TMI Blog2023 (10) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... cussed in the case of PCIT vs. Texport Overseas (P) Ltd. [ 2019 (12) TMI 1312 - KARNATAKA HIGH COURT] relying upon the judgment of Kolhapur Canesugar Works Ltd vs. Union of India [ 2000 (2) TMI 823 - SUPREME COURT] have held that once the statute has omitted clause (i) of Section 92BA by the Finance Act, 2017, the resultant fact is that it had never been enacted and to be considered as a law and it never existed. DR referred to various judgments of the Apex Court including the judgment of Hon ble Supreme Court in the case of Shri Bhagwati Steel Rolling vs. Commissioner of Central Excise [ 2015 (11) TMI 1172 - SUPREME COURT] This exact issue has been dealt in detail in the case of Yorkn Tech Pvt. Ltd., [ 2021 (8) TMI 1374 - ITAT DELHI] that once a provision in the statute has been omitted without any saving clause in the Act, then, it is treated that if provisions does not exist when such provisions are challenged before the Court and the aforesaid decision of the Tribunal, the ratio and principle laid down by the Constitutional Bench as well as subsequently, judgments referred by the ld. DR has been discussed in detail, therefore, following the same ratio we hold that in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income tax Act, 1961 [ the Act ]. 1.2 While doing so, the Ld. CIT (A) failed to appreciate that the case of the Appellant did not fall within the said provision, as the said provision stood omitted. 1.3 It is submitted that in the facts and the circumstances of the case, and in law, the reference to the TPO and the consequential orders passed are bad, illegal and void. 2. NO SANCTION OF CIT 2.1 The Ld, CIT (A) erred in not adjudicating the issue that the reference of the TPO was without previous sanction of the Commissioner of Income-tax, in terms of the mandate of section 92CA of the Act. 2.2 It is submitted that in the facts and the circumstances of the case, and in law, the reference to the TPO and the consequential orders passed are bad, illegal and void. 4. Since in cross objection assessee has raised the validity of initiation of transfer pricing proceedings against the assessee with respect to its specified domestic transaction by invoking provision of Clause (i) of Section 92BA which has been omitted from the Act. 5. The brief facts are that assessee had filed its return of income on 28/09/2013 declaring income of Rs. 8,29,260/-. The said case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LP determined by the ld. TPO, the variation is less than 3% and therefore, as per second proviso to Section 92C(2), no adjustment was required. 7. Before us ld. DR has filed his detailed written submission wherein he has submitted that amendment to Section 92BA by the Finance Act, 2017 was brought w.e.f. 01/04/2017 whereby clause (i) has been omitted. According to him, legislature intended to omit the clause w.e.f. A.Y. 2017-18 onwards and this provision was existing in A.Y.2013-14 and the provision of Section 92BA was inserted by the Finance Bill 2012. He has also referred to clause(i) to the provision of Finance Bill 2017 wherein, he has categorically said that amendment will take effect from 01/04/2017 i.e. to apply in relation to A.Y.2017-18 and subsequent years. He has also referred to the Budget speech of Finance Minister and various transfer pricing regulations in respect of specified domestic transactions as introduced by the Finance Bill 2012. In his arguments he has placed reliance on the judgment of the Hon ble Supreme Court in Constitutional Bench of Supreme Court in the case of Rayala Corporation (P) Ltd. vs. Director of Enforcement, New Delhi (1969) 2 SCC 412, Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assesses in doing business with ease. It is humbly submitted, that as the intention to effect the repeal can be squarely attributed to the legislature then the same would attract the incident of saving found in section 6 of the General Clauses Act, 1897 The legislative practice in India shows that omission of the provision is treated as amendment, which signifies the 'deletion of the provision and is not different from 'repeal Reliance in this regard can be placed on the Apex court decision in Bhagat Ram Sharma vs Union of India AIR 1988 SC 740 p. 746 3. With regard to the words 'repeal' and 'omission' with respect to the apex court decisions referred in M/s Texport Overseas Private Limited [ITA 1722/Bang/2017] and other decisions mentioned in the table at para-14 above, it is to humbly submit as under 3.1 The words 'repeal substitute' and 'omission' have different tenor in a literal sense but tend to denote a similar meaning when used in the context of any amendment of law. While the words themselves may not cause a conflict, it is the consequences of the amendment on the rights and liabilities of the parties that have led to the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of repeal of a 'Central Act or 'regulation', It is not possible to apply the provision to a case of repeal of a 'rule'... Section 6 is applicable where any Central Act or Regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable in the case of omission of a rule (emphasis supplied) It is humbly submitted that this judgment neither deals with the distinction between the terms 'omission' and 'repeal, nor were any arguments regarding the same raised before the Bench. It simply deals with the applicability of Section 6 of the GC Act in context of the 'rules' and upholds Rayala Corporation judgment. But reading between the lines of Kolhapur Canesugar judgment, it can be said that it makes no distinction between repeal and omission. In para 37 of the judgment, the Court states that - 37. The position is well known that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute book as completely as if it had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engraft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two five-Judge Bench judgments of the Supreme Court and also refused to refer the matter to a larger Bench In fact, another judgment of the Supreme Court in Gammon India Ltd. v. Spl. Chief Secretary [(2006) 3 SCC 354] while dealing with repeal and implied repeal echoed the reasoning that when the intention of legislature is to repeal, the use of words will not make any difference in resorting to Section 6 of the GC Act. The Court held that Where an intention to effect a repeal is attributed to a legislature then the same would attract the incident of saving found in Section 6. 3.6 It is to humbly submit that the matter was however finally dealt in length in a two-Judge Bench judgment of Fibre Boards (P) Ltd, Bangalore v. Commissioner of Income Tax, Bangalore [(2015) 10 SCC 333], where the Court stated that the view in Rayala Corporation needs a reconsideration, for omission of a provision results in abrogation or obliteration of that provision in the same way as it happens in repeal The Court discussed the two terms and concluded that it is clear that repeals may take any form and so long as a statute or part of it is obliterated, such obliteration would be covered by the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench judgments by routing through the principle of per incuriam It is to humbly state that these judgments finally clarify that practically there exists no difference between the two terms viz 'repeal omission A plain reading of these words - repeal, omission and substitute, will convey more or less the same meaning - that, it is a form of amendment The Supreme Court in Bhagat Ram Sharma v Union of India [(1988) Supp SCC 30] echoed the same view and held that It is a matter of legislative practice to provide while enacting an amending law, that an existing provision shall be deleted and a new provision substituted. Such deletion has the effect of repeal of the existing provision. There is no real distinction between 'repeal' and an 'amendment. [(1988) Supp SCC 30 at p 40, para 17] Similarly, in the case of the word 'substitute', the Supreme court in Ramkanali Colliery of BCCL v. Workmen by Secy, Rashtriya Colliery Mazdoor Sangh [(2001) 4 SCC 236], the Supreme Court held that If there is both repeal and introduction of another provision in place thereof by a single exercise, the expression substituted is used. Such deletion has the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the relevant finding given in the impugned order as well as judgments which have been relied upon by the parties. It is an undisputed fact that the reference to the ld. TPO with respect to specified domestic transaction was made under clause (i) of Section 92BA which was brought in the statute by the Finance Act 2012, however, has been omitted from the statute of the Finance Act 2017 w.e.f. 01/04/2017. The case of the assessee is that once omission has been made without the said clause, it is deemed that the said clause was never part of the Act wherein as the case of the department is that the omission was brought by the amendment by the Finance Act 2017 w.e.f. 01/04/2017. Therefore, the reference at that point of time was valid. This issue has been discussed by the Hon ble Karnataka High Court in the case of PCIT vs. Texport Overseas (P) Ltd. wherein the Hon ble High Court relying upon the judgment of Hon ble Apex Court in the case of Kolhapur Canesugar Works Ltd vs. Union of India supra have held that once the statute has omitted clause (i) of Section 92BA by the Finance Act, 2017, the resultant fact is that it had never been enacted and to be considered as a law and it ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd (supra) clearly clinches the issue in favour of the assessee and will apply mutatis mutandis in the present appeal also. However, we deem fit to deal with the relevant law on this point. The amendment made in the Act which has the effect of omitting a clause from the statute has to be read in light with Section 6 of the General Clauses Act. As per section 6 of the General Clauses Act, if an amendment for omission has a provision therein that pending proceedings shall continue then such a proceeding will continue. However, in the absence of any such provision in the statue or in the rule, the pending proceeding will