TMI Blog2020 (7) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... by ld DR for the revenue in Pangea3 Legal Database System (P) Ltd Vs ITO [ 2017 (3) TMI 267 - ITAT MUMBAI] is not helpful to him as the quarter wise accounts for IFF is not available in the financial statements of this comparable. Even otherwise the decision of Jurisdictional High Court is having binding effect. Thus, considering the decision of the jurisdictional High Court, we affirm the order of ld. DRP for exclusion of IFF. In the result the ground No. 1 of revenue s appeal is dismissed. Comparability of UIL - During the TP proceedings the assessee vide its letter dated 29.10.2012 ask to TPO to include this comparable as the data of this company was not available at the time of search. TPO rejected the prayer of the assessee by taking view that FAR (functions performed asset employed and the risk assumed) analysis was not done, and that in previous year this comparable was not taken though this company was appearing the search process of the assessee. DRP directed to include this comparable on the ground that the activities of this comparable is similar to the assessee. We have seen that the ld DRP has considered the import contents of this comparables as well as Synthite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessing officer / TPO erred on facts and in law in not considering Ultra Industries Ltd. as part of comparable companies in terms of the directions in the order passed under section 144C(5) of the Act of the DRP. 1.4 That the assessing officer / TPO erred on fact and in law in not appreciating that the average operating profit margin of the comparable companies after considering directions of the DRP is worked out to 7.65 % as against the profit margin of the appellant at 4.015 and therefore, the Transfer Pricing adjustment, proposed by the TPO, was liable to be deleted. Without prejudice: 1.5 That the assessing officer / TPO erred on facts and in law in observing that no recognizable benefit is derived by the assessee from payment of royalty, technical fees and drawing and design fees, and hence, alternatively holding that the arm s length price of aforesaid payment was Nil. 1.6 That the assessing officer / TPO erred on facts and in law in not considering Allied Perfumes Ltd. as part of comparable companies. 1.7 The assessing officer / TPO erred on facts and in law in considering the following companies for the purpose of benchmarking the international tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh import component of the comparable and the assessee in the case of M/s Synthite Industries Ltd. . 3. Brief facts of the case are that the assessee-company is a corporate entity engaged in the business of manufacturing and marketing of industrial flavors, fragrances, and chemical specialties, filed its return of income for AY 2009-10 on 30.09.2009. The assessee while filing return of income reported international transaction with its associated enterprises (AE) and furnished report under Form 3CED. Consequent upon reporting of international transaction, the assessing officer (AO) made reference to the transfer pricing officer (TPO) for computation of arms length price (ALP) with regard the international transaction reported in Form-3CED. During the transfer pricing adjustment proceedings, the TPO identified international transactions of import of raw material of ₹ 83,32,29,182/- for its APL. The assessee benchmarked the said transaction by adopting Transaction Net Margin Method (TNMM). The assessee has shown its profit margin @ 4.29%. The assessee treated itself as a tested party. Operating profit / income was considered for profit level indicator (PLI). The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee s average 9.14% Average 4.51 5. The TPO also noted that the assessee made working adjustment at entity level and overall margin was used to justify its control transaction. The TPO made adjustment at pro-rata basis. The TPO worked out the adjustment of ₹ 10,11,43,000/- in the following manner; Particulars Amounts (₹ 000/-) Total operating income A 1973498 Total operating expenses -B 1894264 Operating profit C (A-B) 79234 NPM C/A as per books 4.01% International transaction of import of goods at book value 833229 International transaction of import of goods at ALP 732085 Adjustment under section 92 CA 101143 6. On receipt of order of TPO under section 92CA(3), the assessing officer added the adjustments suggested by TPO while passing draft assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us Mst Katiji and others [167 ITR 471 (SC)]. 9. On the other hand the learned Authorised Representative (ld. AR) of the assessee vehemently opposed the application for condonation of delay filed by revenue. The ld. AR for assessee submits that each and every day of delay must be explained by the revenue. The approach in filing application for condonation of delay is causal. The application is deserve to be dismissed. In support of his submissions the ld AR for the assessee relied on the copy of Rule -10 of Income tax (Appellate Tribunal) Rules, 1963, Income Tax Appellate Tribunal Guidelines dated 13.04.1970 and para 174 of Income Tax Appellate Tribunal Manual. 10. We have considered the submission of both the parties and gone through the contents of application for condonation of delay. We have deliberated on the Rule -10 of Income tax (Appellate Tribunal) Rules, 1963, Income Tax Appellate Tribunal Guidelines dated 13.04.1970 and para 174 of Income Tax Appellate Tribunal Manual. After considering the submission of ld. DR for the revenue that the delay in filing the appeal is not intentional or deliberate and the decision of Hon ble Apex Court in Land Acquisition Collector Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing officer filed the present appeal during the currency of the sub-section 253(2A) of the Act. And the appeal of the revenue cannot be treated as non-maintainable. The ld. DR further submits that the omission and repeal are broadly synonyms to each other. If the submissions of the AR for the assessee is taken for consideration that there is no saving clause to that effect while omitting such provisions, similarly there is no proviso or clause for abating the proceedings, which were initiated during the currency of the sub-section (2A) of section 253 of the Act. The ld. DR for the revenue submits that the case laws relied on behalf of assessee is not applicable on the facts of the present case. 13. We have heard the submissions of the learned authorised representative (ld AR) for the assessee and the learned Departmental Representative (ld. DR) for the revenue and deliberated on the case laws relied on behalf of the assessee. It is an admitted position that the assessee has neither filed Cross Objection for objecting the maintainability of the appeal filed by the revenue. However, the ld. AR for the assessee has raised legal objection, which goes to the root of amenab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as it is not inconsistent with the provisions reenacted, continue in force and be deemed to have been (made or) issued under the provisions so re-enacted, unless and until it is superseded by any (appointment, notification,) order, scheme, rule, form or bye-law, (made or) issued under the provisions so re-enacted (and when any (Central Act) or Regulation, which, by a notification under Section 5 or 5A of the Scheduled Districts Act, 1874, (14 of 1874) or any like law, has been extended to any local area, has, by a subsequent notification, been withdrawn form the re-extended to such area or any part thereof the provisions of such Act or Regulations shall be deemed to have been repealed and re-enacted in such area or part within the meaning of this Section). 