2018 (7) TMI 2080 - HC - Income Tax

Market risk adjustment - Rule 10B (3) of the Income-tax Rules, 1962 provides for an adjustment for risk Differential - HELD THAT - No substantial question of law arising in the present case as the learned Tribunal has given sufficient reasons for not allowing any risk adjustment following its earlier view in the case of Zyme Solutions Pvt. Ltd. vs. ITO 2016 (6) TMI 1375 - ITAT BANGALORE quoted in the said order. ITAT justification in not following Section 253(4) read with Rule 22 of the Income-tax (Appellate Tribunal) Rules, 1963 - HELD THAT - We do not find any force in the said submission of the learned counsel for the appellant assessee. If the cross-objection filed by the appellant assessee in the appeal is registered and not decided by the learned Tribunal, the appellant-assessee itself may file proper Miscellaneous application before the learned Tribunal.

Summary

Issues:
1. Whether market risk adjustment was justified?
2. Whether the Tribunal followed the appropriate rules in the case?

Analysis:
1. The Appellant filed an appeal under section 260A of the Income Tax Act, 1961, challenging the ITAT's order regarding market risk adjustment for the assessment year 2010-11. The Appellant raised substantial questions of law related to the justification of not allowing market risk adjustment despite Rule 10B(3) of the Income-tax Rules, 1962 providing for such an adjustment. The Tribunal found the Appellant had not provided details or computations for the risk adjustment, deeming the claim hypothetical. Citing a previous case, the Tribunal held that the Appellant had not quantified the risk or furnished necessary details for computation, leading to a decision in favor of the revenue. The Tribunal concluded that no substantial question of law arose as it provided sufficient reasons for disallowing the risk adjustment, following precedent.

2. The second substantial question of law related to the Tribunal's handling of the cross-objection filed by the Appellant in response to the Revenue's appeal. The Appellant argued that the cross-objection was not decided by the Tribunal. However, the Court did not find merit in this submission, suggesting that the Appellant could file a proper Miscellaneous application before the Tribunal if the cross-objection remained undecided. Consequently, the Court dismissed the appeal of the Appellant, emphasizing that no costs were to be incurred.

In summary, the High Court of Karnataka addressed the issues raised by the Appellant regarding market risk adjustment and the handling of cross-objections. The Court upheld the Tribunal's decision on the market risk adjustment, emphasizing the lack of quantification and details provided by the Appellant. Additionally, the Court advised the Appellant on the appropriate course of action regarding the undecided cross-objection. Ultimately, the appeal of the Appellant was dismissed, with no costs imposed.