2015 (4) TMI 300 - HC - Income Tax

Jurisdiction of this Court to decide the case - TPA - selection of comparable - whether the Tribunal was correct in holding that if some profit level indicators of a comparable out of a set of comparables is higher than the profit level indicators of the taxpayer then the transactions reported by the taxpayer is at an arm s length price as contemplated in section 92 92C and other related provisions of the said Act? - Held that - Once the assessment at Bangalore was of Motorola India Electronics Ltd. on 27.03.2006 for the assessment year 2003-04 the subsequent merger would not give right to the assessing authorities who had jurisdiction over the successor company and only the AO of the predecessor company would have jurisdiction which was admittedly at Bangalore. The submission that the appeal is the continuation of the proceedings and the subsequent appeals filed by the Revenue would give the AO of the successor company jurisdiction cannot thus be accepted in view of the provisions of Section 170 of the Act also. Accordingly the present appeal being not maintainable is dismissed by holding that this Court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the AO at Bangalore. Consequently the appeal is returned to the Revenue for filing before the competent Court of jurisdiction in accordance with law. - Decided against revenue.

Summary

Issues involved:
Jurisdiction of High Court over order passed by Tribunal at Bangalore; Interpretation of Section 170 of the Income Tax Act, 1961.

Analysis:
1. Jurisdiction of High Court: The appeal raised the issue of jurisdiction of the High Court over an order passed by the Tribunal at Bangalore. The respondent-assessee contended that the High Court exercising territorial jurisdiction over the Assessing Officer (AO) would be the jurisdictional High Court. The Revenue argued that the change in the AO's situs due to the merger justified the High Court's jurisdiction. The High Court examined the arguments and referred to the Division Bench judgment in Commissioner of Income Tax Vs. Motorola India Ltd. to establish the territorial jurisdiction based on the situs of the AO. The Court held that the objections raised by the respondent-assessee were valid, dismissing the appeal and returning it to the Revenue for filing before the competent court of jurisdiction.

2. Interpretation of Section 170: Another issue raised was the interpretation of Section 170 of the Income Tax Act, 1961 concerning the succession to business. The merger with the respondent-company took place after the assessment of the predecessor company at Bangalore. The question arose whether the assessing authorities of the successor company had jurisdiction or only the AO of the predecessor company at Bangalore. The Court analyzed Section 170, which mandates assessment of the predecessor up to the date of succession and the successor after the date of succession. The Court concluded that the subsequent merger did not grant jurisdiction to the assessing authorities of the successor company, emphasizing the AO of the predecessor company's jurisdiction. Therefore, the appeal was dismissed on the grounds of lack of territorial jurisdiction.

In conclusion, the High Court's judgment clarified the principles governing territorial jurisdiction over income tax matters and the application of Section 170 in cases of business succession. The decision emphasized the importance of the situs of the Assessing Officer in determining the jurisdictional High Court and upheld the provisions of Section 170 regarding assessment of predecessor and successor companies.