HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR
I.T.T.A. No.433 OF 2014
DATED: 22.07.2014 Between:
The Commissioner of Income Tax-I, Hyderabad … Appellant And M/s.DE Shaw India Software Pvt. Ltd … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No.433 of 2014 JUDGMENT: (per the Hon’ble Sri Justice Sanjay Kumar) This appeal under Section 260-A of the Income Tax Act, 1961 is sought to be preferred by the Revenue aggrieved by the order dated 27.11.2013 passed by the Income-Tax Appellate Tribunal, Hyderabad Bench “A”, Hyderabad, in relation to the assessment year 2007-08 on the following suggested substantial questions of law.
1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in rejecting Companies on the ground of exceptionally large scale of operations, without appreciating the fact that high or low turnover does not influence the margins of the comparables and the ratio of the decision of the coordinate bench of Mumbai in the case of Symentic Software P. Ltd?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting companies on the grounds of functional difference and that the TPO has not gone into the verticals/horizontals of the comparable companies, without appreciating that the tax payer itself has not considered the verticals and horizontals of the software sector while selecting the comparables and that the main search strategy of the tax payer as well as the TPO has been to identify the companies which are engaged in the software development services?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting companies on the ground of failing the RPT filter being more than 15%, without appreciating the fact that rationale of 25% threshold limit is in accordance with Section 92A(2)(a) of the Income-Tax Act, 1961?
4. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that communication expenses should be excluded both from export turnover as well as total turnover for the purpose of computing deduction under Section 10A, without appreciating that there is no provision in the Act to reduce the communication expenses from Total Turnover?
Perusal of the order under appeal reflects that insofar as question Nos.1 to 3 are concerned, the Tribunal followed the decision of a Co-ordinate Bench in M/s.Intoto Software India (P) Limited (ITA.No.1196/Hyd/2010). Learned Standing Counsel for the Revenue fairly states that the above order of the Tribunal has been confirmed by this Court. The issue therefore needs no further reconsideration. Insofar as the fourth question of law is concerned, the order under appeal reflects that the Tribunal merely followed the decision of the Karnataka High Court in CIT. v. Tata Elxsi Limited (349 ITR 90) which was also followed by the Tribunal in ITO v. Sak Soft Limited (313 ITR 353) (AT). Though the learned Standing Counsel states that an appeal has been preferred against the decision of the Karnataka High Court, it holds good till set aside. We are not persuaded to disagree with the reasoning of the Karnataka High Court in the above decision. We therefore find no reason to entertain this appeal as no question, much less a substantial question of law, is raised for consideration.
The appeal is accordingly dismissed. No order as to costs.
22nd JULY, 2014.
K.J. SENGUPTA, CJ SANJAY KUMAR, J
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