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Mere Dissatisfaction with the Findings of Tribunal not a ground for appeal before the High Court: Karnataka High Court [Read Judgment]

Imposition - Karnataka High Court - ITAT - Taxscan

The Karnataka High Court in the case of Pr. Commissioner of Income Tax v. M/s. Softbrands India P. Ltd. has held that the lower revenue authorities cannot be allowed to make it their prestige issue, if their stand is not upheld by the Tribunal and agitate against their Orders before the higher Courts by resort to Section 260-A or Section 261 of the Income Tax Act merely because they are dissatisfied with the findings of facts by the Tribunal.

The present appeal is filed by the Revenue under Section 260-A of the Income Tax Act with the issue of determining that whether the Tribunal is right in rejecting comparables Kals Information systems Ltd., Tata Elxi Ltd., M/s. Accel Information Systems Ltd., M/s Bodhtree Consulting (K, T, A and B) after the decision of the Transfer Pricing Officer (TPO) who had chosen the same after application of mind and materials on record. The second issue pertained to whether the Tribunal was justified in fixing the RPT at 15% of total revenue.

Preliminarily, the parties argued on the issue as to whether the questions really come up to the level of definition of ‘substantial questions of law’.

With regard to the treatment of companies as comparables, the Hon’ble Court referred to the decision of Tribunal which had adjudicated the matter on merits. It had held that the estimate of the fair value which the Indian Company has paid or has received from the Associate Enterprise, the said exercise is a function of the TPO who has in compliance made the analysis from the data available in public domain. The Court after referring to the portions quoted held that it is apparent that individual cases of such comparables have been considered, analyzed and discussed by the Tribunal and hence that the appeals under Section 260-A cannot be entertained.

The division bench comprising of Justice Vineet Kothari and Justice S. Sujatha held that the questions arisen in the present matter does not amount to substantial questions of law under Section 260-A of the Income Tax Act or under Section 100 of the Code of Civil Procedure.

The Court frowning upon such appeals held that the Orders passed by the Tribunal should normally put an end and quietus to the findings of facts and factual aspects of assessment. The lower revenue authorities cannot be allowed to make it their prestige issue, if their stand is not upheld by the Tribunal and agitate against their Orders before the higher Courts by resort to Section 260-A or Section 261 of the Act merely because they are dissatisfied with the findings of facts by the Tribunal.

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