TaxTMI 
TaxTMI 
2020 (6) TMI 563
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....P of which reference could be made to TPO, without finding any error in the said submission, was not justified in still passing the impugned revisionary order. 3.For that in absence of any transaction entered into during the year under consideration by the assessee whose ALP is required to be computed and consequently, reference to TPO could have been made, the impugned order of revision passed by the ld. PCIT is bad in law and unsustainable. 4. For that the assumption of jurisdiction by the ld. PCIT in the instant case on the date on which such jurisdiction was assumed being without satisfaction of pre-requisite twin conditions of the law, the same is bad in law and consequently, the impugned order passed in pursuance thereto is liable to be cancelled. 5. For that the ld. PCIT was not justified in interfering with the order of the ld. AO vide impugned revisionary order without finding that any of the four circumstances specified in clauses (a) to (d) of sub-section 3 of section 92Cof the Act existed in the instant case which in turn required the ld.AO to compute ALP. 6. For that the ld. PCIT was not justified in interfering with the order of the....
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.... the Income Tax Act, 1961 to arrive at the Arm's Length Price (ALP) u/s 92C of the Act as required in terms of CBDT InstructionNo. 3/2016 dated 10.03.2016. 4. In response to the notice under section 263 of the Act, the assessee had submitted written submission before the ld PCIT. The written submission to the extent applicable for our discussion is reproduced below: " However, a reply dated 05.03.2019 was received through e-mail. In the said reply, the assessee has made long submissions, basically objecting to the proposed se-aside of the order on the ground that its related parry transactions are payments u/s 40A(2)(b) amounting to Rs. 43,39,38,536/- (not Rs. 51,08,99,031/-) as pointed out in the notice u/s 263, which relates to the subsequent AY 2015-16 and after the omission of clause (i) in the definition of specified domestic transactions by the Finance Act, 2017 the said provisions do not apply to transactions in the nature of payments u/s 40A(2)(b)". 5. However, ld PCIT rejected the contention of the assessee and held that the Assessment order passed u/s 143(3) dated 28.10.2016 is erroneous and prejudicial to the interest of Revenue therefore he set aside ....
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....d and the case laws relied upon, and perused the fact of the case including the findings of the ld PCIT under section 263 of the Act and other materials brought on record. We note that assessee has raised multiple grounds of appeal to challenge the correctness of the order dated 08.03.2019 passed by the ld PCIT under section 263 of the Act but at the time of hearing the solitary grievance of the assessee has been confined to the issue that since clause (i) of section 92BA has been omitted by Finance Act, 2017, w.e.f. 01.04.2017 and the effect of such omission without any saving clause of General Clauses Act, means that the above provisions was not in existence or never existed in the statute, therefore, the jurisdiction exercised by the ld PCIT under section 263 of the Act is void and as a result the order passed by the assessing officer dated 30.08.2016, under section 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. If this is the solitary grievance of the assessee, then, first of all, it would be necessary for us to examine meaning of "omission" and its consequences in respect to the provisions of clause (i) of section 92BA ....
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....t would fail. 12. We note that ld PCIT has issued a show cause notice under section 263 of the Act to the assessee, which is reproduced below: "It is observed from the assessment records that as per Form 3CEB your concern had made specified domestic transactions amounting to Rs. 34,82,67,956/- but the same was not referred to Transfer Pricing Officer by the Assessing officer after obtaining the approval of PCIT as per 92CA of the Act. In this view of the matter the benchmarking of the domestic transaction undertaken with the specified domestic parties for the purpose of determining the Arms Length Price was not done in this case. In the above conspectus, the order passed u/s. 143(3) on 30.08.2016 for A. Y. 2014-15 appears to be erroneous in so far as it is prejudicial to the interest of revenue." We note that ld PCIT issued the above show cause notice u/s 263 in respect of specified domestic transactions referred to in clause (i) of section 92BA of the Act which was omitted with effect from 01.04.2017, and effect of such "omission" of clause (i) of section 92BA means that this provision was never existed in the statute book, since clause (i) of section 92....
