Knoah Solutions Pvt. Ltd. V. Income Tax Officer, Ward-2(1)

ITTA/373/2012

AI Insights

The case involves Knoah Solutions Pvt. Ltd., the appellant, contesting the decision of the Income Tax Appellate Tribunal regarding the comparability of certain companies for the purpose of determining the Arm's Length Price (ALP) for the assessment year 2004-2005. The Tribunal had excluded Progeon Limited, Flextronics Software Systems, Tulsyan Technologies Limited, and Transworks Information Services Limited as comparables because they were loss-making companies and their data was not comparable to that of the appellant. The High Court, after reviewing the Tribunal's decision, found no perversity in the Tribunal's judgment and dismissed the appeal.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 820562 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 16-07-2013
• Assessment Year: misc
• Other Referred Cases: Sony India Pvt. Limited (114 ITD 448) (Delhi), Philips Software Centre (P) Ltd. Vs. ACIT reported in 26 SOT 226 (Bang)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: ALP; Assessment Year 2004-2005; Perversity; Comparable instances
• Section: 260A

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD TUESDAY, THE SIXTEENTH DAY OF JULY TWO THOUSAND AND THIRTEEN PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SEN GUPTA AND THE HON'BLE MS. JUSTICE G.ROHINI I.T.T.A. No. 373 OF 2012 Between: Knoah Solutions Pvt. Ltd., 188 & 189, Phase-II, Kavuri Hills, Madhapur, Hyderabad. ..... Appellant AND Income Tax Officer, Ward-2(1), IT Towers, AC Guards, Hyderabad. .....Respondent The Court made the following : JUDGMENT: (per the Hon’ble the Chief Justice Sri K.J. Sengupta) This appeal is preferred against the judgment and order of the learned Tribunal dated 25.01.2012 in relation to the assessment year 2004-2005 and sought to be admitted on the following suggested question of law. Whether on the facts and in the circumstances of the case the order of the Income Tax Appellate Tribunal is perverse in as much as the Appellate Tribunal in para 5 of the impugned order held the results in the case of Progeon Limited, Flextronics Software Systems, Tulsyan Technologies Limited and Transworks Information Services Limited were ‘not comparables’ while the Commissioner (Appeals) rejected the said results on the ground that they were ‘loss making companies’? We have heard the learned counsel for the appellant and the gone through the impugned judgment and order of the learned Tribunal. The core question is on what basis ALP should be determined. The method is comparable instances. What are comparable instances is essentially a question of fact. If the authorities below have proceeded in their discretion and own understanding to decide what are the comparable instances, this court in exercise of jurisdiction under Sec.260A of the Income Tax Act cannot decide the same. From the impugned judgment and order, we find no perversity in coming to the conclusion by the learned Tribunal. Therefore, we refer to the relevant portion of the findings of the learned Tribunal: “…As such, it is not possible to make reasonable accurate adjustment to eliminate the material effect of the differences between the transactions of this company. As such, the date of this company cannot be considered as comparable to determine the ALP. This view of ours is supported by the order of the Tribunal in the case of Delhi Bench of Tribunal in the case of Sony India Pvt. Limited (114 ITD 448) (Delhi). The learned Tribunal has further relied on the Bangalore Bench of the Tribunal in the case of Philips Software Centre (P) Ltd., Vs. ACIT reported in 26 SOT 226 (Bang). The learned Tribunal thereafter held as follows: “…Similar is the position in the cases of Progeon Limited, Flextronices Software Systems, Tulsyan Technologies Limited and Trans-works Information Services Limited. Finally, we want to make it clear that the result of above companies is not considered as comparables with the assessee’s company transactions on the reason that the datas of these companies are not comparable with the assessee’s company…” In view of the aforesaid factual appreciation, we dismiss the appeal, as we do not find any question of law involved in the matter. No order as to costs. ______________________ Kalyan Jyoti Sengupta, CJ. __________ G.Rohini, J. July 16, 2013 MAS "