be made? - 5 - 3. Whether on the facts and in the circumstances of the case the Tribunal was right in fact and in law in providing working capital adjustment to the taxpayer without considering that the disclosures in the Annual report does not contain a breakup of trade and non-trade Debtors and Creditors? 4. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in providing working capital adjustment to the taxpayer without considering that Cost of capital is different for different companies? 5. Whether on the facts and circumstances of the case, the Tribunal's order can be said as perverse in nature in ordering grant of Risk Adjustment when it is not possible to calculate in terms of numbers the differences in risk so that adjustment can be made? - 5 - 6. Whether on the facts and circumstances of the case, the Tribunal is correct in not following the decision of the Hon'ble ITAT Bangalore bench in the case of M/s SAP Labs India (P.) Ltd. [2012] 17 taxmann.com 16 (Bang.) and M/s Meritor LVS India Pvt. Ltd. [2015] 64 taxmann.com 136 (Bangalore - Trib.) and also decision of the Hon'ble ITAT, Mumbai bench in the case of M/s.Symantec Software Solutions Pvt. Ltd. Vs ACIT (2011) 46 SOT 48 (Mumbai)?" 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 - 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 SMJ List No.: 2 Sl No.: 2