2018 (7) TMI 2101 - HC - Income Tax

TPA - comparable selection - ALP - substantial question of law or fact - HELD THAT - As decided in Pri. 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. We make it clear that the same yardsticks and parameters will have to be applied even if such appeals are filed by the Assessees because there may be cases where the TFbunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an Arm s Length Price in the case of the assessees with which the assessees may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all a sufficient reason to invoke Section 260-A of the Act before this Court - We are of the considered opinion that no substantial question of law arises for consideration in the present case.

Summary

Issues:
1. Appeal filed by Revenue challenging the Order of the Income Tax Appellate Tribunal.
2. Substantial questions of law raised in the appeal related to international transactions and determination of arm's length price (ALP) of royalty payments.
3. Tribunal's findings favoring the Assessee based on previous orders.
4. Interpretation of the maintainability of appeals under Section 260-A of the Income Tax Act.
5. Dismissal of the Revenue's appeal by the High Court.

Analysis:
The High Court of Karnataka heard an appeal filed by the Revenue challenging the Order of the Income Tax Appellate Tribunal related to the Assessment Year 2008-09. The appeal raised substantial questions of law regarding the correctness of directing the Transfer Pricing Officer (TPO) to consider expenses as international transactions and determine the arm's length price (ALP) of royalty payments. The Tribunal's findings favored the Assessee, directing the TPO to re-determine the royalty based on previous orders. 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 highlighted that substantial questions of law related to interpretation of Double Taxation Avoidance Treaties, Income Tax Act provisions, or similar complex matters could be raised, but issues like selection of comparables did not meet the criteria. The Court emphasized that mere dissatisfaction with Tribunal's factual findings is insufficient to invoke Section 260-A. Consequently, the High Court concluded that no substantial question of law arose in the present case, leading to the dismissal of the Revenue's appeal without costs. The judgment reiterated the importance of applying consistent standards in appeals filed by both Revenue and Assessees, ensuring fair and uniform treatment in tax matters.