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TMI Blog2020 (6) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... any error in the said submission, was not justified in still passing the impugned revisionary order. 3.For that in absence of any transaction entered into during the year under consideration by the assessee whose ALP is required to be computed and consequently, reference to TPO could have been made, the impugned order of revision passed by the ld. PCIT is bad in law and unsustainable. 4. For that the assumption of jurisdiction by the ld. PCIT in the instant case on the date on which such jurisdiction was assumed being without satisfaction of pre-requisite twin conditions of the law, the same is bad in law and consequently, the impugned order passed in pursuance thereto is liable to be cancelled. 5. For that the ld. PCIT was not justified in interfering with the order of the ld. AO vide impugned revisionary order without finding that any of the four circumstances specified in clauses (a) to (d) of sub-section 3 of section 92Cof the Act existed in the instant case which in turn required the ld.AO to compute ALP. 6. For that the ld. PCIT was not justified in interfering with the order of the ld. AO vide impugned revisionary order without finding that the circumstances specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctionNo. 3/2016 dated 10.03.2016. 4. In response to the notice under section 263 of the Act, the assessee had submitted written submission before the ld PCIT. The written submission to the extent applicable for our discussion is reproduced below: " However, a reply dated 05.03.2019 was received through e-mail. In the said reply, the assessee has made long submissions, basically objecting to the proposed se-aside of the order on the ground that its related parry transactions are payments u/s 40A(2)(b) amounting to Rs. 43,39,38,536/- (not Rs. 51,08,99,031/-) as pointed out in the notice u/s 263, which relates to the subsequent AY 2015-16 and after the omission of clause (i) in the definition of specified domestic transactions by the Finance Act, 2017 the said provisions do not apply to transactions in the nature of payments u/s 40A(2)(b)". 5. However, ld PCIT rejected the contention of the assessee and held that the Assessment order passed u/s 143(3) dated 28.10.2016 is erroneous and prejudicial to the interest of Revenue therefore he set aside the assessment order and direct the AO to refer the transactions to ld TPO for determination of arm`s length price. 6. Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record. We note that assessee has raised multiple grounds of appeal to challenge the correctness of the order dated 08.03.2019 passed by the ld PCIT under section 263 of the Act but at the time of hearing the solitary grievance of the assessee has been confined to the issue that since clause (i) of section 92BA has been omitted by Finance Act, 2017, w.e.f. 01.04.2017 and the effect of such omission without any saving clause of General Clauses Act, means that the above provisions was not in existence or never existed in the statute, therefore, the jurisdiction exercised by the ld PCIT under section 263 of the Act is void and as a 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 sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de specified domestic transactions amounting to Rs. 34,82,67,956/- but the same was not referred to Transfer Pricing Officer by the Assessing officer after obtaining the approval of PCIT as per 92CA of the Act. In this view of the matter the benchmarking of the domestic transaction undertaken with the specified domestic parties for the purpose of determining the Arms Length Price was not done in this case. In the above conspectus, the order passed u/s. 143(3) on 30.08.2016 for A. Y. 2014-15 appears to be erroneous in so far as it is prejudicial to the interest of revenue." We note that ld 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 cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may also be made to a decision of a learned single Judge of the Allahabad High Court in Seth Jugmendar Das and Others v. State(2), where a similar view was taken when considering the effect of the repeal of the Defence of India Act, 1939, and the (1) [1951] S.C.R. 621. (2) A.I.R. 1951 All. 703. Ordinance No. XII of 1946 which had amended s. 1 (4) of that Act. On the other hand, Mr. Desai on behalf of the respondent relied on a decision of the Privy Council in Wicks v. Director of Public Prosecutions(1). In that case, the appellant, whose case came up before the Privy 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 tria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal of which section 6 of the General Clauses Act had been made applicable. In the case before us, s. 6 of the General Clauses Act cannot obviously apply on the omission of R. 132A of the D.I.Rs. for the two obvious reasons that s. 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule. If s. 6 of the General Clauses Act had been applied no doubt this complaint 'against the two accused for the offence punishable under R. 132A of the D.I.Rs. could have been instituted even after the repeal of 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 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e did not make any provision that an offence previously committed under R. 132A of the D.I.Rs. would continue to remain punishable as an offence of contravention of s. 4 ( 1 ) of the Act, nor was any provision made permitting operation of R. 132A itself so as to permit institution of prosecutions in respect of such offences. The consequence is that the present complaint is incompetent even in respect of the offence under R. 132A(4). This is the reason why we hold that this was an appropriate case where the High Court should have allowed the applications 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 "omit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere a rule is deleted or omitted by a notification and the question was answered in the negative. The Constitution Bench said that "Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule" (Page 656 of the S. C. Report). 