2018 (7) TMI 2077 - HC - Income Tax

TP Adjustment - comparability - substantial question of law - HELD THAT - The controversy involved herein is no more res integra in view of the decision of Prl. Commissioner of Income Tax Anr. V/s. M/s.Softbrands India Pvt. Ltd. 2018 (6) TMI 1327 - KARNATAKA HIGH COURT wherein it has been observed that unless the finding of the Tribunal is found ex facie perverse the Appeal u/s. 260-A of the Act is not maintainable.

Summary

Issues involved:
- Appeal by Revenue against Order of Income Tax Appellate Tribunal, Bangalore Bench
- Substantial questions of law relating to Assessment Year 2009-10

Analysis:
1. Substantial Question No.1: The Revenue questioned the Tribunal's decision to allow relief to the assessee based on previous decisions and comparability of companies. The Tribunal upheld the use of headcount method for allocating common expenses, following a previous decision. The High Court found no substantial question of law in this regard, based on a previous judgment.

2. Substantial Question No.2: The Tribunal directed to include forex gain/loss as operating income related to software development services. The High Court held that the foreign exchange fluctuation should be considered part of the operating income of the software development services segment, based on the Tribunal's decision binding on the DRP.

3. Substantial Question Nos.3, 4, and 5: The issue revolved around the comparability of certain companies like Bodhtree Consulting Ltd., Infosys Ltd., KALS Information Systems Ltd., and Tata Elxsi Ltd. The High Court followed previous decisions and excluded these companies from the list of comparables based on functional differences and specific criteria, finding no substantial question of law in this regard.

4. The High Court referred to a previous judgment emphasizing that unless the Tribunal's finding is ex facie perverse, the appeal under Section 260-A of the Act is not maintainable. The Court dismissed the Revenue's appeals, stating that the questions raised did not give rise to substantial questions of law, and the appeals lacked merit. The Court clarified that dissatisfaction with Tribunal findings is not sufficient to invoke Section 260-A.

5. In conclusion, the High Court found no substantial question of law in the present case and dismissed the Appeals filed by the Revenue, emphasizing that the same parameters apply to both Revenue and Assessees' appeals. The Appeals were dismissed with no order as to costs.