Karnataka High Court
The Pr Commissioner Of Income Tax vs M/S Global E Business Operation Pvt Ltd on 9 August, 2018
Bench: Vineet Kothari, S.Sujatha
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 9TH DAY OF AUGUST 2018
PRESENT
THE HON'BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON'BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.521/2017
BETWEEN:
1. THE PR. COMMISSIONER OF INCOME TAX
5TH FLOOR, BMTC BUILDING,
80 FEET ROAD, KORMANGALA,
BENGALURU - 560 095
2. THE DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE-11(3), PRESENT CIRCLE 3(1)(2),
2ND FLOOR, BMTC BUILDING,
80 FEET ROAD, KORAMANGALA,
BENGALURU - 560 095 ... APPELLANTS
(BY SRI. ARAVIND K V, ADV.)
AND:
M/S GLOBAL E-BUSINESS OPERATION PVT. LTD.,
KALYANI PLATINA, PHASE 2 BLDG,
S.NO.1, 6 & 24, KUNDALAHALLI VILLAGE,
K R PURAM HOBLI,
BENGALURU - 560 066
PAN: AABCG 2843D ... RESPONDENT
(BY SMT.MANASA ANANTHAN, ADV. FOR
SRI. T SURYANARAYANA, ADV.)
Date of Judgment 9-8-2018, ITA No.521/2017
The Pr. Commissioner of Income tax & another Vs.
M/s.Global E-Business Operation Pvt. Ltd.
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THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A
OF INCOME TAX ACT 1961, ARISING OUT OF ORDER
DATED:09/12/2016 PASSED IN IT(TP)A NO.1236/BANG/2010,
FOR THE ASSESSMENT YEAR 2006-2007 ANNEXURE- D,
PRAYING TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS
OF LAW STATED ABOVE. 2. ALLOW THE APPEAL AND SET
ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE
TRIBUNAL, BENGALURU IN IT(TP)A NO.1236/BANG/2010
DATED:09/12/2016 ANNEXURE - D AND CONFIRM THE ORDER
OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER
PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX,
CIRCLE-3(1)(2), BENGALURU.
THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,
S. SUJATHA, J., DELIVERED THE FOLLOWING:
JUDGMENT
Mr. K.V. Aravind, Adv. for Appellants - Revenue. Smt. Manasa Ananthan, Adv. for Mr.T. Suryanarayana, Adv., for Respondent - Assessee.
This Appeal is filed by the Revenue purportedly raising the substantial questions of law arising from the Order of the Income Tax Appellate Tribunal, Bangalore Bench 'B', Bangalore in IT [TP]A No.1236/Bang/2010 dated 09.12.2016, relating to the Assessment Year 2006-07. The substantial question of law framed by the Revenue in the Memorandum of Appeal are as under:
Date of Judgment 9-8-2018, ITA No.521/2017 The Pr. Commissioner of Income tax & another Vs. M/s.Global E-Business Operation Pvt. Ltd.3/9
"1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding certain comparable from list of comparable adopted by TPO on the ground jof functional dissimilarity and employee cost filer by following its earlier decision which has not reached finality even when said decisions have not reached finality and all the requires tests are satisfied?
2. Whether on the facts and in circumstances of the case, the Tribunal is right in law in excluding comparable's namely, Apex Knowledge Solutions Pvt Ltd, Spanco Limited, Goldstone Ingfratech Ltd, Vishal Technology Ltd, Asit C Mehta Financial Services Ltd, Datamatic Financial Services Ltd, even when the said comparable's are chosen as all the required tests are satisfied?"
2. The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned findings as under:
" (iii) Datamatic Financial services Ltd. (Seg).
xxxxxxxxxxxxx Date of Judgment 9-8-2018, ITA No.521/2017 The Pr. Commissioner of Income tax & another Vs. M/s.Global E-Business Operation Pvt. Ltd.