14. A careful reading of section 6 of General Clauses Act (this Act) makes it clear that made after the commencement of General Clauses Act, any Central Act or Regulation repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not effect affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an existing statue. 18. The Hon ble Court in M/s. Shree Bhagwati Steel Rolling Mills (supra) in a later decision, while referring its order in Fibre Board Private Ltd (supra) held that omission would amount to repeal. On the argument of the contesting parties that the omitted provision being treated as it never existed as per section 6 of General clauses Act would not apply to allow the previous operation of the provisions is omitted or anything done or suffered thereunder. Nor may a legal proceeding in respect of any rights and liability acquired or incurred under the enactment so omitted. The Hon ble Apex Court took a view that in majority of the cases, this would cause great public mischief, and that the decision in Fibre Board case was therefore clearly delivered by their lordship for the public good, being, at the least reasonably possible view and that no aspect of the question at their hand was remained unnoticed in Fibre Board Case.( emphasis added by us ) 19. With the aforesaid legal back ground and with utmost regard to the decision of coordinate bench the coordinate bench relied by ld AR for the assessee in Texport Overseas (supra), we have noted that the benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obiter dicta as held by the Supreme Court in Fibre Boards. It is also held that the earlier decisions have not referred to Section 6A of the General clauses Act and they lose their binding effect on an application of the per incuriam principle, as held by the Supreme Court in the case of Fibre Boards Private Limited. Thus, in our view the decision rendered in Royala Corporation Pvt. Ltd lacks binding value for the reasons discussed by the Apex Court in Fibre Boards Pvt. Ltd, the decision rendered in the case of Kolhapur Cane Sugar Works Ltd as also in the case of General Finance Company following the decision in Royala Corporation Ltd, loses its binding value. 17. As we have already noted that the Hon'ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills again reiterated that repeal would include repeal by way of an express omission. The Supreme Court further held that the decision in Fibre Boards Private Limited clarifies the law in holding than an omission would amount to repeal. As a result, the provisions of Sec. 6 of the General Clauses Act would apply to allow the previous operation of the provision so omitted or anything duly done or suffered there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Enforcement (supra) and Kolhapur Canesugar Works Ltd Vs Union of India (supra). Considering the aforesaid legal position and the dates of various judgments of the Hon ble Apex Court, we are of the view that the ld. AR for the assessee has referred and relied on the decisions of General Finance Company Vs ACIT (supra) which have been declared as per-in curium by Hon ble Apex Court. 21. We are conscious of the facts that the latest law declared by Hon ble Apex Court in various cases (supra) was not confronted with the ld. AR for the assessee; however, it is always presumed that the law declared by the Court is in the knowledge of the legal practitioner. We instead of going in further discussions are of the view that in view of the decision of Hon ble Apex Court in Fibre Boards (P) Ltd (supra), the word repeal includes omission . Thus, we do not find any merit in the objection raised by the ld. AR for the assessee which we are rejecting, being without any merit and held that appeal filed by the revenue with in currency of the sub-section 2A of Section 253 of the Act, is valid. 22. Now, we shall advert to various grounds of the appeals filed by the parties. Ground No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is company may be restored to the file of TPO for extrapolating and to examine the comparability. In support of his submissions the ld DR relied on the decision of Mumbai Tribunal Pangea3 Legal Database System (P) Ltd Vs ITO [2017] 79 taxmann.com (Mum- Trib). On the ratio that if the financial data is available for all quarters and it is otherwise possible to determine the transaction as well as profitability during the corresponding period, then it would be suffice comparability criteria and relied on the decision of Pune Tribunal in Schlumberger India Technology Center (P) Ltd Vs DCIT [2018] taxmann.com 19 (Pune- Trib). 24. We have considered the submissions of the ld. representatives of the parties and have gone through the orders of the lower authorities. The TPO proposed to include IFF as a valid comparable company by taking view that the assessee while making TP research for comparable, rejected this company only on the ground of (RPT) related party transaction (table II page 2 of TPO order). On show cause the assessee vide its reply dated 29.10.2012 submitted that RPT is ₹ 36.98 Crore out of total transaction of ₹ 382 Crore. The TPO concluded that RPT is less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany was not available at the time of search. The TPO rejected the prayer of the assessee by taking view that FAR (functions performed asset employed and the risk assumed) analysis was not done, and that in previous year this comparable was not taken though this company was appearing the search process of the assessee. The ld DRP directed to include this comparable on the ground that the activities of this comparable is similar to the assessee. We have seen that the ld DRP has considered the import contents of this comparables as well as Synthite Industries and included solely on the basis of activities. The ld DR for the revenue have not brought any fact to our notice to differentiate the similarities in function, thus, we upheld the inclusion of this comparable by ld DRP. In the result the ground No. 3 of the appeal by revenue is rejected. 29. In the result the appeal of the revenue is dismissed. 30. Further considering the details furnished by the assessee in support f Ground No. 1.2 to 1.4 that in case the exclusion of IFF and inclusion of UIL is affirmed the average mean margins of final set of comparable as per the direction of DRP would be within the tolerance range o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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