ITA No.222 of 2014 -1- IN HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No.222 of 2014 Date of decision:09.03.2015 Commissioner of Income Tax, Faridabad ....Appellant Versus M/s Motorola Solutions India Pvt. Ltd. ......Respondent CORAM: HON'BLE MR.JUSTICE S.J.VAZIFDAR, ACTING CHIEF JUSTICE HON'BLE MR.JUSTICE G.S.SANDHAWALIA Present: Mr.Tajender K.Joshi, Advocate, for appellant. Mr.Himanshu Sinha, Advocate and Mr.Ashim Aggarwal, Advocate, for respondent. G.S.Sandhawalia J. present appeal, preferred by Revenue, has been filed under Section 260A of Income Tax Act, 1961 (for short, 'Act'), against order dated 21.06.2013, passed by Income Tax Appellate Tribunal, Bangalore Bench 'A' Bangalore in IT(TP)A No.1274/BANG/2008 dated 21.06.2013, for assessment year 2003-04. Revenue has claimed following question of law for determination by this Court: Whether, in view of first proviso to section 92C(2) of Income Tax Act, 1961, Tribunal was correct in holding that if some profit level indicators of comparable, out of set of comparables, is higher than profit level indicators of taxpayer, then transactions reported by taxpayer is at arm's length price as contemplated in section 92, 92C and other related provisions of said Act? Counsel for respondent-assessee, however, has raised preliminary objection as to jurisdiction of this Court on ground that 1 of 5 ::: Downloaded on - 01-01-2019 10:00:03 ::: ITA No.222 of 2014 -2- order has been passed by Tribunal at Bangalore and that original company which was assessed on 27.03.2006 was Motorola India Electronics Pvt. Ltd. company, thereafter, had been known as Motorola Solutions India Pvt. Ltd., which had filed appeal before Commissioner, Income Tax (Appeals)-IV, Bangalore, which had been partly allowed. Thereafter, appeal had been filed before Tribunal at Bangalore. company, in meantime, merged with Motorola India Pvt. Ltd. and name had been changed to Motorola Solutions India Pvt. Ltd., respondent herein. Tribunal had passed order on 21.06.2013, which is subject matter of challenge. Accordingly, it was contended that this Court would have no jurisdiction. Reliance was placed upon Division Bench judgment of this Court in Commissioner of Income Tax Vs. Motorola India Ltd. (2010) 326 ITR 156 to contend that situs of Assessing Officer (for short, 'AO') has to be seen and High Court which exercises territorial jurisdiction of such Officer would be jurisdictional High Court. On contrary, counsel for Revenue has placed reliance upon Division Bench judgment of Delhi High Court in Commissioner of Income Tax Vs. Aar Bee Industries (2013) 357 ITR 542, in which case, judgment in Motorola India Ltd. (supra) was also taken into consideration and discussed. It is, accordingly, submitted this Court would have jurisdiction since initial company had merged with Motorola Solutions India Pvt. Ltd. which had been assessed at Gurgaon. It is contended that merely because of fact that assessment had been made at Bangalore would not be relevant factor since AO has, now, been changed and therefore, situs of Tribunal would not be determining factor. After hearing counsel for parties, we are of view that argument raised by Revenue is not sustainable and objections raised by 2 of 5 ::: Downloaded on - 01-01-2019 10:00:03 ::: ITA No.222 of 2014 -3- respondent-assessee is liable to be upheld. As noticed above, in case of Motorola India Ltd. (supra), there was transfer order passed under Section 127 of Act, whereby records were transferred from Bangalore to Gurgaon and jurisdiction of respondent-assessee was transferred to this Court. It was held that assessee could not take advantage of transfer and situs of AO would give High Court territorial jurisdiction. Otherwise, it would lead to assessee avoiding inconvenient law, laid down by High Court concerned. relevant observations read as under: decision of High Courts are binding on subordinate Courts and authorities or Tribunals under its superintendence throughout territory in relation to which it exercises jurisdiction but it does not extend beyond its territorial jurisdiction. In other words, decision of one High Court is not binding precedent for another High Court or for Courts or Tribunals outside its territorial jurisdiction. doctrine of precedents and rule of binding efficacy of law laid down by High Court within its territorial jurisdiction, questions of law arising out of decision in reference, has to be determined by High Court which exercises territorial jurisdiction over situs of Assessing Officer and if it was otherwise then it would result in serious anomalies as