PRINCIPAL COMMISSIONER OF INCOME TAX-4 V. M/S EMULEX COMMUNICATIONS PVT LTD

ITA/99/2021

AI Insights

The case involves an appeal by the Principal Commissioner of Income Tax-4 and the Deputy Commissioner of Income Tax against M/s. Emulex Communications Pvt. Ltd. concerning an order passed by the Income Tax Appellate Tribunal, Bengaluru. The appeal was filed under Section 260-A of the Income Tax Act, 1961, challenging the Tribunal's decision on the inclusion and exclusion of comparables in the assessment for the year 2011-12. The Revenue contended that the Tribunal erred in its analysis under Rule 10B of the Income Tax Rules, which pertains to the selection of comparables for transfer pricing. The assessee argued that the tax effect was below the threshold of Rs.2 Crores as per the latest CBDT Circulars, which should preclude the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 739923 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 24-09-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: TANMAYEE RAJKUMAR
• Assessee Lawyers: SANMATHI I
• Keywords: Comparable Analysis; Income tax appeal; Exclusion/Including Comparables; Rule 10B
• Section: 260-A

Judgement Text

" - 1 - NC: 2024:KHC:39703-DB ITA No. 99 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 99 OF 2021 BETWEEN: 1. PRINCIPAL COMMISSIONER OF INCOME TAX-4, BMTC COMPLEX, KORAMANGALA, BENGALURU. 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(2), BANGALORE. …APPELLANTS (BY SRI SANMATHI E. I., ADV.) AND: M/S. EMULEX COMMUNICATIONS PVT. LTD., THE MILLENIA TOWER-C, LEVEL 2 AND 3, NO.1 AND 2, MURPHY ROAD, ULSOOR, BANGALORE – 560 008. …RESPONDENT (BY SMT. TANMAYEE RAJKUMAR, ADV.) THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28/08/2019 PASSED IN IT(TP)A NO.267/BANG/2016, FOR THE ASSESSMENT YEAR 2011-2012, PRAYING TO (A) 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 AND ETC. THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:39703-DB ITA No. 99 of 2021 CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Smt.Tanmayee Rajkumar for respondent/assessee. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 28.08.2019 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.267/Bang/2016 for the assessment year 2011-12. 3. This Court, admitted the appeal on 13.12.2022 to consider the following substantial question of law: “1.Whether on the facts and circumstances of the case and in law, the Tribunal erred in excluding/including comparable’s ignoring the parameters of analysis prescribed under Rule 10B, - 3 - NC: 2024:KHC:39703-DB ITA No. 99 of 2021 which are exhaustive and, if so, whether it is legally permissible to bypass the same partially or by implication? 2. Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in deleting M/s.E-Info Chips Ltd., as comparable without acknowledging the fact that it is into the functions similar to functions carried out by the taxpayer and as such order passed by Tribunal is perverse in nature?” 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 5. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. - 4 - NC: 2024:KHC:39703-DB ITA No. 99 of 2021 6. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE MPK List No.: 2 Sl No.: 17 "