M/s IZMO Limited (formerly Logix Microsystems Limited), Bangalore V. The Deputy Commissioner of Income Tax, Circle 3(1)(1), Bangalore

MA 73/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7758 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-07-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 17-06-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN BENGALURU
• Assessee Lawyers: L BHARATH
• Keywords: Transfer pricing; Rectification of order
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER MP NO.73/BANG/2020 [IN IT(TP)A NO.186/BANG/2016 ] ASSESSMENT YEAR : 2011 - 12 IZMO LTD. [FORMERLY LOGIX MICROSYSTEMS LTD.], 177/2C, BILEKAHALLI INDUSTRIAL AREA, BANNERGHATTA ROAD, BANGALORE 560 076. PAN: AAACL 3000E VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1), BANGALORE. APPL IC ANT RESPONDENT APPL IC ANT BY : SHRI L. BHARATH, C A RESPONDENT BY : SHRI MUZAFFAR HUSSAIN, CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 24.07 .2020 DATE OF PRONOUNCEMENT : 24.07 .2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS A MISCELLANEOUS PETITION FILED BY THE ASS ESSEE U/S. 254(2) OF THE INCOME-TAX ACT, 1961 [THE ACT] STATING THAT THE RE ARE APPARENT ERRORS IN THE ORDER DATED 29.01.2020 PASSED BY TRIBUNAL, WHIC H REQUIRES TO BE RECTIFIED. 2. THE ISSUE THAT WAS CONSIDERED AND DECIDED BY THE TRIBUNAL IN THE APPEAL OF THE ASSESSEE WAS WITH REGARD TO DETERMINA TION OF THE ARMS LENGTH PRICE [ALP] IN RESPECT OF AN INTERNATIONAL T RANSACTION ENTERED INTO BY MP NO.73/BANG/2020 PAGE 2 OF 3 THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISE AS PER THE PROVISIONS OF SEC.92 OF THE ACT. THE ASSESSEE SOUGHT EXCLUSION OF 8 COM PARABLE COMPANIES THAT WAS CHOSEN BY THE TPO FOR THE PURPOSE OF COMPA RING THE PROFIT MARGIN OF THE ASSESSEE WITH THE AFORESAID 8 COMPANIES. VI DE PARA 40 OF THE ORDER, THE TRIBUNAL EXCLUDED ALL THE 8 COMPANIES FORM THE LIST OF COMPARABLE COMPANIES. IN THIS PETITION, THE ASSESSEE HAS PROJ ECTED THE GRIEVANCE THAT THOUGH THE 8 COMPANIES WERE EXCLUDED FROM THE LIST OF COMPARABLE COMPANIES AND THE ASSESSEE GETS RELIEF WHICH IT SOU GHT FOR, BUT YET THERE WERE OTHER REASONS ALSO FOR EXCLUSION OF THE COMPAR ABLE COMPANIES AND THOSE REASONS FOR EXCLUSION HAVE NOT BEEN CONSIDERE D BY THE TRIBUNAL IN THE IMPUGNED ORDER. THIS IS THE SUM AND SUBSTANCE OF THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE. 3. THE GRIEVANCE OF THE ASSESSEE AS ABOVE IS PROJEC TED IN RESPECT OF THE 4 OUT OF 8 COMPARABLE COMPANIES DEALT WITH BY T HE TRIBUNAL IN PARA 40 OF THE ORDER OF TRIBUNAL VIZ., L&T INFOTECH LTD., T ATA ELSXI LTD., PERSISTENT SYSTEMS & E-INFOCHIPS LTD. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. CO UNSEL FOR THE ASSESSEE REITERATED THE STAND OF THE ASSESSEE AS RE FLECTED IN THE PETITION. WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THE MI SCELLANEOUS PETITION FILED BY THE ASSESSEE. A COMPANY IF IT IS CHOSEN AS A CO MPARABLE COMPANY CAN BE EXCLUDED FROM THE LIST OF COMPARABLE COMPANIES F OR MORE THAN ONE REASON. E.G., IF THE RPT OF A COMPARABLE COMPANY I S MORE THAN THE THRESHOLD LIMIT OF 15%, THEN IT CAN BE EXCLUDED. I T MAY ALSO BE THE CASE OF THE ASSESSEE THAT THE VERY SAME COMPARABLE COMPANY IS ALSO NOT FUNCTIONALLY COMPARABLE. IF THE TRIBUNAL ACCEPTS T HAT THE COMPARABLE COMPANY HAS TO BE EXCLUDED BY APPLYING THE RPT FILT ER, IT IS NOT NECESSARY THAT FUNCTIONALLY COMPARABILITY SHOULD ALSO BE ADJU DICATED. IN OTHER WORDS, WHEN MAIN RELIEF IS GRANTED ON THE BASIS OF ONE REA SON, THE ADJUDICATION OF EXCLUSION OF A COMPARABLE COMPANY FOR OTHER REASONS MAY NOT BE MP NO.73/BANG/2020 PAGE 3 OF 3 NECESSARY. IN ANY EVENT, THE SCOPE OF PROCEEDINGS U/S. 254(2) OF THE ACT IS VERY LIMITED AND IS RESTRICTED TO RECTIFICATION OF MISTAKES THAT ARE APPARENT ON THE FACE OF RECORD. IN THE PROCEEDINGS U/S. 254 (2) OF THE ACT, THE ASSESSEE CANNOT SEEK A REVIEW OF THE ORDER OF THE T RIBUNAL OR SEEK A DIRECTION THAT THE ORDER OF THE TRIBUNAL SHOULD BE WRITTEN IN A PARTICULAR MANNER. WE THEREFORE DISMISS THE MISCELLANEOUS PET ITION AS ONE WITHOUT ANY MERIT. 5. IN THE RESULT, THE MISCELLANEOUS PETITION IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 24TH DAY OF JULY, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 24 TH JULY, 2020. / DESAI S MURTHY / COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FIL E BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.