assessee affected by assessment order at Bombay may invoke jurisdiction of Delhi High Court to take advantage of suitable decision taken by it. Thus, such assessee may avoid application of inconvenient law laid down by jurisdictional High Court of Bombay. On basis of aforementioned reasoning, Division Bench sustained objection that jurisdiction to entertain application under sub- section (1) and (2) of Section 256 of Act vested in High Court of Bombay and not of Delhi. We are in respectful agreement with aforementioned reasoning of Delhi High Court. Accordingly, we hold that preliminary objection raised by learned counsel for assessee-respondent is sustainable. xxxx xxxx xxxx conjoint reading of aforementioned provisions makes it evident that Director General or Chief Commissioner or Commissioner is empowered to transfer any case from one or more Assessing Officers subordinate to him to any other Assessing Officer. It also deals with procedure when case is 3 of 5 ::: Downloaded on - 01-01-2019 10:00:03 ::: ITA No.222 of 2014 -4- transferred from one Assessing Officer subordinate to Director General or Chief Commissioner or Commissioner to Assessing Officer who is not subordinate to same Director General, Chief Commissioner or Commissioner. aforementioned situation and definition of expression 'case' in relation to jurisdiction of Assessing Officer is quite understandable but it has got nothing to do with territorial jurisdiction of Tribunal or High Courts merely because Section 127 of Act dealing with transfer has been incorporated in same chapter. Therefore, argument raised is completely devoid of substance and we have no hesitation to reject same. In view of above, appeal is dismissed by sustaining preliminary objection that this Court has no territorial jurisdiction over order passed by Assessing Officer at Bangalore. Accordingly, these appeals are returned to revenue appellant for their filing before competent court of jurisdiction in accordance with law. said view was followed in ITA No.49 of 2012 titled Commissioner of Income Tax (Central) Gurgaon Vs. M/s Parabolic Drugs Ltd., decided on 11.10.2012, wherein also, assessee's case had been transferred from New Delhi to Central Circle, Chandigarh under Section 127 of Act. Tribunal's order was sought to be challenged in said appeal and this Court returned appeal for filing before competent Court of jurisdiction, keeping in view settled principles of this Court and binding precedent of Division Bench of this Court, as noticed above. Another ground which militates against Revenue is that merger with respondent-company is stated to have taken place on 01.04.2005 and AO's order was made on 27.03.2006. As per Section 170 of Act, predecessor is to be assessed in respect of income of previous year only in which succession took place upto date of succession and successor is to be assessed in respect of income of previous year, after date of succession. Relevant portion reads as under: 4 of 5 ::: Downloaded on - 01-01-2019 10:00:03 ::: ITA No.222 of 2014 -5- Succession to business otherwise than on death. 170. (1) Where person carrying on any business or profession (such person hereinafter in this section being referred to as predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as successor) who continues to carry on that business or profession, (a) predecessor shall be assessed in respect of income of previous year in which succession took place up to date of succession; (b) successor shall be assessed in respect of income of previous year after date of succession. Once assessment at Bangalore was of Motorola India Electronics Ltd. on 27.03.2006 for assessment year 2003-04, subsequent merger would not give right to assessing authorities who had jurisdiction over successor company and only AO of predecessor company would have jurisdiction, which was, admittedly, at Bangalore. submission that appeal is continuation of proceedings and subsequent appeals filed by Revenue, would give AO of successor company jurisdiction, cannot, thus, be accepted, in view of provisions of Section 170 of Act, also. Accordingly, present appeal, being not maintainable, is dismissed by holding that this Court has no territorial jurisdiction to adjudicate upon lis over order passed by AO at Bangalore. Consequently, appeal is returned to Revenue for filing before competent Court of jurisdiction, in accordance with law. (S.J.Vazifdar) (G.S.Sandhawalia) Acting Chief Justice Judge 09.03.2015 sailesh 5 of 5 ::: Downloaded on - 01-01-2019 10:00:03 ::: Commissioner of Income-tax, Faridabad v. Motorola Solutions India Pvt. Ltd