2018 (7) TMI 379 - HC - Income Tax

TPA - MAM - resale price method OR transaction net margin method - substantial question of law - Held that - This Court in a recent judgment in Pr. Commissioner of Income Tax, Bangalore and Another Vs. M/s. Soft brands India P. Ltd. (2018 (6) TMI 1327 - KARNATAKA HIGH COURT) has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable - No substantial question of law - Appeal dismissed.

Summary

Issues:
1. Appeal by Revenue challenging Income Tax Appellate Tribunal's order.
2. Substantial question of law regarding the appropriate transfer pricing method.
3. Interpretation of previous Tribunal orders.
4. Application of Section 260-A of the Income Tax Act.
5. Dismissal of Revenue's appeal due to lack of substantial question of law.

Analysis:

1. The Revenue filed an appeal challenging the Order of the Income Tax Appellate Tribunal regarding the transfer pricing method for the Assessment Year 2010-11.

2. The main substantial question of law raised by the Revenue was whether the Tribunal was correct in directing the Transfer Pricing Officer to adopt the resale price method over the transaction net margin method without considering the nexus with the business activity of the assessee company.

3. The Tribunal found that the assessee was distributing consumer durables imported from its associated enterprise abroad. The Transfer Pricing Officer rejected the resale price method and opted for the transaction net margin method. However, the Dispute Resolution Panel held that the resale price method was appropriate for analyzing the international transactions. The Tribunal remitted the issue back to the Assessing Officer for evaluation based on the resale price method.

4. Referring to a recent judgment, the Court emphasized that unless there is an ex-facie perversity in the Tribunal's findings, an appeal under Section 260-A of the Income Tax Act is not maintainable. The Court clarified that issues related to comparables and arriving at the correct arm's length price do not constitute substantial questions of law. The Court dismissed the Revenue's appeal, stating that dissatisfaction with the Tribunal's factual findings is not sufficient to invoke Section 260-A.

5. After hearing the counsel for both parties, the Court concluded that no substantial question of law arose in the case. Consequently, the Revenue's appeal was dismissed without costs.

This detailed analysis covers the issues raised in the judgment, including the Tribunal's decision on the transfer pricing method, the interpretation of previous orders, and the application of relevant provisions of the Income Tax Act leading to the dismissal of the Revenue's appeal.