TMI Blog2023 (3) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly, we restore this issue to the file of the Assessing Officer with the direction to examine the same in terms of section 40A(2)(a) of the Act. TP adjustment in respect of international transactions entered with AE - Hon'ble Bombay High Court in the case of CIT Vs. Thyssen Krupp Industries Pvt. Ltd [ 2015 (12) TMI 1076 - BOMBAY HIGH COURT] has held that the transfer pricing adjustment is mandated in respect of international transaction entered with the related parties, meaning thereby, there is no requirement of making any adjustment in respect of transactions entered with unrelated parties. Accordingly, we direct the Assessing Officer/TPO to restrict the transfer pricing adjustment on the international transactions entered with AEs only. - I.T.A. No. 7950/Mum/2019 - - - Dated:- 28-11-2022 - Shri B.R. Baskaran (AM) Shri Rahul Chaudhary (JM) For the Assessee : Shri Jitendra Jain Ms. Aasifa Khan For the Department : Shri Samruddhi Dhananjay Hande ORDER Per B.R.Baskaran (AM) :- The assessee has filed this appeal challenging the assessment order passed by the Assessing Officer under section 143(3) read with section 144C(13) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified Domestic transactions entered with the related parties are required to be examined in terms of section 40A(2)(a) of the Act. Accordingly, he submitted that this issue may be restored to the file of the Assessing Officer for examining it afresh. 7. We have heard the parties on this issue and perused the record. We noticed that the effect of omission of clause (i) in section 92BA relating to the specified domestic transaction was examined by the Coordinate Bench in the case of Edelweiss Rural Corporate Services Limited (supra) and the Tribunal, by following the decision rendered by Hon'ble Karnataka High Court in the case of Texport Overseas Pvt. Ltd. (supra), held that the reference made to learned TPO under clause (i) to section 92BA is not valid and consequently transfer pricing adjustment made in respect of the Specified domestic transaction is liable to be deleted. For the sake of convenience, we extract below observations made by the Coordinate Bench in the above said case. 15. The next issue urged by the assessee relates to the transfer pricing adjustment made in respect of specified domestic transactions. The TPO had proposed transfer pricing adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (10) of section 80-IA; (v) any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sub- section (8) or sub-section (10) of section 80- IA are applicable; or (vi) any other transaction as may be prescribed, and where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of twenty crore rupees. Section 92(2), as amended provided that where in an international transaction or specified domestic transaction, two or more associated enterprises enter into a mutual agreement or arrangement for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises, the cost or expense allocated or apportioned to, or, as the case may be, contributed by, any such enterprise shall be determined having regard to the arm's length price of such benefit, service or facility, as the case may be.Section 92(2A) provided that any allowance for an expenditure or interest or allocation of any cost or expense or any income in relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SDT. On this issue, as rightly pointed out by the learned counsel for the assessee, the decision of the ITAT in the case of Textport Overseas Pvt.Ltd. (supra) has been confirmed by the Hon'ble Karnataka High Court in the very same case of Texport Overseas Pvt. Ltd in ITA No.392/2018 order dated 12.12.2019, with the following observations:- 5. Having heard learned Advocates appearing for parties and on perusal of records in general and order passed by tribunal in particular it is clearly noticeable that Clause (i) of Section 92BA of the Act came to be omitted w.e.f. 01.04,2019 by Finance Act, 2014. As to whether omission would save the acts is an issue which is no more res-intigra in the light of authoritative pronouneenient of Hon'ble Apex Court in the matter of KOBLAPUR CANESUGAR WORKS LTD. v. UNION OF INDIA reported in AIR 2000 SC 811 whereunder Apex Court has examined the effect of repeal of a statute visa-vis deletion/addition of a provision in an enactment and its effect thereof. The import of Section 6 of General Clauses Act has also been examined and it came to be held: 37. The position is well known that at common law, the normal effect of repealing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Supreme Court in Kolhapur Canesugar Works Ltd referred to herein supra which has been followed by Co-ordinate Bench of this Court in the matter of M/s.GE Thermometrias India Private Ltd., stated supra. As such we are of the considered view that first substantial question of law raised in the appeal by the revenue in respective appeal memorandum could not arise for consideration particularly when the said issue being no more res Integra. 16. Since the decision rendered by the Hon'ble High Court of Karnataka is binding on this bench of Tribunal sitting in Bengaluru, we follow the same. Accordingly, we hold that the reference to the TPO in respect of specified domestic transactions mentioned in clause (i) of sec.92BA is not valid, as the said provision has been omitted. Accordingly, we direct the AO to delete the addition relating to specified domestic transactions made u/s 92CA of the Act. 17. We however notice that the co-ordinate bench in the case of Textport Overseas (supra) has restored the matter to the file of the A.O. with the direction to examine the claim of expenditure in accordance with the provisions of section 40A(2) of the Act. Following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Accordingly, we restore this issue to the file of the Assessing Officer with the direction to examine the same in terms of section 40A(2)(a) of the Act. 9. The TPO had also made transfer pricing adjustment in respect of international transactions entered with AE. The learned AR submitted that the TPO has made the adjustment at entity level, i.e., on the transactions entered with non-AE also. By placing reliance on the decision rendered by Hon'ble Bombay High Court in the case of CIT Vs. Thyssen Krupp Industries Pvt. Ltd. (2016) 381 ITR 413, the learned AR submitted that the transfer pricing adjustment should be restricted to the international transactions entered with AEs only. 10. We have heard learned DR on this issue and perused the record. The Hon'ble Bombay High Court, in the above said case, has held that the transfer pricing adjustment is mandated in respect of international transaction entered with the related parties, meaning thereby, there is no requirement of making any adjustment in respect of transactions entered with unrelated parties. Accordingly, we direct the Assessing Officer/TPO to restrict the transfer pricing adjustment on the internatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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