4/912.3 We have considered the rival submissions as well as the relevant material on record. At the outset, we note that an identical issue was considered by the co-ordinate bench of this Tribunal in the case of Goldman Sachs Services P. Ltd. Vs. DCIT (supra) for the same assessment year in para 11 as under:
xxxxxxxxxxxx As it clear from the finding of the Tribunal that the RPT computed by the TPO was not found to be correct but all the transactions which were falling under the definition of international transactions as per Section 92A and 92B of the Act will be considered as RPT. In view of the decision of the co-ordinate bench in the case of Goldman Sachs Services P. Ltd. Vs. DCIT (supra), we direct the TPO to exclude this company from the set of comparables.
(iv) Vishal Info Technology Ltd.
xxxxxxxxxxx 13.3 Having considered the rival submissions as well as the relevant material on record, we find that the comparability of this company has been Date of Judgment 9-8-2018, ITA No.521/2017 The Pr. Commissioner of Income tax & another Vs. M/s.Global E-Business Operation Pvt. Ltd.
5/9examined by the co-ordinate bench of this Tribunal in the case of Goldman Sachs Services P. Ltd. Vs. DCIT (supra) in paras 9 to 9.2 as under:
xxxxxxxxxxx Following the earlier order of this Tribunal, we direct the A.O./TPO to exclude this company form the set of comparable companies.
(v) Asit C Mehta Financial Services Ltd.
(earlier known as Nucleus Netsoft & GIS(India) Ltd.) xxxxxxxxxxx 14.3 We have considered the rival submissions as well as the relevant material on record. The objections raised by the assessee before us was considered by the co-ordinate bench of this Tribunal in the case of Goldman Sachs Services P. Ltd. Vs. DCIT (supra) in paras 13 & 14 as under:
xxxxxxxxxxx Following the earlier order of this Tribunal, we direct the A.O./TPO to exclude this company from the list of comparables.
(vi) Goldstone Infratech Limited (Seg).
xxxxxxxxxx Date of Judgment 9-8-2018, ITA No.521/2017 The Pr. Commissioner of Income tax & another Vs. M/s.Global E-Business Operation Pvt. Ltd.
6/915.3 We have considered the rival submissions as well as the relevant material on record. At the outset we note that the co-ordinate bench of this Tribunal in the case of Goldman Sachs Services P. Ltd. Vs. DCIT (supra) has examined various facts as pointed out by the assessee before us in para 10 as under:
xxxxxxxxxxxx Since these facts are examined by the co-ordinate bench have not been disputed therefore we direct the A.O./ TPO to exclude this company from the set of comparables."
3. For the similar reasons, the Tribunal has excluded other comparables also.
4. However, this Court in a recent judgment in I.T.A. Nos.536/2015 c/w 537/2015 delivered on 25.06.2018 (Prl. Commissioner of Income Tax & Anr.
-v- M/s Softbrands India Pvt. Ltd.,) 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 Date of Judgment 9-8-2018, ITA No.521/2017 The Pr. Commissioner of Income tax & another Vs. M/s.Global E-Business Operation Pvt. Ltd.
7/9of an assessee or the Revenue under Section 260-A of the Act is not maintainable. The relevant portion of the said judgment is quoted below for ready reference:
"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 Date of Judgment 9-8-2018, ITA No.521/2017 The Pr. Commissioner of Income tax & another Vs. M/s.Global E-Business Operation Pvt. Ltd.
8/9tenor 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 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 Date of Judgment 9-8-2018, ITA No.521/2017 The Pr. Commissioner of Income tax & another Vs. M/s.Global E-Business Operation Pvt. Ltd.
9/9satisfied 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 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."
5. Having heard the learned counsels appearing for the parties, we are therefore of the opinion that no substantial question of law arises in the present case also. The Appeal filed by the Appellants-Revenue is liable to be dismissed and it is dismissed accordingly.
No costs.
Sd/-
JUDGE Sd/-
JUDGE AN/-