TMI Blog2020 (8) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ia (P) Ltd [ 2020 (6) TMI 629 - ITAT KOLKATA] and there is no change in facts and law and the Revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench. PCIT issued the above show cause notice u/s 263 in respect of specified domestic transactions referred to in clause (i) of section 92BA of the Act which was omitted with effect from 01.04.2017, and effect of such omission of clause (i) of section 92BA means that this provision never existed in the statute book, since clause (i) of section 92BA never existed in the statute book therefore, ld PCIT cannot exercise his jurisdiction under section 263 of the Act in respect of specified domestic transactions referred to in clause (i) of section 92BA of the Act. Therefore, the action of the Assessing Officer cannot be held to be erroneous as well as prejudicial to the interest of the revenue - Decided in favour of assessee - ITA No.228/Gau/2019 - - - Dated:- 31-7-2020 - Shri A. T. Varkey, JM And Dr. A.L. Saini, AM For the Appellant : Shri J.P. Gupta, FCA For the Respondent : Shri T. Hunar, JCIT, Sr. DR ORDER PER DR. A. L. SAINI: The captioned appeal filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result the order passed by the assessing officer dated 30.08.2016, under section 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. If this is the solitary grievance of the assessee, then, first of all, it would be necessary for us to examine meaning of omission and its consequences in respect to the provisions of clause (i) of section 92BA of the Act. The Clause (i) of section 92BA of the Act is reproduced below: Section 92BA: Meaning of specified domestic transaction For the purposes of this section and sections 92, 92C, 92D and 92E, specified domestic transaction in case of an assessee means any of the following transactions, not being an international transaction, namely:- (i).Omitted by Finance Act, 2017, w.e.f. 1-4-2017*. *Prior to omission, clause (i) of section 92BA, as originally enacted, read as under: (i) any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A. Clause (i) of section 92BA of the Act, inter alia provides that any expenditure in respect of which payment has been made by assessees to certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT issued the above show cause notice u/s 263 in respect of specified domestic transactions referred to in clause (i) of section 92BA of the Act which was omitted with effect from 01.04.2017, and effect of such omission of clause (i) of section 92BA means that this provision was never existed in the statute book, since clause (i) of section 92BA was never existed in the statute book therefore, ld PCIT cannot exercise his jurisdiction under section 263 of the Act in respect of specified domestic transactions referred to in clause (i) of section 92BA of the Act. In other words, since the clause (i) of section 92BA was omitted with effect from 01.04.2017 by the Finance Act 2017. Therefore, in the Act, clause (i) of section 92BA stood omitted from the Act as if it was never in the statute book. Therefore, omission means the above provisions was not in existence or never existed in the statute book. To support this, we find useful guidance from the judgment of the Hon`ble Supreme Court in the case of Rayala Corporation (P) Ltd (1970 AIR 494) wherein the Hon`ble Supreme Court has defined the terminology omission and Repeal and distinguished these terminologies also. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Council, was convicted for contravention of Regulation 2A of the Defence (General) Regulations framed under the Emergency Powers (Defence) Act, 1939 as applied to British subjects abroad by s. 3 (1 )(b) of the said Act. It was held that, at the date when the acts, which were the subject matter of the charge, were committed, the regulation in question was in force, so that, if the appellant had been prosecuted immediately afterwards, the validity of his conviction could not be open to any challenge at all. But the Act of 1939 was a temporary Act, and after various extensions it expired on February 24, 1945. The trial of the accused took place only in May 1946, and he was Convicted and sentenced to four years penal servitude on May 28. In these circumstances, the question raised in the appeal was: Is a man entitled to be acquitted when he is proved to have broken a Defence Regulation at a time when that regulation was in operation, because his trial and conviction take place after the regulation expired ? The Privy Council took notice of sub- s. (3) of section 11 of the Emergency Powers (Defence) Act, 1939 which laid down that the expiry of this Act shall not affect the operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that rule. The last case relied upon is 1. K. Gas Plant Manufacturing Co., (Rampur) Ltd. and Others v. The King Emperor(2). In that case, the Federal Court had to deal with the effect of sub-s. (4) of section 1 of the Defence of India Act, 1939 and the Ordinance No. XII of 1946 which were also considered by the Allahabad High Court in the case of Seth Jugmendar Das Ors.