TMI Blog2018 (8) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeal) No. 361 of 2018 - - - Dated:- 10-7-2018 - MS. INDIRA BANERJEE, CHIEF JUSTICE And THE HON'BLE MS.JUSTICE P.T.ASHA For Appellant : Mr.T.R.Senthil Kumar assisted by Ms.K.G.Usha Rani JUDGMENT ( Delivered by Ms.Indira Banerjee, Chief Justice ) This appeal is against a judgment and order dated 25th November, 2016 passed by the Income Tax Appellate Tribunal D Bench, Chennai, partly allowing the appeal of the respondent assessee being I.T.A.No.401/Mds/2016, in relation to the assessment year 2011-12 against an order dated 21st December, 2015 of the Assessing Officer under Section 143(3) of the Income Tax Act, 1961, hereinafter referred to as the said Act ). 2. The respondent assessee, which provides engineering services, filed its return for the assessment year 2011-12 disclosing the income of ₹ 3,31,83,584/- and ₹ 6,37,96,564/- under Section 115JB of the said Act. 3. As the respondent assessee had entered into an international transaction with its Associated Enterprises exceeding a value of ₹ 15.00 Crores, a reference was made to the Transfer Pricing Officer, hereinafter referred to as the TPO . 4. The international transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al profile of M/s.Stewarts Lloyds Ltd which warranted rejected of that comparable for the impugned assessment year. As per ld. Authorised Representative cost of raw material incurred by the said company was insignificantly small when compared to its total operating cost. Thus, according to him, without any rhyme or reason, M/s.Stewarts Lloyds Ltd was rejected as a proper comparable. 12. In any case, according to him, if M/s.Mahindra Consulting Engineers Ltd was considered as a proper comparable, then two new comparables suggested by the assessee during the course of proceeding before ld. TPO, namely M/s.Desein Private Limited and M/s.Blue Star Design Engineering Ltd. had also to be considered as good comparables. Ld. Authorised Representative submitted that these two companies were also providing engineering consultancy. Summarizing his arguments, ld. Authorised Representative submitted that M/s.Mahindra Consulting Engineers Ltd had to be excluded and M/s.Stewarts Lloyds Ltd had to be included in the list of comparables. As per the ld. Authorised Representative in the event M/s.Mahindra Consulting Engineers Ltd was considered as a good comparable, then M/s.Desein Priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 257,752,236 Percentage of total costs (A/B) 8.02 per cent We do find that material cost was not significant enough to come to a conclusion that the said company was having an independent manufacturing/production segment, requiring a segmental analysis. Therefore, we are of the opinion that M/s.Stewarts Lloyds Ltd was a good comparable. 18. As a result of the discussion in para 14 to 17 above, final list of comparables that are to be considered are Mahindra Consulting Engineers Ltd, M.N.Dastur Company (P) Ltd, Toyo Engineering India Ltd, Kirloskar Consultants Ltd and M/s.Stewarts Lloyds Ltd. Ld. TPO is directed to rework the PLI of the above comparables and recomputed the Arms Length Price adjustment if any necessary. Ordered accordingly. 9. Mr.T.R.Senthil Kumar, learned counsel appearing on behalf of the Revenue, strenuously argued that the cost of material consumption of M/s.Stewarts Lloyds India Limited as a percentage to its operating cost, which was only 8.02% was a relevant factor for rejection of M/s.Stewarts Lloyds India Limited as an acceptable comparable. Whether this factor w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (7) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908) relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. 12. An appeal lies under Section 260-A of the said Act, only when there is a substantial question of law. We find that there is no question of law involved in this appeal much less any substantial question of law. 13. In Sir Chunilal V. Mehta Sons Ltd. vs Century Spg. Mfg. Co. Ltd., reported in AIR 1962 SC 1314, the Supreme Court agreed with and approved a Full Bench Judgment of this Court in Rimmalapudi Subba Rao vs Noony Veeraju And Ors reported in AIR 1951 Mad 969 and laid down the principles for deciding when a question of law becomes a substantial question of law. 14. In Hero Vinoth Vs. Seshammal reported in (2006) 5 SCC 545, the Supreme Court followed Sir Chunilal V. Mehta Sons (supra) and other judgments and summarized the tests to find out whether a given set of questions of law were me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther a question of law raised in the case is substantial: (Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] , SCR pp. 557-58) The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law. 22. In Dy. Commr. v. Rama Krishna Narain [1954 SCR 506 : AIR 1953 SC 521] also it was held that a question of law of importance to the parties was a substantial question of law entitling the appellant to a certificate under (the then) Section 100 CPC. 23. To be substantial a question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch legal principle. In the second type of cases, the substantial question of law arises not because the law is still debatable, but because the decision rendered on a material question, violates the settled position of law . (iii) The general rule is that High Court will not interfere with the concurrent findings of the courts below. But it is not an absolute rule. Some of the well-recognised exceptions are where (i) the courts below have ignored material evidence or acted on no evidence; (ii) the courts have drawn wrong inferences from proved facts by applying the law erroneously; or (iii) the courts have wrongly cast the burden of proof. When we refer to decision based on no evidence , it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding. 16. In M.Janardhana Rao Vs. Joint Commissioner of Income Tax [2005] 273 ITR 50 (SC), the Supreme Court held that the principles contemplated under Section 100 of the Code of Civil Procedure would apply to Section 260-A of the IT Act too. 17. Right of appeal is not automatic. Right of appeal is con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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