M/s Natsem India Designs Pvt. Limited, Bangalore V. ACIT, Bangalore

ITA 756/BANG/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7594 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-08-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 28-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P K PRASAD; UMASHANKAR GAUTAM
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER IT(TP)A NOS.755 & 756 (BANG) 2012 (ASSESSMENT YEARS : 2003 04 & 2004 - 05) M/S TEXAS INSTRUMENTS (INDIA) PVT. LTD., (SUCCESSOR IN INTEREST TO NATSEM INDIA DESIGN PVT. LTD.) 66/3, BAGMANE TECH PARK, BYRASANDRA, CV RAMAN NAGAR, BANGALORE 560093 PAN: AAACN4844Q APPELLANT VS ACIT CIRCLE 12 (1), BANGALORE RESPONDENT ASSESSEE BY : SHRI P. K. PRASAD & SHRI UM A SHANKAR GAUTAM ADVOCATES REVENUE BY : MS NEERA MALHOTRA, CIT DR DATE OF HEARING : 28-08-2017 DATE OF PRONOUNCEMENT : 08-09-20 17 O R D E R PER A. K. GARODIA, A. M.: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND T HESE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE LEARNED CIT (A) IV, BA NGALORE BOTH DATED 29.03.2012 FOR A. Y. 2004 05 & 2005 06. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN BOTH YEARS, AN IDENTICAL ADDITIONAL GROUND H AS BEEN RAISED I.E. ADDL. GROUND NO. 1 IN A. Y. 2003 04 AND ADDL. GROUND NO . 4 IN A. Y. 2004 05 TO THE EFFECT THAT RPT FILTER ADOPTED BY THE AO/TPO & CIT (A) AT 25% AND ACCEPTING CERTAIN COMPARABLES I.E. 1) BLUE STAR INFOTECH LTD. , 2) CALIFORNIA SOFTWARE CO. LTD., IT(TP)A NOS. 755 & 756/BANG/2012 2 3) COMPUCOM SOFTWARE LTD., 4) GEOMATRIC SOFTWARE SO LUTIONS LTD., 5) INFOSYS TECHNOLOGIES LTD., 6) INFOTECH ENTERPRISES LTD., 7) KPIT COMMIN INFO SYSTEM LTD., 8) MICRO TECHNOLOGIES INDIA LTD., 9) SATYAM COMPUTE R SERVICES LTD., 10) SONATA SOFTWARE LTD. AND 11) TATA ELXSI LTD. IN A. Y. 2003 04 AND 1) INFOTECH ENTERPRISES LTD., 2) HELIOS & MATHESON INFORMATION TECHNOLOGY LTD., AND 3) SAT INVESTECK LTD. IN A. Y. 2004 05 IS NOT PROPER. T HE OTHER ISSUES AS PER ADDITIONAL GROUNDS ARE REGARDING TURNOVER FILTER OF RS. 1 CROR E TO RS. 200 CRORES, EMPLOYEES COST FILTER, FUNCTIONAL SIMILARITY ASPECT ETC. 3. IN COURSE OF HEARING, IT WAS SUBMITTED BY THE LE ARNED AR OF THE ASSESSEE THAT RPT FILTER SHOULD BE ADOPTED AT 0%. AT THIS JUNCTUR E, IT WAS POINTED OUT BY THE BENCH THAT THIS TRIBUNAL IS ADOPTING 25% RPT FILTER . REGARDING TURNOVER FILTER, THE BENCH POINTED OUT THAT THIS TRIBUNAL IS RESTORING B ACK THE MATTER TO AO/TPO FOR A FRESH DECISION IN THOSE CASES WHERE TURNOVER FILTER OR ABNORMAL PROFIT IS AN ISSUE IN THE LIGHT OF THE JUDGMENT OF HONBLE DELHI HIGH COU RT RENDERED IN THE CASE OF CHRYSCAPITAL INVESTMENT ADVISORS (P) LTD. VS. DCIT AS REPORTED IN 376 ITR 183 WHEREIN IT WAS HELD THAT HUGE PROFIT OR HUGE TURNOV ER, IPSO FACTO DOES NOT LEAD TO EXCLUSION OF A COMPARABLE AND IT HAS TO BE SEEN THA T SUCH DIFFERENCES MATERIALLY AFFECT THE PRICE OR COST AND AN ATTEMPT SHOULD BE M ADE TO MAKE REASONABLE ADJUSTMENT TO ELIMINATE SUCH MATERIAL DIFFERENCE. R EGARDING FUNCTIONAL SIMILARITY ASPECT, THE BENCH OBSERVED THAT AFTER APPLYING PROP ER RPT & TURNOVER FILTERS, THIS ASPECT HAS TO BE EXAMINED AND DECIDED IN RESPECT OF THOSE COMPARABLES WHICH PASS THROUGH THESE FILTERS. IN REPLY, BOTH SIDES AG REED THAT IN THAT SITUATION, THE ENTIRE T. P. MATTER MAY BE RESTORED BACK TO A.O. OR CIT (A) FOR A FRESH DECISION WITH SUITABLE DIRECTION. IT(TP)A NOS. 755 & 756/BANG/2012 3 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN VIE W OF THE ABOVE DISCUSSION, WE FEEL IT PROPER TO RESTORE THE ENTIRE T. P. MATTE R TO THE FILE OF CIT (A) FOR A FRESH DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PRO VIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. WE ALSO MAKE IT CLEAR TH AT IN THE ABOVE PARA, THE DISCUSSION IS ABOUT RPT FILTER, TURNOVER FILTER AND FUNCTIONAL DISSIMILARITY ASPECTS BUT SINCE THE ENTIRE T. P. MATTER IS BEING RESTORED BACK, OTHER ASPECTS IF ANY SHALL ALSO BE DECIDED AFRESH BY WAY OF A SPEAKING AND REA SONED ORDER IN BOTH YEARS AND IF REQUIRED, THE CIT (A) MAY OBTAIN REMAND REPORT F ROM THE AO/TPO AS THE CASE MAY BE. IN VIEW OF THIS DECISION, THE INDIVIDUAL GR OUNDS IN BOTH YEARS DO NOT REQUIRE ANY ADJUDICATION. 5 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (VIJAY PAL RAO) SD/- (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE D A T E D : 08.09.2017. *MS COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.