(2). After quoting the amended sub-s. (4) of s. 1 of the Defence of India Act, the Court held :- The express insertion of these saving clauses was no doubt due to a belated realisation that the provisions of s. 6 of the General Clauses Act (X of 1897) apply only to repealed statutes and not to expiring statutes, and that the general rule in regard to the expiration of a temporary statute is that unless it contains some special provision to the contrary, after a temporary Act has expired, no proceedings can be taken upon it and it ceases to have any further effect . Therefore, offences committed against temporary Acts must be prosecuted and punished before the Act expires and as soon as the Act expires any proceedings which are being taken against a person will ipso facto terminate. The Court cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons under s. 561A of the Code of Criminal Procedure and should have quashed the proceedings on this complaint. Consequently, as already directed by our short order dated 2nd May, 1969, the appeals are allowed, the order of the High Court rejecting the applications under s. 561A of the Code of Criminal Procedure is set aside, and the proceedings for the prosecution of the appellants are quashed. After going through the judgment of the Hon`ble Supreme Court in the case of Rayala Corporation (P) Ltd (supra), we note that the provisions of section 6 of the General Clauses Act (X of 1897) apply only to repealed statutes and not to omitted statutes, unless it contains some special provision to the contrary. Therefore, any penalty/prosecution under clause(i) of section 92BA may be punished before its omission that is, before 01.04.2017 and as soon as the Act omits any proceedings which are being taken against a person will ipso facto terminate. Argument advanced by Shri Vijay Shankar, (CIT-DR) , on behalf of the Revenue was that the prosecution/penalty in respect of clause (i) of section 92BA of the Act, was in force in assessment year 2014-15, and therefore it is val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the General Clauses Act. When the term Central Act or Regulation or Rule is used in that Act reference has to be made to definition of that term in the statute. It is not possible nor permissible to give a meaning to any of the terms different from the definition. It is manifest that each term has a distinct and separate meaning attributed to it for the purpose of the Act. Therefore, when the question to be considered is whether a particular provision of the Act applies in a case then the clear and unambiguous language of that provision has to be given its true meaning and import. The Full Bench has equated a `rule' with `statute'. In our considered view this is impermissible in view of the specific provisions in the Act. When the legislature by clear and unambiguous language has extended the provision of section 6 to cases of repeal of a `Central Act' or `Regulation', it is not possible to apply the provision to a case of repeal of a `Rule'. The position will not be different even if the rule has been framed by virtue of the power vested under an enactment; it remains a `rule' and takes its colour from the definition of the term in the Act (G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er which the rule has been framed in that case also the pending proceeding will not be affected by omission of the rule. In the absence of any such provision in the statute or in the rule the pending proceedings would lapse on the rule under which the notice was issued or proceeding was initiated being deleted/omitted. It is relevant to note here that in the present case the question of divesting the Revenue of a vested right does not arise since no order directing refund of the amount had been passed on the date when Rule 10 was omitted. We, therefore, hold that the decisions of the Full Bench of the Gujarat High court and the Division Bench of the Karnataka High Court noted above were not correctly decided. The said decisions are overruled. We, therefore, hold that the decisions of the Full Bench of the Gujarat High court and the Division Bench of the Karnataka High Court noted above were not correctly decided. The said decisions are overruled. In the case in hand Rule 10 or Rule 10-A is neither a Central Act nor a Regulation as defined in the Act. It may be a Rule under Section 3(51) of the Act. Section 6 is applicable where any Central Act or Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstituted by section ll-A of the Act. From the contents of the provisions in the Rules it is clear that it did not contain any saving clause for continuance of the proceeding initiated under the rule which was deleted/omitted. There is also no provision in Section 11-A or in any other Section of the Act saving the proceedings initiated under the deleted/omitted provision. The consequential position that follows is that the proceeding lapsed after 6th August 1977 and any order passed in the proceeding thereafter is to be treated as non-est. In case the notice was issued after Section 11-A was introduced in the Act, the proceeding will continue and will not be affected by this decision. All the cases are disposed of on the terms aforesaid. No costs. From the above judgment it is abundantly clear that if a provision of a statute is unconditionally omitted without a saving Clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in Section 6 or in special Acts may modify the position. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are on three counts. i. First grievance is that clause (i) of section 92BA has been repealed and not omitted. Effect of such Repeal means the clause (i) of section 92BA was in existence till 01.04.2017 and it was removed by the Finance Act, 2017. In the assessee`s case under consideration, ld PCIT has exercised his jurisdiction under section 263 of the Act, for the assessment year 2014-15. In the assessment year 2014-15, the clause (i) of section 92BA was in force therefore, the exercise of the jurisdiction under section 263 of the Act during the currency of the Act is very much valid. ii. Second grievance is that ld DR relied on the following two judgments of Hon`ble Supreme Court, namely: (1) M/s. Shree Bhagwati Steel Rolling Mills vs. C.I.T. Excise Others - 2015(326) ELT 209(S.C.) and (2) M/s. Fibre Boards 62 Taxmann.com 135 (S.C.) and contended that these two judgments interpret the matter in favour of the Revenue. iii. Third grievance is thatthe judgments of Hon`ble Supreme Court, which were relied by the assessee in its favour, in the case of Kolhapur Canesugar Works Ltd. V Union of India (2002) 2 SCC 536 and in Royala Corporation P. Ltd. V Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards case is therefore clearly delivered by this Court for the public good, being, at the very least a reasonably possible view. Also, no aspect of the question at hand has remained unnoticed. For this reason also we decline to accept Shri Aggarwals persuasive plea to reconsider the judgment in Fibre Boards case. This being the case, it is clear that on point one the present appeal would have to be dismissed as being concluded by the decision in the Fibre Boards case. .. 43. We are in broad agreement with the Karnataka High Court view as it is clear that the load capacity of an induction furnace unit is certainly relevant material referred to in Rule 3(2) to determine the capacity of the furnace installed. It is obvious that it is not necessary to state such load capacity in terms for it to be included in Rule 3(2). Agreeing therefore with the Karnataka High Courts view we set aside the judgment of the Punjab and Haryana High Court and declare that a Chartered Engineer Certificate dealing with the sanctioned electrical load for a furnace is a relevant consideration which can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reproduced below for ready reference: 18. On a reading of Section 24 together with what has been stated by this Court above, it becomes difficult to accept Shri Arijit Prasad s contention that Section 24 would only apply to notifications which themselves gave rights to persons like the appellant. Unlike Section 6 of the General Clauses Act, which saves certain rights, Section 24 merely continues notifications, orders, schemes, rules etc. that are made under a Central Act which is repealed and re-enacted with or without modification. The idea of Section 24 of the General Clauses Act is, as its marginal note shows, to continue uninterrupted subordinate legislation that may be made under a Central Act that is repealed and reenacted with or without modification. It being clear in the present case that Section 280ZA which was repealed by omission and re-enacted with modification in section 54G, the notification declaring Thane to be an urban area dated 22.9.1967 would continue under and for the purposes of Section 54G. It is clear, therefore, that the impugned judgment in not referring to section 24 of the General Clauses Act at all has thus fallen into error. 19. But then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 6 itself would apply only to a repeal not to an omission . This statement of law was followed by another Constitution Bench in the Kolhapur Canesugar Works Ltd . case. After setting out paragraph 17 of the earlier judgment, the second constitution bench judgment states as follows: 33. In para 21 of the judgment the Full Bench has noted the decision of a Constitution Bench of this Court in Chief Inspector of Mines v. Karam Chand Thapar [AIR 1961 SC 838] and has relied upon the principles laid down therein. The Full Bench overlooked the position that that was a case under Section 24 of the General Clauses Act which makes provision for continuation of orders, notification, scheme, rule, form or bye-law, issued under the