30. The Full Bench appears to have lost sight of the position that all the relevant terms i.e. `Central Act', `Enactment' Regulation', and `Rule' are defined in Sub-section 3(7), 3(19), 3(50) and 3(51) respectively of 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 consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d view that in such a case the Court is to look to the provisions in the rule which has been introduced after omission of the previous rule to determine whether a pending proceeding will continue or lapse. If there is a provision therein that pending proceedings shall continue and be disposed of under the old rule as if the rule has not been deleted or omitted then such a proceeding will continue. If the case is covered by Section 6 of the General Clauses Act or there is a pari-materia provision in the statute under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 of 78 which introduced Section 11-A of the Central Excise Act, adopted the legal device of creating a fiction by virtue of which a proceeding under Rule 10 could be deemed to be a proceeding under section 11-A of the Act. If such was the position then it could be argued that the proceeding initiated when old Rule 10 was in force could be continued on the strength of the clause of the notification by which the said Rule was omitted and substituted by a new Rule which in turn was substituted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es incurred during the currency of the Act will not apply to omission of a provision in an Act but only to repeal, omission being different from repeal as held in the aforesaid decisions. In the IT Act, s. 276DD stood omitted from the Act but not repealed and hence, a prosecution could not have been launched or continued by invoking s. 6 of the General Clauses Act after its omission." 15. Now we shall address the main grievances of ld DR for the Revenue, which 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a legal proceeding in respect of any right or liability be instituted, continued or enforced in respect of rights and liabilities acquired or incurred under the enactment so omitted. In the vast majority of cases, this would cause great public mischief, and the decision of Fibre Boards 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 K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and liabilities acquired or incurred under the enactment so omitted. Therefore, considering the judgment of the Hon`ble Supreme Court in the case of M/s. Shree Bhagwati Steel Rolling Mills(supra), it can be said that since clause(i) of section 92BA was omitted w.e.f. 01.04.2017 therefore, it would be treated that said since clause(i) of section 92BA was never existed in the statute book. 18. Now, we shall take second judgment, in the case of M/s. Fibre Boards, 62Taxmann.com135(S.C.),relied on by the ld DR for the Revenue. The important part of the judgment is 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 cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. If Section 6 of the General Clauses Act had been applied, no doubt this complaint against the two accused for the offence punishable under Rule 132-A of the DIRs could have been instituted even after the repeal of that rule." 22. It will be clear from a reading of this paragraph that a Madhya Pradesh High Court judgment was distinguished by the Constitution Bench on two grounds. One being that Section 6 of the General Clauses Act does not apply to a rule but only applies to a Central Act or Regulation, and secondly, that Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration for omission of a provision results in abrogation or obliteration of that provision in the same way as it happens in repeal. The stress in these cases was on the question that a 'rule' not being a Central Act or Regulation, as defined in the General Clauses Act, omission or repeal of a 'rule' by another 'rule' does not attract section 6 of the Act and proceedings initiated under the omitted rule cannot continue unless the new rule contains a saving clause to that effect...."(At pages 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instances, whereby obvious inadvertence or oversight a judgment fails to notice a plain statutory provision or obligatory authority running counter to the reasoning and result reached, it may not have sway of binding precedents. It should be a glaring case, an obtrusive omission. No such situation presents itself here and we do not embark on the principle of judgment per incuriam." (At page 837) An interesting application of the said principle is contained in State 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 provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an enactment "shall be omitted)." 33. At this stage, it is important to note that a temporary statute does not attract the provision of Section 6 of the General Clauses Act only for the reason that the said statute expires by itself after the period for which it has been promulgated ends. In such cases, there is no repeal for the reason that the legislature has not applied its mind to a live statute and obliterated it. In all cases where a temporary 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n act as distinguished from acquisition by act of law. In the context in which the expression issued by the Legislature requires first to be understood and interpretation that suits the context requires to be adopted. Exemption of capital gains under Section 54G of the Act can be claimed on transfer of assets in cases of shifting of industrial undertaking from urban area to any other non-urban area. This exemption may be claimed 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on`ble Supreme Court has decided the issue in favour of assessee on different set of facts and not in favour of Revenue as contended by ld. Departmental Representative (DR). Therefore, we find that the aforesaid order of Hon'ble Supreme Court is not in favour of Revenue, as contended by ld. DR. The facts of the judgment in the case of M/s. Fibre Boards(supra) is that soon after "omission" of Section 280ZA there is 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 re-enactment 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 92 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench judgments for they do indeed say that in Section 6 of the General Clauses Act, the word "repeal" would not take within its ken an "omission". Therefore, the judgments of the Hon`ble Supreme Court in the case of Kolhapur Canesugar Works Ltd (supra) and in the case of Rayala Corporation P. Ltd (supra) were not overruled by the Hon`ble Supreme Court by its subsequent judgments in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or continued by invoking section 6 of the General Clauses Act after its omission. 21. We note that the Coordinate Bench of ITAT Indore in the case of Swastik Coal Corporation Pvt. Ltd, in ITA No. 486/Ind/2018, order dated 26.07.2019, has quashed the order of ld PCIT under section 263 of the Act, on the identical facts, as narrated above. The findings of the Coordinate 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, hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted 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, 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." 11.Therefore based on the above judgements of the Coordinate Benches,[ in the case of Swastik Coal Corporation Pvt Ltd and in the case of M/s Raipur Steel Casting India (p) Ltd-supra)] we hold that since clause (i) section 92A was omitted with effect from 1st April, 2017 and the effect of such omission is that the said clause(i) was never existed in the statute. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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