Retrospective omission and business nexus principles govern transfer pricing deletion, brokerage allowance, and 80IAB deduction.

Omission of clause (i) of section 92BA without a saving clause was treated as retrospective, so transfer pricing adjustment based solely on that deleted provision was held unsustainable. Brokerage paid for procuring tenants was partly allowed as business expenditure under section 37(1) where invoices established direct business nexus, with the balance left for verification. Receipts from car parking, fixed deposits created for business exigencies, permission charges and licence fee were held to have direct nexus with the SEZ undertaking and were allowed as deduction under section 80IAB, rather than being taxed as income from other sources.

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Issues: (i) whether the transfer pricing adjustment made in respect of expenditure covered by clause (i) of section 92BA, after its omission, survived in law; (ii) whether brokerage expenses were allowable as business expenditure in full; and (iii) whether receipts from car parking, fixed deposits, permission charges and licence fee were eligible for deduction under section 80IAB.

Issue (i): whether the transfer pricing adjustment made in respect of expenditure covered by clause (i) of section 92BA, after its omission, survived in law.

Analysis: The omission of clause (i) of section 92BA was treated as retrospective on the footing that, once the clause was omitted without a saving provision, the provision must be taken as never having existed for the covered transactions. The adjustment arose only because the impugned expenditure fell within that deleted clause, and the reference to the transfer pricing machinery under section 92CA was therefore not sustainable.

Conclusion: The transfer pricing adjustment was deleted and the issue was decided in favour of the assessee.

Issue (ii): whether brokerage expenses were allowable as business expenditure in full.

Analysis: Brokerage paid for procuring tenants in a property-letting business was held to have direct business nexus where supporting invoices established the nature of the services. On that basis, the part of the claim duly substantiated was accepted as incurred in the ordinary course of business under section 37(1), while the balance required verification.

Conclusion: The disallowance was partly deleted and partly restored for verification, with the issue partly decided in favour of the assessee.

Issue (iii): whether receipts from car parking, fixed deposits, permission charges and licence fee were eligible for deduction under section 80IAB.

Analysis: Receipts having a direct and immediate nexus with the SEZ business, including car parking income, interest on fixed deposits created for business exigencies, and ancillary charges connected with the business infrastructure, were treated as business income eligible for deduction. The classification as income from other sources was not sustained for these items.

Conclusion: Deduction under section 80IAB was allowed on all four receipts and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded on the principal transfer pricing issue and on the deduction claim for the impugned receipts, while the brokerage claim was allowed only to the extent substantiated, resulting in a partial relief to the assessee.

Ratio Decidendi: An omission of a charging or enabling provision, when made without a saving clause, can render pending proceedings under that provision unsustainable, and business-linked ancillary receipts with a direct nexus to the eligible undertaking remain deductible as business income for the purpose of section 80IAB.

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