repealed Act or regulation under an Act after its repeal and re-enactment. In that case Section 6 did not come up for consideration. Therefore the ratio of that case is not applicable to the present case. With respect we agree with the principles laid down by the Constitution Bench in RayalaCorpn. Case [(1969) 2 SCC 412 : (1970) 1 SCR 639]. In our considered view the ratio of the said decision squarely applies to the case on hand. 23. The Kolhapur Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 697 and 698) 26. In view of what has been stated hereinabove, perhaps the appropriate course in the present case would have been to refer the aforesaid judgment to a larger bench. But we do not find the need to do so in view of what is stated by us hereinbelow. 27. First and foremost, it will be noticed that two reasons were given in Rayala Corporation (P) Ltd. for distinguishing the Madhya Pradesh High Court judgment. Ordinarily, both reasons would form the ratio decidendi for the said decision and both reasons would be binding upon us. But we find that once it is held that Section 6 of the General Clauses Act would itself not apply to a rule which is subordinate legislation as it applies only to a Central Act or Regulation, it would be wholly unnecessary to state that on a construction of the word repeal in Section 6 of the General Clauses Act, omissions made by the legislature would not be included. Assume, on the other hand, that the Constitution Bench had given two reasons for the non-applicability of Section 6 of the General Clauses Act. In such a situation, obviously both reasons would be ratio decidendi and would be binding upon a subsequent bench. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of U.P. Anr. v. Synthetics and Chemicals Ltd. Anr., (1991) 3 SCR 64, where a Division Bench of this Court held that one particular conclusion of a Bench of seven Judges was per incuriam see: the discussion at pages 80, 81 and 91 of the said judgment. .Now, if the legislative intent to supersede the earlier law is the basis upon which the doctrine of implied repeal is founded could there be any incongruity in attributing to the later legislation the same intent which Section 6 presumes where the word repeal' is expressly used. So far as statutory construction is concerned, it is one of the cardinal principles of the law that there is no distinction or difference between an express provision and a provision which is necessarily implied, for it is only the form that differs in the two cases and there is no difference in intention or in substance. A repeal may be brought about by repugnant legislation, without even any reference to the Act intended to be repealed, for once legislative competence to effect a repeal is posited, it matters little whether this is done expressly or inferentially or by the enactment of repugnant legislation. If such is the basis upon whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute expires, the statute expires of its own force without being obliterated by a subsequent legislative enactment. But even in this area, if a temporary statute is in fact repealed at a point of time earlier than its expiry, it has been held that Section 6 of the General Clauses Act would apply. See: State of Punjab v. Mohar Singh, (1955) 1 SCR 893 at page 898. 34. In CIT v. Venkateswara Hatcheries (P) Ltd., (1999) 3 SCC 632, this Court was faced with an omission and re-enactment of two Sections of the Income Tax Act. This Court found that Section 24 of the General Clauses Act would apply to such omission and re-enactment. The Court has stated as follows: As noticed earlier, the omission of Section 2(27) and re-enactment of Section 80-JJ was done simultaneously. It is a very well-recognized rule of interpretation of statutes that where a provision of an Act is omitted by an Act and the said Act simultaneously re-enacts a new provision which substantially covers the field occupied by the repealed provision with certain modification, in that event such re-enactment is regarded having force continuously and the modification or changes are treated as amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed if the capital gains arising on transfer of any of assets of existing industrial unit is utilized within one year or three years after the date on which the transfer took place for purchase of new machinery or plant for the purposes of the business of the industrial undertaking in the area to which the said undertaking is shifted. The Legislature consciously has not used the expression towards the purchase of plant and machinery as in Section 54(4) of the Act in contrast to Section 54(2) of the Act wherein the words towards is used before the word purchase . The expression purchased used in sub-clause (a) of section 54G of the Act requires to be understood as the domain and control given to the assessee. In the present case, it is not in dispute that the assessee has paid advance amount for acquisition of land, plant, building