IN HIGH COURT OF KARNATAKA, BENGALURU DATED THIS 27TH DAY OF AUGUST 2018 PRESENT HON BLE DR.JUSTICE VINEET KOTHARI AND HON BLE MRS.JUSTICE S.SUJATHA I.T.A. No.886/2017 BETWEEN : 1. PR. COMMISSIONER OF INCOME TAX-6 BMTC COMPLEX KORMANGALA BANGALORE. 2. INCOME TAX OFFICER WARD-6(1)(1), BANGALORE. ...APPELLANTS (BY SRI. SANMATHI.E.I, ADV.) AND: M/S. SCANCAFE DIGITAL SOLUTIONS PVT. LTD., GROUND FLOOR, NELL RAO TOWERS, PLOT NO.118, ROAD NO.03 EPIP PHASE-1 WHITEFIELD MAIN ROAD BENGALURU - 560 066 PAN: AAKCS5398E. RESPONDENT THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12.04.2017 PASSED IN IT(TP)A NO.502/BANG/2015, FOR Date of Judgment 27-08-2018, ITA No.886/2017 Pr. Commissioner of Income Tax-6 & Another Vs. M/s. Scancafe Digital Solutions Pvt. Ltd., 2/8 ASSESSMENT YEAR 2010-2011 VIDE ANNEXURE - PRAYING TO DECIDE FOREGOING QUESTION OF LAW AND /OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY HON BLE COURT AS DEEMED FIT AND SET ASIDE APPELLATE ORDER DATED:12.04.2017 PASSED BY INCOME TAX APPELLATE TRIBUNAL, B BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO. IT(TP)A NO.502/BANG/2015 FOR ASSESSMENT YEAR 2010-11 VIDE ANNEXURE - A, AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN INTEREST OF JUSTICE. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, S. SUJATHA, J., DELIVERED FOLLOWING: JUDGMENT Mr. E.I. Sanmathi, Adv. for Appellants Revenue. This Appeal is filed by Revenue purportedly raising substantial questions of law arising from Order of Income Tax Appellate Tribunal, Bangalore Bench B , Bangalore, in IT[TP]A No.502/Bang/2015 dated 12.04.2017, relating to Assessment Year 2010-11. Date of Judgment 27-08-2018, ITA No.886/2017 Pr. Commissioner of Income Tax-6 & Another Vs. M/s. Scancafe Digital Solutions Pvt. Ltd., 3/8 2. substantial question of law framed by Revenue in Memorandum of Appeal is as under: Whether, on facts and in circumstances of case, Tribunal is right in law in excluding certain comparable on basis of functional dissimilarity by not acknowledging its own decision in Narus Network Pvt. Ltd., where it has held that comparable can t be excluded basis of functional different and when it satisfies all qualitative and quantitative filters applied by TPO. Tribunal has used narrower functionality filter than TPO, but has not tested other comparables against narrower functionality filter applied by it? 3. learned Tribunal, after discussing rival contentions of both Appellants-Revenue and Respondent-Assessee, has returned findings as under: Regarding Substantial Question of Law: 10. As regards exclusion of comparables, learned AR of assessee submitted that these companies had come up for consideration before co-ordinate bench of this Tribunal in Tesco Date of Judgment 27-08-2018, ITA No.886/2017 Pr. Commissioner of Income Tax-6 & Another Vs. M/s. Scancafe Digital Solutions Pvt. Ltd., 4/8 Hindustan Service Centre Pvt. Ltd. (IT(TP)A.569/Bang/2015 and 191/Bang/2015 wherein it was held as follows: xxxxxxxxxx 11. Further in case of M/s.Siemens Technology & Services Pvt. Ltd. vs. ACIT (IT(TP)A No.1601/Bang/2012 dated 16/12/2016, comparability of Accentia Technologies Ltd., Acropetal Tech. Ltd. (Seg.) E-Clerx Services Ltd., and Infosys BPO was considered by co- ordinate bench of this Tribunal. relevant para. is extracted below: xxxxxxxxxxxx 12. Learned DR has not brought any evidence on record controverting above submission. 13. Therefore, respectfully following decision of co- ordinate bench, we hold that above companies may be excluded for reasons given by Tribunal in aforesaid decision. 4. However, this Court in recent judgment in I.T.A. Nos.536/2015 c/w 537/2015 delivered on Date of Judgment 27-08-2018, ITA No.886/2017 Pr. Commissioner of Income Tax-6 & Another Vs. M/s. Scancafe Digital Solutions Pvt. Ltd., 5/8 25.06.2018 (Prl. Commissioner of Income Tax & Anr. v- M/s Softbrands India Pvt. Ltd.,) has held that in these type of cases, unless ex-facie perversity in findings of learned Income Tax Appellate Tribunal is established by appellant, appeal at instance of assessee or Revenue under Section 260-A of Act is not maintainable. relevant portion of said judgment is quoted below for ready reference: Conclusion: 55. substantial quantum of international trade and transactions depends upon fair and quick judicial dispensation in such cases. Had it been case of substantial question of interpretation of provisions of Double Taxation Avoidance Treaties (DTAA), interpretation of provisions of Income Tax Act or Overriding Effect of Treaties over Domestic Legislations or questions like Treaty Shopping, Base Erosion and Profit Shifting (BEPS), Transfer of Shares Date of Judgment 27-08-2018, ITA No.886/2017 Pr. Commissioner of Income Tax-6 & Another Vs. M/s. Scancafe Digital Solutions Pvt. Ltd., 6/8 in Tax Havens (like in case of Vodafone etc.), if based on relevant facts, such substantial questions of law could be raised before High Court under Section 260-A of Act, Courts could have embarked upon such exercise of framing and answering such substantial question of law. On other hand, appeals of present tenor as to whether comparables have been rightly picked up or not, Filters for arriving at correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. 56. We are therefore of considered opinion that present appeals filed by Revenue do not give rise to any substantial question of law and suggested substantial questions of law do not meet requirements of Section 260-A of Act and thus appeals filed by Revenue are found to be devoid of merit and same are liable to be dismissed. Date of Judgment 27-08-2018, ITA No.886/2017 Pr. Commissioner of Income Tax-6 & Another Vs. M/s. Scancafe Digital Solutions Pvt. Ltd., 7/8 57. We make it clear that same yardsticks and parameters will have to be applied, even if such appeals are filed by Assessees, because, there may be cases where Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at Arm s Length Price in case of assessees with which assessees may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with findings of facts arrived at by learned Tribunal is not at all sufficient reason to invoke Section 260-A of Act before this Court. 58. appeals filed by Revenue are therefore dismissed with no order as to costs. 5. Having heard learned counsel appearing for Appellants-Revenue, we are therefore of opinion that no substantial question of law arises in present case also. Appeal filed by Appellants- Date of Judgment 27-08-2018, ITA No.886/2017 Pr. Commissioner of Income Tax-6 & Another Vs. M/s. Scancafe Digital Solutions Pvt. Ltd., 8/8 Revenue is liable to be dismissed and it is dismissed accordingly. No costs. Copy of this Order be sent to Respondent- Assessee forthwith. Sd/- JUDGE Sd/- JUDGE PMR Pr. Commissioner of Income-tax-6, Bangalore / Income-tax Officer, ward-6(1)(1), Bangalore v. Scancafe Digital Solutions Pvt. Ltd