TMI Blog2023 (7) TMI 1394X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 1312 - KARNATAKA HIGH COURT] wherein it was held that clause (i) of section 92BA having been omitted by the Finance Act, 2017 w.e.f. 01.04.2017 from the statute, the resultant effect would be that it had never been passed and, hence, the decision taken by the AO under the effect of section 92BA of the Act and reference made to the TPO u/s 92CA of the Act was invalid and bad in law. Respectfully following the same, we have no hesitation in holding that the transfer pricing adjustment made could not be made, in the facts and circumstances of the instant case. Appeal of the assessee is allowed. - SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER For the Assessee : Shri Ved Jain, CA For the Revenue : Shri R.D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d domestic transaction on account of transfer of semi-finished goods from non-eligible units to unit where deduction u/s 80IC of the Act is claimed by the assessee. The ld. TPO issued notice to the assessee requiring the assessee to provide details relating to the said transaction together with the basis of computing the transaction price thereon. The assessee filed replies vide letter dated 10.07.2019 and 12.09.2019 along with documentary evidences. The assessee submitted that it transferred semi finished goods from non-eligible units where shoes and sandals were manufactured to eligible units, i.e., Unit-V, Haridwar where also shoes and sandals in the name of Sparx was manufactured. It is not in dispute that Unit-V, Haridwar is eligible f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omestic transactions whereby domestic transfer pricing provision can only result in restriction of deduction u/s 80IC of the Act. It was accordingly contested that no addition is warranted even on application of TNMM even if the margin proposed by the TPO is assumed to be correct. Further, on without prejudice basis, it was argued that the addition in any case is to be restricted to 30% since the assessee had claimed deduction u/s 80IC of the Act only to the tune of 30% of the eligible profits. 7. The ld. DRP, vide its directions u/s 144C(5) of the Act dated 19.02.2021, excluded two comparables taken by the ld. TPO and arrived at the revised margin of the comparables at 13.09%; upheld the TNMM to be Most Appropriate Method and directed to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the effect of section 92BA of the Act and reference made to the TPO u/s 92CA of the Act was invalid and bad in law. The relevant observations of the Hon ble Karnataka High Court are as under:- 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. 01.04.2017 by Finance Act, 2014. As to whether omission would save the acts is an issue which is no more res integra in the light of authoritative pronouncement of Hon'ble Apex Court in the matter of Kolhapur Canesugar Works Ltd. v. Union of India AIR 2000 SC 811 whereunder Apex Court has examined the effect of repeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect of omission of sub-section (9) to Section 10B of the Act w.e.f. 01.04.2004 by Finance Act, 2003 and held that there was no saving clause or provision introduced by way of amendment by omitting sub-section (9) of section 10B. In the matter of General Finance Co. v. ACIT, which judgment has also been taken note of by the tribunal while repelling the contention raised by revenue with regard to retrospectivity of section 92BA(i) of the Act. Thus, when clause (i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.04.2017 from the Statute the resultant effect is that it had never been passed and to be considered as a law never been existed. Hence, decision taken by the Assessing Officer under the effect of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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