lapse. Section 6 and 6A of the General Clauses Act for sake of ready reference are reproduced herein below:- 6 Effect of repeal. Where this Act, or any [Central Act] or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout a saving clause in favour of pending proceedings, all actions must stop where the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in section 6 or in special Acts may modify the position. Thus the operation or repeal or deletion or to the future and the past largely depends on the savings applicable. In a case where a particular provision in a statute is omitted and in its place another provision dealing with the same contingency is introduced without a saving clause in favour of pending proceedings then it can be reasonable inferred that the intention of the legislature is that the pending proceedings shall not continue but fresh proceedings for the same purpose may be initiated under the new provision. 10. Thus, if a provision or statute is unconditionally omitted without any saving clause in favour of the pending proceedings, all actions must stop where such an omission is found, especially when action has been taken after the provision has been omitted. During the course of argument a reference was made to the judgment of Hon ble Supreme Court in the case of Fiber Boards (P) Ltd., Bangalore v. Commissiioner of Income Tax, Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 970 SCR (1) 639 and M.R. Pratap v. Director of Enforcement, New Delhi, (1969) 2 SCC 412 which was followed in Kolhapur Canesugar Works Ltd. Anr. v. Union of India Ors., (2000) 2 SCC 536 and argued that an omission would not amount to repeal and that since the present case was concerned with the omission of Section 280ZA, section 24 of general clauses act would have no application as it only applied to `repeals‟ and not omissions‟, and also that it saved rights that were given by subordinate legislation, and as the notification dated 22.9.1967 did not by itself confer any right on the appellant, section 24 of the General Clauses Act would not be attracted. 11.1 The Apex Court in the case of Fibre Boards (supra) was of the view that there is no need for the later enactment to state in express terms that an earlier enactment has been repealed by using any particular set of words or form of drafting but that if the legislative intent to supersede the earlier law is manifested by the enactment of provisions as to effect such supersession, then there is in law a repeal notwithstanding the absence of the word repeal‟ in the later statute. Repeals may take an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) and Kolhapur Canesugar Works Ltd. (supra)) and the absence of any reference to section 6A, therefore, again undoes the binding effect of these two judgments on an application of the per incuriam‟ principle. 12. Same view has been reiterated by the Hon ble Supreme Court in the case of Shree Bhagwati Steel Rolling v. Commissioner of Central Excise, (2016) 3 SCC 643. In this case, the appellant took a rolling mill on lease from 1997 to 2000 and manufactured rerolled non-alloyed steel products. On 1.9.1997 the compounded levy scheme was introduced by insertion of section 3A of the Central Excise Act. The appellant opted for the aforesaid scheme under Rule 96ZP of the Central Excise Rules. When the lease expired, the appellant surrendered its registration certificate on 1.6.2000. Section 3A was omitted in 2001. On 19.8.2005 notice was issued to the appellant demanding interest for delayed payment of central excise duty under section 3A of the Central Excise Act for the period 1997 to 2000. 12.1 The question framed before the Hon ble High Court was whether omission of the compounded levy scheme in 2001 wipes out the liability of the assessee for the period during which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that there is no substance in the argument that repeal amounts to an obliteration from the very beginning, whereas an omission is only in futuro. 12.5 The Apex Court was of the view that when the court referred to section 6A in Fibre Board s case and held that section 6A shows that a repeal can be by way of an express omission, obviously what was meant was that an amendment which repealed a provision could do so by way of an express omission. Hence section 6A undisputedly leads to the conclusion that repeal would include repeal by way of an express omission. The Apex Court arrived at the conclusion that an omission would amount to a repeal for the purpose of Section 24 of the General Clauses Act. Since the same expression, namely, repeal is used both in Section 6 and Section 24 of the General Clauses Act, the construction of the said expression in both sections would, therefore, include within it omissions made by the legislature. 38 12.6 The Court was also of the view that merely because the Constitution Bench in case of Rayala Corporation referred to a repeal not amounting to an omission this would not undo the effect of decision in Fibre Board s case and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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