| 2018-TII-INSTANT-ALL-537 | 05 March 2018 |
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CASE LAWS GOOGLE INDIA PVT LTD Vs DCIT: KARNATAKA HIGH COURT (Dated: March 1, 2018) Income tax - constitution of Special Bench - overriding powers - transfer of appeals - vacation of stay The Assessee company is engaged in the business of global outsourced information technology and IT enabled services. During the relevant year, the Assessee had preferred W.P.Nos.52358-52359/2017 for being aggrieved of the order as 2017-TII-199-ITAT-BANG-INTL as passed by ITAT Bengaluru Bench, in the Stay Petition bearing No.229/Bang/2017 in ITA No.1190/Bang/2014 pertaining to A.Y 2013-14, wherein the Tribunal had vacated the stay earlier granted to the assessee. The Single Judge of this Court, after examining the subject matter and the contentions urged, considered it proper to direct the Tribunal to dispose of the pending appeal in an expeditious manner and also made interim arrangements in the balance of equities. However, after the issuance of such directions, the Assessee made a request to the President of the Tribunal to constitute a Special Bench to hear its appeals and, thereafter, made another request to the President of the Tribunal to transfer its appeals to a Bench outside Bengaluru while also alleging a so-called hostile approach of the Members of the Bengaluru Bench of the Tribunal. The Assessee was however informed that the President of the Tribunal had rejected its request for constitution of Special Bench. Thereafter, under the administrative orders of the President of the Tribunal, various appeals of the assessee, including ITA No.1190/Bang/2014 - 2015-TII-108-ITAT-BANG-INTL, were listed before a Touring Bench of the Tribunal at Bengaluru, but the same were adjourned at the request of the Department. At such stage, as the time for disposal of appeal envisaged in the order - 2017-TII-67-HC-KAR-INTL was expiring, the Assessee requested the Single Judge for extension of time. In the meantime, the President of the Tribunal also rejected the request of Assessee for transfer of its appeals outside the Bengaluru Bench. Thereafter, the W.P.Nos.52358-52359/2017 - 2017-TII-67-HC-KAR-INTL was taken up for consideration and the Single Judge directed the ITAT Bengaluru Bench, to hear and dispose of the appeals by its Members in an expeditious manner. Therefore, the Assessee challenged the order of Singe Judge by arguing that he had practically confined the matter to be heard only by the Members of the Bengaluru Bench of the Tribunal and neither there was any occasion nor any justification for such directions by the Single Judge. On intra appeal, the HC held that, Whether a mere extension granted by Writ Court for disposal of appeals, after taking note of the fact that prayer for transfer of appeals outside the State was rejected by President of the Tribunal, cannot be construed to mean that Writ Court has passed any order overriding the powers of the President to constitute appropriate Bench - YES: HC + it is seen that background aspects of the matter make it clear that after the Tribunal vacated the interim order and the assessee approached this Court, the Single Judge found no justification to keep the writ petitions pending and considered it proper to issue directions to the Tribunal to dispose of the appeals expeditiously, and also issued directions for retention of certain amount in the bank account by the assessee over and above the amount already deposited. It appears that after the said order, the assessee came out with different requests for constitution of Special Bench and then for transfer of the appeals from Bengaluru Bench. The request for constitution of Special Bench was declined and the prayer for transfer of the matters was also rejected by a specific and considered order passed by the President. It appears that, while such requests of assessee were pending, the President considered it proper to provide for a Touring Bench at Bengaluru, whose sitting was earlier proposed from Jan 29, 2018 to Feb 02, 2018, but then was restricted only to Jan 29, 2018. The matters were adjourned on Jan 29, 2018 and, thereafter, the prayer for extension of time was considered by Single Judge. Before such consideration, the prayer for transfer was rejected by the President on Feb 20, 2018. In the given set of facts and circumstances, the Single Judge found it proper to extend the time for disposal of the appeal/s by the Members of the Bengaluru Bench of the Tribunal; + the observations occurring in the decisions relied upon by Assessee's counsel and the principles available therein are neither of any doubt nor of debate. However, this Court is unable to agree that the Single Judge has at all passed any order overriding the powers of the President. In fact, the Single Judge passed the order impugned only after taking note of the fact that the President had rejected the prayer of the assessee for transfer of the appeals outside Bengaluru. In the given set of facts and circumstances, this Court is unable to take any exception against the impugned order as passed by the Single Judge but, of course, deem it appropriate to observe that the said order cannot be construed to mean that the powers of the President to constitute appropriate Bench for hearing and disposal of the appeals has been dealt with by the Court; and obviously, it goes without saying that the President has the powers to constitute appropriate Bench/Benches for consideration of the appeal/s in accordance with law. Assessee's appeal dismissed
CIT Vs CUMMINS TURBO TECHNOLOGIES LTD: BOMBAY HIGH COURT (Dated: February 28, 2018) Income tax - ALP - broad classification - exclusion of comparable - functional dissimilarity - ITES segment The Assessee is a company incorporated in United Kingdom and is engaged in the business of manufacturing and selling of turbochargers. During the relevant A.Y, the assessee had earned taxable income in the form of royalty from Cummins India as well as IT enabled services from its Indian branch. For the purposes of arriving at the ALP of the services rendered by it, the Revenue placed reliance upon M/s. Maple E-Solutions Ltd. as a comparable. The Tribunal however on examination of the activities carried out by the assessee and the activities carried out by M/s. Maple E-Solutions Ltd., found that they were functionally different and, therefore held that they could not be used as a comparable in arriving at ALP. On appeal, the HC held that, Whether a call centre service provider can be compared to those rendering IT enabled services, in presence of huge functional differences between the two - NO: HC + the Tribunal has opined that merely because the call centre business is also understood broadly as an IT enabled services, would not by itself lead the assessee and M/s. Mapple E-Solutions Ltd. to become a comparable, looking at the functional difference between the two. This view taken by the Tribunal on the facts is a reasonable and possible view. Further, it is found that the impugned order of the Tribunal has placed reliance upon the decision of the Delhi Bench of the Tribunal in the case of ITO Vs. CRM Services India (P) Ltd - 2011-TII-86-ITAT-DEL-TP and a decision of Hyderabad branch of the Tribunal in M/s. Capital IQ Information Systems (India) Pvt. Ltd. Vs. DCIT - 2012-TII-148-ITAT-HYD-TP, wherein the Tribunal has discarded M/s. Maple E-Solutions Ltd. as a comparable. This for the reason that M/s. Maple E-Solutions Ltd. was found involved in frauds resulting in the financial results declared by it, being unreliable. The impugned order of the Tribunal placed reliance upon the said decisions and concluded because of the unreliability of the data of M/s. Maple E-Solutions Ltd., it could not be used as a comparable to determine the ALP of the respondent assessee's services. This view of the Tribunal has not been shown to be perverse in any manner. Revenue's appeal dismissed
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