IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 11TH DAY OF FEBRUARY, 2020 BEFORE HON BLE MR. JUSTICE KRISHNA S.DIXIT WRIT PETITION NO.17125 OF 2018 (T-IT) BETWEEN: M/S. WIPRO GE HEALTHCARE PVT LTD., NO.4, KADUGODI INDUSTRIAL AREA, WHITEFIELD, BANGALORE-560067. REPRESENTED BY ITS AUTHORIZED SIGNATORY SHRI KEDAR KULKARNI. ... PETITIONER (BY SMT. S R ANURADHA, ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(2), BENGALURU 560 001. 2. GOVERNMENT OF INDIA, MINISTRY OF FINANCE, INCOME TAX DEPARTMENT, 7TH FLOOR, INCOME TAX OFFICE, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU -560 001. REP BY ITS SECRETARY. ... RESPONDENTS (BY SRI. K V ARAVIND, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH ORDER DATED 12.03.2018 FOR A/Y 2009-10 PASSED BY R-1 VIDE ANNEX-A. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN B GROUP, THIS DAY, COURT MADE FOLLOWING: 2 ORDER Petitioner being Corporate Assessee is knocking at doors of Writ Court for assailing Assessment Order dated 12.03.2018, made by first respondent at Annexure-A for Assessment Year 2009-10 whereupon demand for payment of tax so assessed, has been raised. 2. After service of notice, respondents having entered appearance through their Panel Counsel resist writ petition making submission in justification of impugned order; it is also submitted that petitioner has got alternate remedy of appeal and therefore, it should be relegated thereto. 3. Having heard learned counsel for parties and having perused petition papers, this Court grants reprieve to petitioner for following reasons: a) return of income filed by petitioner for Assessment Year 2009-10 was selected for scrutiny by issue of Notice under Section 143(2) of Income Tax Act, 1961; since value of international transactions of petitioner exceeded prescribed limit, reference was made to TPO for determining arm s length price of subject international 3 transactions entered with associated enterprises of petitioner; TPO passed order u/s 92CA on 29.01.2013 determining ALP adjustment that was added to returned Income along with allowance u/s 10A; accordingly, draft Assessment Order having been made on 04.03.2013 was objected to by petitioner; Dispute Resolution Panel issued directions u/s 144C (5) of Act on 10.10.2013 which resulted into Assessing Officer making final Assessment vide order dated 29.11.2013; b) Revenue went in appeal to Income Tax Appellate Tribunal which partly allowed appeal vide order dated 06.10.2017; paragraphs 7 & 8 of said order being relevant for adjudication read as under: 7. Being aggrieved, revenue is in appeal before us. Ground Nos.1,6 and 7 are general in nature and do not require any adjudication. Ground No.2 challenges direction of Hon ble DRP in directing AO to carry out working capital adjustment as per actual working without putting any artificial cap. TPO has put artificial limit on working capital adjustment. law is quite settled to extend that there should not be any artificial cap on working capital adjustment. benefit of working capital adjustment should be granted based on actual working as per methodology adopted for working out working capital adjustment. It requires to be ensured that same methodology is adopted in respect of both tested party as well as comparable entities. 4 Nothing is discernible from material on record on this aspect of issue. Therefore, we remit this issue back to file of AO/TPO to compute working capital adjustment on above lines grant adjustment without any cap. 8. Third ground of appeal challenges direction of Hon ble DRP to include FCS Software Solutions and Thinksoft Global Services Ltd., we find from record that TPO excluded these companies on ground that working capital adjustment in both cases was more than 4%. Though, this cannot be valid reason for exclusion of entities for purpose of comparability but there is no finding by TPO that these companies pass through all filters applied by TPO. Hence, we remand this issue back to file of TPO/AO to examine whether these two comparables pass through all filters applied by TPO if so to include same in list of comparable. c) reasoning contained in subject paragraphs of ITAT order makes it apparent that there was limited remand of matter for judicious consideration afresh and therefore, mandatory procedure prescribed u/s 144C of Act to extent of such remand ought to have been followed; there is force in contention of Assessee that ordinarily, remand results into reconsideration of matter regardless of its scope, and therefore, there ought to have been draft order to which Assessee would have responded; there may be exceptions to this general rule as rightly illustrated by Panel Counsel for Revenue is 5 true, but case of petitioner does not fit into that inasmuch as, remand order expects judicious determination by fresh look, certain fixed factors/parameters notwithstanding; there cannot be mechanical exercise in case of remand of this nature; d) contention vehemently advanced by Panel Counsel for Revenue that there is no scope for judicious determination after remand, is bit difficult to accept inasmuch as, remand order specifically directs Assessment Officer to carryout Working Capital adjustment disregarding artificial cap; this apart, ITAT has directed re-examination as to whether two comparables ie., FCS Software Solutions and Thinksoft Global Services Limited pass through all filters applied by TPO; this can not be done mechanically; thus, there is remand which warrants judicious determination of matter remanded; e) impugned order dated 12.03.2018 has been structured on wrong legal premise that there is no need for judicious determination of matter as per procedure prescribed u/s 144C(1) of Act, when it is otherwise, as 6 already discussed in paragraphs supra; this apart, what prejudice would have been caused to Revenue had mandatory procedure prescribed under this provision was otherwise adhered to, is not forthcoming; procedure prescribed is intended to meet out fair treatment to Assessee; even this aspect has not been adverted to by answering respondent; thus, there is error of great magnitude warranting indulgence of Writ Court for setting same right; and, f) contention of Revenue that petitioner has got alternate remedy of appeal and therefore, it should be relegated thereto does not much impress this Court; argument of alternate remedy does not bar writ jurisdiction of Court when impugned order has demonstrable error of law on it s face resulting into prejudice to Assessee; nothing is stated as to how Revenue would be affected by invocation of writ jurisdiction by Assessee when full opportunity is given to both sides; added to this, what difference appeal would have made to matter is also not forthcoming. 7 In above circumstances, this writ petition is allowed; Writ of Certiorari issues quashing impugned order and consequential demands; matter is remitted to first respondent for consideration afresh, in accordance with law after hearing petitioner or its agent. All contentions of parties are kept open. No costs. Sd/- JUDGE Bsv Wipro GE Healthcare Pvt. Ltd. v. Deputy Commissioner of Income-tax, Circle-7(1)(2), Bengaluru / Government of India Ministry of Finance, Income Tax Department