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...., in, the following words :-- "The general rule in regard to a temporary statute is that, in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires." Mention may also be made to a decision of a learned single Judge of the Allahabad High Court in Seth Jugmendar Das and Others v. State(2), where a similar view was taken when considering the effect of the repeal of the Defence of India Act, 1939, and the (1) [1951] S.C.R. 621. (2) A.I.R. 1951 All. 703. Ordinance No. XII of 1946 which had amended s. 1 (4) of that Act. On the other hand, Mr. Desai on behalf of the respondent relied on a decision of the Privy Council in Wicks v. Director of Public Prosecutions(1). In that case, the appellant, whose case came up before the Privy Council, was convicted for contravention of Regulation 2A of the Defence (General) Regulations framed under the Emergency Powers (Defence) Act, 1939 as applied to British subjects abroad by s. 3 (1 )(b) of the said Act. It was held that, at the date when the acts, which were the subject matter of the charge, were commi....
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....cited above cannot apply to the notification with which we are concerned. Reference was next made to a decision of the Madhya Pradesh High Court in State of Madhya Pradesh v. Hiralal Sutwala(1), but, there again, the accused was sought to be prosecuted for 'an offence punishable under an Act on the repeal of which section 6 of the General Clauses Act had been made applicable. In the case before us, s. 6 of the General Clauses Act cannot obviously apply on the omission of R. 132A of the D.I.Rs. for the two obvious reasons that s. 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule. If s. 6 of the General Clauses Act had been applied no doubt this complaint 'against the two accused for the offence punishable under R. 132A of the D.I.Rs. could have been instituted even after the repeal of that rule. The last case relied upon is 1. K. Gas Plant Manufacturing Co., (Rampur) Ltd. and Others v. The King Emperor(2). In that case, the Federal Court had to deal with the effect of sub-s. (4) of section 1 of the Defence of India Act, 1939 and the Ordinance No. XII of 1946 which were also consid....
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.... of the Act. He urged that, from this simultaneous action taken, it should be presumed that there was no intention of the Legislature that acts, which were offences punishable under R. 132A of the D.I.Rs., should go unpunished after the omission of that rule. It, however, appears that when s. 4(1) of the Act was amended, the Legislature did not make any provision that an offence previously committed under R. 132A of the D.I.Rs. would continue to remain punishable as an offence of contravention of s. 4 ( 1 ) of the Act, nor was any provision made permitting operation of R. 132A itself so as to permit institution of prosecutions in respect of such offences. The consequence is that the present complaint is incompetent even in respect of the offence under R. 132A(4). This is the reason why we hold that this was an appropriate case where the High Court should have allowed the applications under s. 561A of the Code of Criminal Procedure and should have quashed the proceedings on this complaint. Consequently, as already directed by our short order dated 2nd May, 1969, the appeals are allowed, the order of the High Court rejecting the applications under s. 561A of the Code of Crim....
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....Cement and Chemical Industries (supra), as it appears from the discussions in the judgment, tried to distinguish the decision of the Constitution Bench in M/s Rayala Corporation (supra) for reasons, we are constrained to say not sound in law. The decision of the Constitution Bench is directly on the question of applicability of Section 6 of the General Clauses Act in a case where a rule is deleted or omitted by a notification and the question was answered in the negative. The Constitution Bench said that "Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule" (Page 656 of the S. C. Report). 30. The Full Bench appears to have lost sight of the position that all the relevant terms i.e. `Central Act', `Enactment' Regulation', and `Rule' are defined in Sub-section 3(7), 3(19), 3(50) and 3(51) respectively of the General Clauses Act. When the term Central Act or Regulation or Rule is used in that Act reference has to be made to definition of that term in the statute. It is not possible nor permissible to give a meaning to any of the terms different from the definition. It is manife....
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....s initiated under a particular provision of the rule after the said provision was omitted the Court is not to look for a provision in the newly added rule for continuing the pending proceedings. It is also not correct to say that the test is whether there is any provision in the rules to the effect that pending proceedings will lapse on omission of the rule under which the notice was issued. It is our considered view that in such a case the Court is to look to the provisions in the rule which has been introduced after omission of the previous rule to determine whether a pending proceeding will continue or lapse. If there is a provision therein that pending proceedings shall continue and be disposed of under the old rule as if the rule has not been deleted or omitted then such a proceeding will continue. If the case is covered by Section 6 of the General Clauses Act or there is a pari-materia provision in the statute under which the rule has been framed in that case also the pending proceeding will not be affected by omission of the rule. In the absence of any such provision in the statute or in the rule the pending proceedings would lapse on the rule under which the notice was issu....
