9911796707
TMI Blog2022 (7) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... d Income Tax Department is void and as a result the order by assessing officer dt. 26.12.2017 u/s 143(3) of the Act is void ab initio wrong, illegal, bad in law as well as on facts. A/G-2. That because of such omission, the addition of Rs.6,19,14,682/- made by the AO in this case for the A.Y. 2014-15 as per T.P.O.'s order is invalid and bad in law, and as such the addition should be directed to be deleted." 3. The seven grounds of appeal taken by the revenue and four ground of appeals taken by the assessee revolve around these two additional grounds of appeals taken by the assessee. 4. In brief, the controversy in all these grounds, revolves around the issue whether Arm's Length Price (ALP) is required to be determined qua domestic transactions entered into by the assessee with its partner u/s 92BA(i) of the Act. 5. Brief facts of the case are that the assessee has filed its return of income on 26/11/2014 disclosing total income of Rs.1,13,79,250/-. The case was selected for scrutiny and notice u/s 143(2) of the Act was issued and served upon the assessee. The Assessing Officer found that there was large specified domestic transaction reflecting from Form 3CEB with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal has decided the appeals of three assessee's by way of a common order. In all these three appeals, the common issue involved relates to sustainability of ALP qua transactions enumerated in 92BA(i), which has been omitted by the Finance Act, 2017. The Tribunal after following the decision of the Co-ordinate Bench of ITAT Bangalore in the case of Texport Overseas Private Limited vs. DCIT; IT(TP)A No. 1722/Bang/2017 Assessment Year 2013-14, order dt. 22/12/2017, held that omission of the provision would mean that it has to be presumed with such clause was never there in the statute and all consequential proceedings including the ones pending at the time when the omission had taken place, have to be dropped. He further placed reliance on the order of the ITAT Ahmedabad Bench in the case of Amman India Pvt. Ltd. vs. ACIT in ITA No. 2262/Ahd/2018; Assessment Year 2014-15, order dt. 03/01/2022, copy of which is placed on record. Lastly he placed reliance on the order of the Co-ordinate Bench of ITAT Kolkata, in the case of M/s. Raipur Steel Casting India (P) Ltd. vs. PCIT-5, Kolkata in ITA No. 895/Kol/2019. Copy of all these decisions are placed on record. 9. The ld. CIT D/R, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting the jurisdiction of the Pr. C.I.T.-5, Kolkata in initiating proceedings u/s.263 on the ground that the reference to the TPO on the specified domestic transactions was not applicable to him since Section 92BA(i) was omitted by Finance Act, 2017 w.e.f. 01.04.2017. The assessee is relying on Section-6 of the General Clause Act, 1897(GCA 1897) to contend that an omission is not entailed in repeal, and upon omission, the provision results in obliteration from the very beginning. The appellant has relied on the decision of ITAT, Bangalore in the case of M/s. Texport Overseas (P) Ltd. vs. DCIT, A.Y. 2013-14, ITA No.IT(TP)A No.1722/Bang/2017, order dated 22.12.2017 for the proposition that since clause 92BA(i) was omitted w.e.f. 01.09.2017 it is to be treated as if it never existed in the statute and thus no adverse inference can be drawn against the appellant under the said provisions. Against this it is submitted that Section-6 of GCA, 1897 has to be read in consonance with Section-6A of GCA, 1897. The relevant portion of the GCA, 1897 is reproduced as under- "6. Effect of repeal- Where this Act, or any [Central Act} or Regulation made after the commencement of this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision pronounced on 04/09/2002. However, it may kindly be pointed out that the Hon'ble Bench of Bangalore Tribunal did not take into consideration the subsequent decision of the Apex Court constitutional bench on the same issue in the case of M/s. Shree Bhagwati Steel Rolling Mills (supra) and M/s. Fibre Boards (supra). The constitutional bench in the above cases, orders passed in 2015, have held that repeal, delete and omit can be used interchangeably and, therefore, section 6 of the General Clauses Act would also save provisions which have been omitted from the Act. Therefore, the proceedings initiated during the omission of provision will continue. It cannot be obliterated from the very beginning." 10. In brief his contentions was that if a provision repealed then, actions taken earlier will be protected by clause 6 & 6A of the General Clauses Act, 1897. Making reference to the decision of the Hon'ble Supreme Court in the case of M/s. Shree Bhagwati Steel Rolling Mills vs. CIT Excise & Others - 2015 (326) ELT 209 (S.C.), he contended that the Hon'ble Supreme Court in this judgment has observed that an omission is also one of the modes to repeal the provision. In other word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, 1961, as such the order so passed subsequent to limitation under section 144C(4) is without jurisdiction, illegal, bad in law and therefore be annulled. 