Case Note & Summary
The Revenue filed appeals under Section 260A of the Income Tax Act, 1961, against a common order dated 08.11.2024 passed by the Income Tax Appellate Tribunal (ITAT), C Bench, Bangalore. The appeals pertained to the assessment years 2015-16 and 2016-17 for the respondent-assessee, M/s EYGBS (India) Pvt Ltd. The Revenue had made a transfer pricing adjustment by rejecting the comparable companies selected by the assessee and substituting its own. The ITAT deleted the adjustment, holding that the assessee's selection of comparables was appropriate and that the benchmarking analysis was correctly done. The Revenue contended that the ITAT erred in not considering that the comparables were functionally dissimilar. The High Court, after hearing the counsel for the Revenue, found that the ITAT had applied the correct legal principles and that the findings were based on facts. The court held that no substantial question of law arose, as the Revenue failed to demonstrate any perversity or error in the ITAT's reasoning. Consequently, the appeals were dismissed, and the delay of 46 days in filing was condoned.
Headnote
A) Income Tax - Transfer Pricing - Comparable Selection - Section 92C, Income Tax Act, 1961 - The Revenue challenged the ITAT's order deleting the transfer pricing adjustment, arguing that the comparable companies selected by the assessee were not functionally similar. The court held that the ITAT had correctly applied the functional analysis and that no substantial question of law arose, as the findings were based on facts and consistent with the arm's length principle. (Paras 1-5) B) Income Tax - Substantial Question of Law - Section 260A, Income Tax Act, 1961 - The court reiterated that an appeal under Section 260A lies only if a substantial question of law is involved. Since the ITAT's decision was based on factual appreciation and no perversity was shown, the appeal was dismissed. (Paras 2-5)
Issue of Consideration
Whether the Income Tax Appellate Tribunal (ITAT) was correct in deleting the transfer pricing adjustment made by the Revenue, and whether any substantial question of law arises from the impugned order.
Final Decision
The appeals are dismissed. The delay of 46 days in filing the appeals is condoned.
Law Points
- Transfer pricing adjustment
- comparable selection
- benchmarking analysis
- substantial question of law
- Section 92C Income Tax Act
- 1961