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....on. There is no saving provision in favour of pending proceeding. Therefore action for realisation of the amount refunded can only be taken under the new provision in accordance with the terms thereof. The further question that arises for consideration in this connection is whether the notification No. 267/77 dated 6.8.77 by which Rule 10 was deleted contained any provision for continuance of the proceedings already initiated and whether Act 25 of 78 which introduced Section 11-A of the Central Excise Act, adopted the legal device of creating a fiction by virtue of which a proceeding under Rule 10 could be deemed to be a proceeding under section 11-A of the Act. If such was the position then it could be argued that the proceeding initiated when old Rule 10 was in force could be continued on the strength of the clause of the notification by which the said Rule was omitted and substituted by a new Rule which in turn was substituted by section ll-A of the Act. From the contents of the provisions in the Rules it is clear that it did not contain any saving clause for continuance of the proceeding initiated under the rule which was deleted/omitted. The....
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....ct but not repealed and hence, a prosecution could not have been launched or continued by invoking section 6 of the General Clauses Act after its omission. The findings of the Hon`ble Supreme Court are as follows: "6. Net result of this discussion is that the view taken by the High Court is not consistent with what has been stated by this Court in the two decisions aforesaid and the principle underlying s. 6 of the General Clauses Act 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 the aforesaid decisions. In the IT Act, s. 276DD stood omitted from the Act but not repealed and hence, a prosecution could not have been launched or continued by invoking s. 6 of the General Clauses Act after its omission." 15. Now we shall address the main grievances of ld DR for the Revenue, which are on three counts. i. First grievance is that clause (i) of section 92BA has been "repealed" and not "omitted." Effect of such "Repeal" means the clause (i) of section 92BA was in existence till 01.04.2017 and ....
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....e judgment of Hon`ble Supreme Court in the case of M/s. Shree Bhagwati Steel Rolling Mills vs. C.I.T. Excise & Others - 2015(326) ELT 209(S.C.), the relevant paras of the said judgment are reproduced below: "24. Fibre Boards case is a recent judgment which, as has correctly been argued by Shri Radhakrishnan, learned senior counsel on behalf of the revenue, clarifies the law in holding that an omission would amount to a repeal. The converse view of the law has led to an omitted provision being treated as if it never existed, as Section 6 of the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a legal proceeding in respect of any right or liability be instituted, continued or enforced in respect of rights and liabilities acquired or incurred under the enactment so omitted. In the vast majority of cases, this would cause great public mischief, and the decision of Fibre Boards case is therefore clearly delivered by this Court for the public good, being, at the very least a reasonably possible view. Also, no aspect of the question at hand has remained unnoticed. For this re....
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.... the concluding para No. 44 of the said judgment clearly speaks that the appeals filed by the Revenue are dismissed and the appeals filed by the assessees are allowed. The said judgment of the Hon`ble Supreme Court also advocates that omitted provision being treated as if it never existed and as Section 6 of the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a legal proceeding in respect of any right or liability be instituted, continued or enforced in respect of rights and liabilities acquired or incurred under the enactment so omitted. Therefore, considering the judgment of the Hon`ble Supreme Court in the case of M/s. Shree Bhagwati Steel Rolling Mills(supra), it can be said that since clause(i) of section 92BA was omitted w.e.f. 01.04.2017 therefore, it would be treated that said since clause(i) of section 92BA was never existed in the statute book. 18. Now, we shall take second judgment, in the case of M/s. Fibre Boards, 62Taxmann.com135(S.C.),relied on by the ld DR for the Revenue. The important part of the judgment is reproduced below for ready reference: ....
