Case Note & Summary
The Revenue (Commissioner of Income Tax and Assistant Commissioner of Income Tax) filed appeals under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (ITAT), 'C' Bench, Bangalore, dated 30.09.2013 in ITA Nos. 283/Bang/2012 and 267/Bang/2012. The appeals pertained to the assessment years 2007-08 and 2008-09. The assessee, M/s Hewlett-Packard Globalsoft Pvt. Ltd., had paid a non-compete fee to its associated enterprise (AE). The Assessing Officer (AO) made a transfer pricing adjustment under Section 92 of the Act, holding that the non-compete fee was not at arm's length. The Commissioner of Income Tax (Appeals) and the ITAT deleted the addition. The Revenue contended that the ITAT erred in deleting the addition and that the comparables used by the assessee were not appropriate. The High Court examined the orders of the authorities below and found that the ITAT had correctly appreciated the facts, including the selection of comparables and the application of the arm's length principle. The court held that the findings of the ITAT were based on evidence and were not perverse. Consequently, no substantial question of law arose, and the appeals were dismissed.
Headnote
A) Income Tax - Transfer Pricing - Non-Compete Fee - Section 92, Income Tax Act, 1961 - Rule 10B, Income Tax Rules, 1962 - The Revenue challenged the ITAT order deleting the addition made by the AO on account of non-compete fee paid to an associated enterprise, alleging that the fee was not at arm's length. The court held that the ITAT had correctly appreciated the facts and the comparables, and no substantial question of law arose. (Paras 1-5) B) Income Tax - Substantial Question of Law - Section 260A, Income Tax Act, 1961 - The court reiterated that findings of fact by the Tribunal, unless perverse or based on no evidence, do not give rise to a substantial question of law. The Revenue failed to demonstrate any perversity in the Tribunal's order. (Paras 4-5)
Issue of Consideration
Whether the Income Tax Appellate Tribunal was correct in deleting the transfer pricing adjustment made by the Assessing Officer in respect of non-compete fee paid by the assessee to its associated enterprise, and whether the Tribunal's findings give rise to a substantial question of law.
Final Decision
Appeals dismissed. No substantial question of law. ITAT order confirmed.
Law Points
- Transfer pricing adjustment
- Arm's length price
- Non-compete fee
- Associated enterprise
- Section 92 of Income Tax Act
- 1961
- Rule 10B of Income Tax Rules
- 1962
- Substantial question of law
