Karnataka High Court
Pr Commissioner Of Income Tax vs M/S Nxp Semi Conductor India Pvt Ltd on 29 June, 2018
Bench: Vineet Kothari, S.Sujatha
1/8
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 29th DAY OF JUNE 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON'BLE Mrs.JUSTICE S.SUJATHA
I.T.A.No.63/2016
Between:
1. Pr. Commissioner of
Income Tax
C.R. Building,
Queens Road
Bangalore-560 001.
2. Deputy Commissioner
of Income Tax
Circle-12(2), Bangalore.
...Appellants
(By Mr. Sanmathi.E.I, Advocate)
And:
M/s. NXP Semi Conductors
India Pvt. Ltd.,
I.T.Park, Nagawara Village,
Kasaba Hobli,
Bangalore-560 045.
...Respondent
(By Mr. Mallaha Rao K &
Mr.Sandeep S Karhail, Advocates)
Date of Judgment 29-06-2018 I.T.A.No.63/2016
Pr. Commissioner of Income Tax & Anr.
Vs. M/s. NXP Semi Conductors India Pvt. Ltd.,
2/8
This I.T.A. is filed under Section 260-A of Income Tax
Act 1961, praying to 1. Decide the foregoing question of law
and/or such other questions of law as may be formulated by
the Hon'ble Court as deemed fit. 2. Set aside the appellate
order dated:22/07/2015 passed by the ITAT, 'C' Bench,
Bengaluru, in appeal proceedings No.IT(TP)A No.1634/
Bang/2014 for Assessment Year 2009-10, as sought for in
this appeal; and to grant such other relief as deemed fit, in
the interest of justice and etc.
This I.T.A. coming on for Hearing, this day
Dr. Vineet Kothari J. delivered the following:-
JUDGMENT
Mr. Sanmathi.E.I. Adv. for Appellants - Revenue Mr. Mallaha Rao K & Mr. Sandeep S Karhail, Adv. for Respondent-Assessee
1. The Appellants - Revenue have filed this appeal raising purported substantial questions of law arising from the Order of the learned Income Tax Appellate Tribunal, Bangalore Bench "C", Bangalore, Annexure A dated 22/07/2015 in IT(TP)A.No.1634/Bang/2014 for AY 2009-10.
2. The appellants - Revenue have suggested two substantial questions of law which are quoted below for ready reference: -
Date of Judgment 29-06-2018 I.T.A.No.63/2016 Pr. Commissioner of Income Tax & Anr. Vs. M/s. NXP Semi Conductors India Pvt. Ltd., 3/8 "1.Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority/TPO to omit the companies such as KALS Information Systems Ltd, Infosys Technologies Ltd, Tata Elxsi Ltd, Persistent Systems Ltd and Bodhtree Consulting Ltd from final list of comparables as it is functionally different from the assessee, by relying on the decision of the co-ordinate bench which has not reached finality when the TPO in the order has rightly selected a set of comparable companies to arrive at the average mean margin of the software development segment and thereby arriving at the TP adjustment to the ALP international transactions entered into by the assessee?
2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority to consider claim of assessee with regard to depreciation on goodwill which was rightly rejected by first appellate authority as Date of Judgment 29-06-2018 I.T.A.No.63/2016 Pr. Commissioner of Income Tax & Anr.
Vs. M/s. NXP Semi Conductors India Pvt. Ltd., 4/8 the said claim was not made before assessing authority?"
3. The learned counsel appearing for the appellants- Revenue submitted that he does not press the second substantial question of law raised in the present appeal.
4. In so far as the first substantial question of law is concerned, the learned ITAT in its Order dated 22/07/2015 has given the following findings, the relevant portion of which is quoted for ready reference:-
"9.4.2 Following the above decision of the co- ordinate bench of this Tribunal in the case of Cisco Systems Services BE, India Branch (supra) for Assessment Year 2009-10, we direct the Assessing Officer/TPO to omit this company from the final set of comparables as it is functionally different from the assessee in the case on hand, who is purely a software service provider:
... ... ...
Date of Judgment 29-06-2018 I.T.A.No.63/2016 Pr. Commissioner of Income Tax & Anr.
Vs. M/s. NXP Semi Conductors India Pvt. Ltd., 5/8 ... ... ...
10.4.2 Following the above decision of the co-ordinate bench of this Tribunal in the case of Cisco Systems Services BE, India Branch (supra), we direct the Assessing Officer/TPO to omit this company from the final set of comparable as it is functionally different from the assessee in the case on hand, who is purely a software service provider."
5. However, this Court in a recent judgment in I.T.A.No.536/2015 c/w. I.T.A.No.537/2015 (Pr.Commissioner of Income Tax, Bangalore and Another Vs. M/s. Softbrands India P.Ltd.,) rendered on 25-06-2018, has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable and the relevant portion of the said judgment is quoted below for ready reference:
Date of Judgment 29-06-2018 I.T.A.No.63/2016 Pr. Commissioner of Income Tax & Anr. Vs. M/s. NXP Semi Conductors India Pvt. Ltd., 6/8 "Conclusion:
55. A substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases. Had it been a case of substantial question of interpretation of provisions of Double Taxation Avoidance Treaties (DTAA), interpretation of provisions of the Income Tax Act or Overriding Effect of the Treaties over the Domestic Legislations or the questions like Treaty Shopping, Base Erosion and Profit Shifting (BEPS), Transfer of Shares in Tax Havens (like in the case of Vodafone etc.), if based on relevant facts, such substantial questions of law could be raised before the High Court under Section 260-A of the Act, the Courts could have embarked upon such exercise of framing and answering such substantial question of law.
On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our Date of Judgment 29-06-2018 I.T.A.No.63/2016 Pr. Commissioner of Income Tax & Anr. Vs. M/s. NXP Semi Conductors India Pvt. Ltd., 7/8 considered opinion, give rise to any substantial question of law.
56. We are therefore of the considered opinion that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed.
57. We make it clear that the same yardsticks and parameters will have to be applied, even if such appeals are filed by the Assessees, because, there may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an 'Arm's Length Price' in the case of the assessees with which the assessees may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all Date of Judgment 29-06-2018 I.T.A.No.63/2016 Pr. Commissioner of Income Tax & Anr. Vs. M/s. NXP Semi Conductors India Pvt. Ltd., 8/8 a sufficient reason to invoke Section 260-A of the Act before this Court.
58. The appeals filed by the Revenue are therefore dismissed with no order as to costs."
6. Having heard the learned counsel for the parties, this Court is satisfied that no substantial question of law would arise in the present case and the appeal filed by the Revenue is therefore, liable to be dismissed. Accordingly, it is dismissed. No costs.
Sd/-
JUDGE Sd/-
JUDGE BMV*