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....s: "17. Reference was next made to a decision of the Madhya Pradesh High Court in State of Madhya Pradesh v. HiralalSutwala [AIR 1959 MP 93] but, there again, the accused was sought to be prosecuted for an offence punishable under an Act on the repeal of which Section 6 of the General Clauses Act had been made applicable. In the case before us, Section 6 of the General Clauses Act cannot obviously apply on the omission of Rule 132-A of the DIRs for the two obvious reasons that Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a rule. If Section 6 of the General Clauses Act had been applied, no doubt this complaint against the two accused for the offence punishable under Rule 132-A of the DIRs could have been instituted even after the repeal of that rule." 22. It will be clear from a reading of this paragraph that a Madhya Pradesh High Court judgment was distinguished by the Constitution Bench on two grounds. One being that Section 6 of the General Clauses Act does not apply to a rule but only applies to a Central Act or Regulation, and secondly, that Section 6 itself would apply only to....
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....eal simpliciter or repeal accompanied by fresh legislation. The section also applies when a temporary statute is repealed before its expiry, but it has no application when such a statute is not repealed but comes to an end by expiry. The section on its own terms is limited to a repeal brought about by a Central Act or Regulation. A rule made under an Act is not a Central Act or regulation and if a rule be repealed by another rule, section 6 of the General Clauses Act will not be attracted. It has been so held in two Constitution Bench decisions. The passing observation in these cases that "section 6 only applies to repeals and not to omissions" needs reconsideration for omission of a provision results in abrogation or obliteration of that provision in the same way as it happens in repeal. The stress in these cases was on the question that a 'rule' not being a Central Act or Regulation, as defined in the General Clauses Act, omission or repeal of a 'rule' by another 'rule' does not attract section 6 of the Act and proceedings initiated under the omitted rule cannot continue unless the new rule contains a saving clause to that effect...."(At pages 697 and 698)....
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.... in both Section 6 and Section 24 would, therefore, include repeals by express omission. 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.1 30. Thirdly, an earlier Constitution Bench judgment referred to earlier in this judgment, namely, State of Orissa v. M.A. Tulloch & Co., (1964) 4 SCR 461 has also been missed. The Court there stated: 1 In Mamleshwar Prasad &Anr. v. Kanahaiya Lal (dead) through LRs., (1975) 3 SCR 834, Krishna Iyer, J., succinctly laid down what is meant by the "per incuriam" principle. He stated: "We do not intend to detract from the rule that, in exceptional instances, whereby obvious inadvertence or oversight a judgment fails to notice a plain statutory provision or obligatory authority running counter to the reasoning and result reached, it may not have sway of binding precedents. It should be a glaring case, an obtrusive omission. No such situation presents itself here and we do not embark on the principle of judgment per incuriam." (At page 837) An interesting application of the said principle is contained in State of U.P....
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....statute or part of it is obliterated, such obliteration would be covered by the expression "repeal" in Section 6 of the General Clauses Act. 32. In fact in Halsbury's Laws of England Fourth Edition, it is stated that: "So far as express repeal is concerned, it is not necessary that any particular form of words should be used. (R v. Longmead, (1795) 2 Leach 694 at 696). All that is required is that an intention to abrogate the enactment or portion in question should be clearly shown. (Thus, whilst the formula "is hereby repealed" is frequently used, it is equally common for it to be provided that an enactment "shall cease to have effect" (or, If not yet in operation, "shall not have effect") or that a particular portion of an enactment "shall be omitted)." 33. At this stage, it is important to note that a temporary statute does not attract the provision of Section 6 of the General Clauses Act only for the reason that the said statute expires by itself after the period for which it has been promulgated ends. In such cases, there is no repeal for the reason that the legislature has not applied its mind to a live statute and obliterated it. In all cases where....
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.... "which is not utilized by him for all or any of the purposes aforesaid....". It is clear that for the assessment year in question all that is required for the assessee to avail of the exemption contained in the Section is to "utilize" the amount of capital gains for purchase and acquisition of new machinery or plant and building or land. It is undisputed that the entire amount claimed in the assessment year in question has been so "utilized" for purchase and/or acquisition of new machinery or plant and land or building. 37. The High Court is not correct when it states:- "31. The word 'purchase' is not defined under the Act and therefore, has to be construed in the commercial sense. In many dictionaries, the word 'purchase' means the acquisition of property by party's own act as distinguished from acquisition by act of law. In the context in which the expression issued by the Legislature requires first to be understood and interpretation that suits the context requires to be adopted. Exemption of capital gains under Section 54G of the Act can be claimed on transfer of assets in cases of shifting of industrial undertaking from urban area to any other non-urban area....