and machinery, etc., within the time stipulated in the Section, but it is not the case of the assessee that after such payment of advance amount, it has taken possession of land and building, plant and machinery. In our view, if the argument of the learned Senior Counsel for the assessee is accepted, it would defeat the very purpose and object of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-enactment with modification in Section 54G of the Income Tax Act, therefore, section 24 of the General Clauses Act would apply. Therefore, Hon`ble Supreme Court held that on omission of Section 280ZA of the Act and its re-enactment with modification in Section 54G of the Act, section 24 of the General Clauses Act would apply, and the notification of 1967, declaring Thane to be an urban area, would be continued under and for the purposes of Section 54A of the Act. Whereas in the assessee`s case under consideration clause (i) of section 92BA was omitted with effect from 01.04.2017 and there is no reenactment with modification in other sections of the Income tax Act, therefore, in the assessee`s case under consideration it would be treated that clause (i) of section 92BA was never existed in the statute book. It is a very well-recognized rule of interpretation of statutes that where a provision of an Act is omitted by an Act and the said Act simultaneously reenacts a new provision which substantially covers the field occupied by the repealed provision with certain modification, in that event such re-enactment is regarded having force continuously and the modification or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s. Shree Bhagwati Steel Rolling Mills vs. C.I.T. Excise Others - 2015(326) ELT 209(S.C.), and M/s. Fibre Boards 62 Taxmann.com 135 (S.C.). Therefore, contention of ld DR that these judgments were overruled is not tenable. 20. We are of the view that at this juncture it is necessary to examine, the meaning of saving clause? As Per the law.Com Law Dictionary Black's Law Dictionary 2nd Ed, the saving clause has been defined as follows: A saving clause in a statute is an exception of a special thing out of the general things mentioned in the statute; it is ordinarily a restriction in a repealing act which is intended to save rights pending proceedings penalties etc. from the annihilation which would result from an unrestricted repeal. In contracts it is a clause that states that ambiguities should not render a contract void or voidable but the contract should be enforced in all other respects provided it can still exist as a valid and binding agreement. Thus, the Saving clause means a clause which denotes a reservation or exception. As per Find Law Legal dictionary, saving clause means a clause in a statute exempting something from statute s operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inate Bench is reproduced below: 8. We find that the above view of the Ld. Pr. CIT is not correct. In view of the aforesaid discussion, moreover, the coordinate bench has also examined the issue in the case of Texport Overseas Pvt. Ltd. in IT(TP)A No.1722/Bang/2017. Admittedly, in this case, the order has been revised purely on the basis that the assessing officer has not referred to determine the arm s length price to the TPO. Since the provision itself stood omitted at the time when the order was passed by the Ld. Pr. CIT, under these undisputed facts in the light of the Judgement of the Hon'ble Supreme Court rendered in the case of General Finance Company (supra) as well as the order of the coordinate bench rendered in the case of Texport Overseas Pvt. Ltd. (supra), the impugned order cannot be sustained, hence is hereby quashed. The order impugned is thus quashed and the grounds raised in the appeal are allowed. 22. To conclude: If a provision of a statute is unconditionally omitted without a saving Clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as prejudicial to the interest of the revenue, in the facts and circumstances as narrated above. Thus, the usurpation of jurisdiction of exercising revisional jurisdiction by the Principal CIT is null in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 of the Act by the Principal CIT. Therefore, we quash the order of the Principal CIT dated 08.03.2019 being ab initio void. 5. We note that in respect of specified domestic transactions which is referred to clause (i) of section 92BA of the Act, which was omitted with effect from 01.04.2017 and the effect of such omission of clause (i) of section 92BA means that this provision never existed in the statute book, hence reference to TPO was bad in law. As the issue is squarely covered in favour of the assessee by the decision of Coordinate Bench in the case of M/s Raipur Steel Casting India (P) Ltd. (supra), and there is no change in facts and law and the Revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench. Therefore, respectfully following the decision of Co-ordinate Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
