TMI Blog2018 (9) TMI 1977X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the TPO and DRP is also not sustainable in the eyes of law. Where this clause (i) is omitted from the statute since its inception, the AO ought have required to frame the assessment in normal course after making necessary enquiries of particular claim of expenditure in accordance with law. But this exercise could not have been done on account of provisions of section 92BA Clause (i) of the Act. Now when this clause (i) has been omitted from the statute by virtue of the aforesaid amendments, the AO is required to adjudicate the issue of claim of expenditures in accordance with law after affording opportunity of being heard to the assessee. We therefore set aside the orders of the AO and the DRP and restore the matter to the AO with the direction to readjudicate the issue of claim of expenditure incurred in respect of which payment has been made or is to be made to person referred to in clause (b) of sub section 2 of section 40A. Disallowance u/s 14A - HELD THAT:- The authorities have made disallowance having noted that the assessee did not have any exempted income. On this issue, it has been repeatedly held by the Tribunal, Hon ble Apex Court and the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble ITAT passed ' the Appellant's own case in IT(TP) A No. 1722/Bang/2017 dated 22.12.2017 for earlier assessment year 201314, wherein it was held that as section 92BA(i) being omitted by Finance Act 2017, the same has to be understood that it had never existed in the statute book. 4.2. As regards reference made under section 92CA (1): 4.2.1. Without prejudice to the above, the reference to the TPO under section 92CA (1) by the Learned Assessing Officer is in defiance to Instruction Nos. 15 of 2015 86 3 of 2016 and against the principles of natural justice is bad in law. 4.2.2. The Honourable DRP has failed to appreciate that as the reference under section 92CA (1) of the IT Act being bad 86 void-ab-initio, the draft Assessment Order passed by the Learned Assessing Officer is invalid rendering all the subsequent proceedings as bad. 4.2.3. The Honourable DRP has failed to appreciate that as the reference under section 92CA (1) being bad 86 void-ab-initio, the impugned Assessment Order passed by the Learned Assessing Officer is barred by limitation in terms of section 153 (1) of the IT Act. 4.3. As regards rejecting the information and document ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, the Learned DRP is not justified in upholding the action of the Learned TPO in selecting Biba Apparels Pvt Limited, as comparable company, since the financial statements of the said companies are not available in public domain. 4.4.8. Without prejudice to the above, the Learned DRP is not justified in upholding the action of TPO in selecting companies namely; Monarch Apparels Ltd., Page Industries Limited, SVG Fashions Ltd, and Jagannath Textiles Co. Ltd without carrying any FAR analysis and without carrying out any adjustment for eliminating the differences therein. 4.4.9. Without prejudice to the above, the Learned TPO and the Hon'ble DRP ought to have considered the profits before managerial remuneration for determining ALP. 4.4.10. Without prejudice to the above, the Learned DRP 8s TPO ought to have computed the ALP under Rule 10AB and after carrying out appropriate adjustment towards FAR. 4.4.11. Without prejudice to the above, the Hon'ble DRP has erred in stating that there is a tax arbitrage when the Appellant and all its directors are chargeable to tax at the same rate in so far as disallowed remuneration is concerned. 4.4.12. The Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing opportunity of being heard to the assessee. 3. The learned counsel for the assessee further filed a copy of the order of the Tribunal with a request that following the order of the Tribunal for earlier years, the matter may be restored back to the AO for readjudication of the issue. The learned DR did not dispute these facts. He, however, placed reliance upon the order of the CIT(A). 4. Having carefully examined the orders of lower authorities, we find that impugned issue is squarely covered by the order of the Tribunal in the assessee s own case for the assessment year 2013-14. The relevant observation of the Tribunal is extracted hereunder for the sake of reference: 7. Having carefully examined the orders of authorities below in the light of rival submissions and relevant provisions and various judicial pronouncements, we find that by virtue of the insertion of section 92BA on the statute as per clause (i), any expenditure in respect of which payment has been made or is to be made to person referred to in clause (b) of sub section 2 of section 40A exceeds the prescribed limit, it would be a specified domestic transaction for which AO is required to make a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held in different cases. Following the aforesaid judgments, the jurisdictional High Court has also expressed the same view in the case of CIT Vs. GE Thermometrics India Pvt. Ltd. The relevant observation of the jurisdictional High Court is extracted hereunder: 8. Admittedly, in the instant case, there is no saving clause or provision introduced by way of an amendment while omitting sub-section (9) of Section 10B. Therefore, once the aforesaid section is omitted from the statute book, the result is it had never been passed and be considered as a law that never exists and therefore, when the assessment orders were passed in 2006, the AO was not justified in taking note of a provision which was not in the statute book and denying benefit to the assessee. The whole object of such omission is to extend the benefit under Section 10B of the Act irrespective of the fact whether during the period to which they are entitled to the benefit, the ownership continues with the original assessee or it is transferred to another person. Benefit is to the undertaking and not to the person who is running the business. We do not see any merit in these appeals. The substantial qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes. 5. Since the impugned issue is squarely covered by the aforesaid order of the Tribunal, we set aside the order of the CIT(A) and restore the matter to the AO, following earlier order of the Tribunal. 6. The other ground relates to the disallowance made under section 14A of the Act. In this regard, our attention was invited to the fact that in the assessment order, AO has noted that assessee did not earn any exempted income and the said fact was again taken cognizance by the CIT(A). Despite having noted these facts, the lower authorities have made disallowances under section 14A of the Act. 7. During the course of hearing, the learned Counsel for the assessee has candidly admitted that assessee had some exempted income. But this aspect was never examined by the lower authorities. The authorities have made disallowance having noted that the assessee did not have any exempted income. On this issue, it has been repeatedly held by the Tribunal, Hon ble Apex Court and the High Court that wherever there is no exempted income, provisions of section 14A cannot be invoked. In the light of these facts, the finding of the lower authorities appears to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