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....at the capital gain made by the assessee should only be "utilized" by him in the assessment year in question for all or any of the purposes aforesaid, that is towards purchase and acquisition of plant and machinery, and land and building. Advances paid for the purpose of purchase and/or acquisition of the aforesaid assets would certainly amount to utilization by the assessee of the capital gains made by him for the purpose of purchasing and/or acquiring the aforesaid assets. We find therefore that on this ground also, the assessee is liable to succeed. The appeals are, accordingly, allowed and the judgment of the High Court is set aside." Having gone through the second judgment, in the case of M/s. Fibre Boards, 62Taxmann.com135(S.C.) (supra), as relied on by the ld DR for the Revenue, we note that Hon`ble Supreme Court has decided the issue in favour of assessee on different set of facts and not in favour of Revenue as contended by ld. Departmental Representative (DR). Therefore, we find that the aforesaid order of Hon'ble Supreme Court is not in favour of Revenue, as contended by ld. DR. The facts of the judgment in the case of M/s. Fibre Boards(supra) is that soon after....
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....ion P. Ltd (supra) were appreciated and accepted by the subsequent judgments of the Hon'ble Supreme Court. In one of the subsequent judgments, in the case of M/s. Fibre Boards (supra), both these judgments were appreciated in the following words: "19. But then Shri Arijit Prasad put before us two roadblocks in the form of two Constitution Bench decisions. He cited Rayala Corporation (P) Ltd. 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. He argued based upon these two judgments that an "omission" would not amount to "repeal" and that since the present case was concerned with the omission of Section 280ZA, Section 24 would have no application. 20. Shri Prasad is correct in relying upon these two Constitution Bench judgments for they do indeed say that in Section 6 of the General Clauses Act, the word "repeal" would not take within its ken an "omission". Therefore, the judgments of the Hon`ble Supreme Court in the case of Kolhapur Canesugar Works Ltd (supra) and in the case of Rayala Corporation P. Ltd (supra) were not overruled by t....
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....f section 92BA, for reference by A.O. to TPO is null in the eye of Law, as clause (i) of section 92BA is "omitted" and not "repeated" and there is no provision in any other section of the Income Tax Act saving the pending proceedings initiated under the omitted provision [ (clause (i) of sec, 92BA)] as the said clause (i) was omitted on 01.04.2017, therefore, subsequent revision proceedings by ld. PCIT u/s. 263 on dated 08.03.2019 would be invalid. As we noticed above that an 'omission' of a provision is different from a 'repeal' and section 6 of the General Clauses Act applies to a repealed law and not to 'omission' of law, therefore section 6 of the General Clauses Act does not apply. So in the assessee`s case it is noted that in the Income Tax Act, clause (i) of section 92BA was omitted from the Act and not repealed, hence pending proceedings/ prosecution could not have been launched or continued by invoking section 6 of the General Clauses Act after its omission. 21. We note that the Coordinate Bench of ITAT Indore in the case of Swastik Coal Corporation Pvt. Ltd, in ITA No. 486/Ind/2018, order dated 26.07.2019, has quashed the order of ld PCIT under section 263 of the....
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....on 92BA is unconditional, that is, it does not say that Pending Proceedings under clause (i) of section 92BA would continue in future, even after its omission on 01.04.2017. Therefore, Ld. PCIT erred in exercising his jurisdiction u/s. 263 of the Act, so far clause (i) of section 92BA is concerned, reason being, in the eyes of law after omission of clause (i) of section 92BA, it would be treated as if it never existed in the Statute Book. In other words, clause (i) of section 92BA, was omitted w.e.f 1.4.2017 unconditionally and without a saving clause therefore section 6 of the General Clauses Act has no application. We note that ld PCIT issued the above show cause notice u/s 263 in respect of specified domestic transactions referred to in clause (i) of section 92BA of the Act which was omitted with effect from 01.04.2017, and effect of such "omission" of clause (i) of section 92BA means that this provision never existed in the statute book, since clause (i) of section 92BA never existed in the statute book therefore, ld PCIT cannot exercise his jurisdiction under section 263 of the Act in respect of specified domestic transactions referred to in clause (i) of section 92BA....