4. That on the facts and circumstances of the case and in law, Ld. TPO/the Ld. AO/ and the Hon'ble DRP have erred on facts and in law in enhancing the income of the appellant by Rs. 13,52,49,494/-. " 4. The Ld. Counsel first of all brought to our notice that the aforesaid legal issue that has been raised is no longer res integra and has been adjudicated by Coordinate Bench of this Tribunal Bangalore Bench in the case of IT(TP)A No. 1722/Bang/2017 in Texport Overseas Private Limited Vs. DCIT for AY 2013-14 vide order dated 22.12.2017 and submitted that the matter may be remanded back to the AO with the direction given in the said order. We note that the legal issue raised by the assessee goes to the root of the matter and we note that the AO has made a reference u/s. 92 Ld. CIT(A) having observed that the assessee has entered into specified domestic transactions since this case was covered u/s. 92BA of the Act but later on there was an amendment in Sec. 92BA by Finance Act, 2019 w.e.f. 01.04.2017 whereby cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... never raised before the DRP nor were they raised in the original grounds of appeal. Therefore, it cannot be admitted. 3. The learned counsel for the assessee has further contended that AO has made a reference under section 92CA, having observed that the assessee has entered into specified domestic transaction as this case is covered under section 928A of the IT Act but later on there was amendment in section 92BA by the Finance Act, 2017 w.e.f. 01.04.2017 whereby clause (ii) of section 92BA relating to any expenditure in respect of which payment has been made or is to be made to a person referred to clause (b) of sub section 2 of section 40A was omitted and on account of its omission, the impugned transaction would not fall within the definition of specified domestic transaction. Therefore, it has become necessary for the assessee to raise this additional ground before the Tribunal. 4. The learned counsel for the assessee has further invited bur attention that provision of section 928A was brought on statute by the Finance Act, 2012 w.e.f. 01.04.2013 relevant to assessment year 2013-14. Therefore, it is the first year when the transactions are to be examined in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance was also placed upon the order of the Tribunal in lT(TP)A No. l 722/Bang/2017 Page 4 of7 the case of CIT Vs. GE Thermometrics India Pvt. Ltd., in ITA No. 876/2008 in which while dealing the omission sub- section (9) of Section 1 OB the Hon'ble High Court has held that once the 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, the AO was not justified in taking note of a provision which was not in the statute book and denying benefit to the assessee. Therefore, in the light of these judicial pronouncements, sub-section (i) of section 928A shall be deemed to be not on the statute since beginning. 6. The learned DR on the other-hand has contended that even if it is held that the clause (i) of section 928A relating to expenditures 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 of the Act is not on the statute since beginning in view of the amendment and in the light of various judicial pronouncements the reference made by AO to TPO is bad in law, the AO is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he absence of any such provisions in the statute or in the rule, the pending proceeding will lapse under rule under which the notice was issued or proceeding being omitted or deleted". 8. In the case of General Finance Co., Vs. ACIT, their Lordship Of the Apex Court has again examined the issue and held that the principle underlying section 6 as saving the right to initiate proceedings for liabilities 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 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 subsection (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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the Act. Accordingly, since we have restored the matter to the AO, we find no justification to deal with the other issues on merit. Accordingly, appeal of the assessee stand allowed for statistical purposes." 5. Respectfully following the aforesaid order of the Tribunal, we note that in the instant case, by the Finance Act, 2017, clause (i) of section 92BA has been omitted w.e.f. 01.04.2017. The legal effect of a provision being omitted by subsequent amendment, then it would be deemed that clause (i) was never been on the statute book. While omitting the clause (i) of section 92BA, we note that nothing was specified whether the proceeding initiated or action taken on this continue. Therefore, the proceeding initiated or action taken under that clause would not survive at all. In the light of this legal position, the cognizance taken by the AO under section 92BA(i) and refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of TP adjustment in the domestic transaction are deleted. 13. Consequently, the appeal of the revenue is dismissed whereas Ground Nos. 1 to 4 including the two additional grounds of the assessee are allowed. 14. In the assessee's appeal, there is one more ground wherein the assessee has pleaded that the Assessing Officer has not given TDS credit to the assessee. This ground was raised by the assessee before the ld. First Appellate Authority also as Ground No. 7. The assessee has pleaded that the ld. ACIT should have allowed proper credit of TDS. It was contended by the assessee that the Assessing Officer has erred in treating the TDS credit of Rs.30,48,824/- only in the assessment order instead of additional claim of TDS credit of Rs.1,22,317/- on mobilization advance claimed by the assessee during the course of assessment proceedings. The stand of the assessee was that the ITAT Kolkata Bench in the case of the assessee for Assessment Year 2013-14 had directed the Assessing Officer to allow the TDS credit on mobilization advance in previous years where corresponding income has been booked. However, the Assessing Officer has erred in not granting TDS credit of Rs.1,22,317/- dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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