2018 (7) TMI 2311 - HC - Income Tax

Maintainability of appeal against ITAT order - TPA - include forex gain or loss to be part of operating income/loss - whether Tribunal is right in law in concluding that forex gain or loss are to be treated as operating in nature since they are not critical to operating activities of the business conducted by the taxpayer - HELD THAT - The controversy involved herein is no more res integra in view of the decision of this Court in 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 - 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 - 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 regarding the Assessment Year 2009-10.

Analysis:
The appeal raised substantial questions of law related to the treatment of forex gain or loss in the operating income/loss of the taxpayer. The Tribunal, after considering the arguments of both parties, held that the foreign exchange gain/loss arising from software development services should be included in the operating revenues for calculating the operating margin of the assessee. This decision was supported by previous tribunal rulings. The controversy was deemed settled based on a previous court decision unless the Tribunal's finding was ex facie perverse, rendering the appeal not maintainable under Section 260-A of the Act.

The court emphasized that appeals should involve substantial questions of law, such as interpretation of DTAA provisions or BEPS issues, rather than disputes over comparables or filters for determining comparables. The court clarified that dissatisfaction with the Tribunal's factual findings alone is insufficient to invoke Section 260-A. Consequently, the court found no substantial question of law in the present case and dismissed the Revenue's appeal, stating that the same standards apply even if appeals are filed by the Assessees. The appeal was dismissed with no order as to costs, concluding the judgment.