2021 (6) TMI 449

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....r 2013-14, to the extent detrimental to the Appellant is bad in law and arbitrary, contrary to facts, law and circumstances of the case and liable to be quashed. 3. That in law and on facts and circumstances of the case, the ld. TPO/Ld. AO did not discharge his/her statutory onus by establishing that the conditions specified in clause (a) to (d) of Section 92C(3) of the Act have been satisfied before disregarding the arm's length price determined by the Appellant and proceeding to determine the arm's length price himself and the Hon'ble DRP erred by largely concurring with the views of the Ld. TPO/Ld. AO on the same. 4. That the Ld. TPO/Ld. AO/Hon'ble DRP, while making transfer pricing adjustment erred in law and on facts and circumstances of the case in rejection of the economic analysis undertaken by the Appellant in the Transfer Pricing documentation in accordance with the provisions of the Act read with rules, thereby confirming the economic analysis adopted by the Ld. TPO substantially. 5. The Ld. AO/Ld. TPO/Hon'ble DRP erred in enhancing the income of the Assessee by Rs. 4,73,22,361/- holding that the specified domestic transactions undertaken by As....

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....d stating that it was never raised before any of the lower authorities, in our considered opinion, since this additional ground goes to the root of the matter and requires no verification of any fact. We will address it first. 6. The assessee company is engaged in the business of designing, manufacturing, marketing, selling and exporting of the rear view mirrors and parts thereof for automobile industry. 7. The International transactions undertaken by the assessee company with its associated enterprises are summarized as under: S.No. Nature of Transaction Method used by assessee PLI Amount in Rs. 1. Purchase of raw material TNMM OP/TC 507112107 2. Sale of finished goods TNMM OP/TC 26733427 3. Services rendered back office services CUP NA 35741466 4. Provision of engineering design services TNMM OP/TC 5. Provision of back office support services TNMM OP/TC 23678628 6. Group support services rendered TNMM OP/TC 41854117 7. Group support services received European region TNMM OP/TC 8. Group support received Asia-Pacific region TNMM OP/TC 9. Design a....

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....Business Support Services 62,18,669 Total adjustment required to be made 6,28,41,297 12. Objections were raised before the DRP but were of no avail and the AO finally framed the assessment order which is under challenge before us. 13. Before us referring to the additional ground raised the Counsel for the assessee vehemently stated that sub-section (1) of Section 92BA has been omitted from the statute and by virtue of the amendment this particular sub-clause shall be deemed not to be on the statute since the beginning and, therefore, the assessment order deserves to be quashed. The Counsel referred to various judicial decisions in support of his contention. Per contra, the DR strongly supported the findings of the lower authorities and stated that there is no decision of the jurisdictional High Court. 14. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that as per sub-clause (1) of section 92BA the assessee has undertaken the transaction which has exceeded the prescribed limit. It is also not in dispute that vide Finance Act, 2017 w.e.f. 01.04.2017 the said sub-clause (1) of section 92BA has been omitted. We ....

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....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 provisions in the statute or in the rule, the pending proceeding will lapse under rule under which the notice was issued or proceeding being omitted or deleted". 8. In the case of General Finance Co., Vs. ACIT, their Lordship Of the Apex Court has again examined the issue and held that the principle underlying section 6 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 different cases. Following the aforesaid judgments, the jurisdictional High Court has also expressed the same view in the case of CIT Vs. GE Thermometrics India Pvt. Ltd. The relevant observation of the jurisdictional High Court is extracted hereunder: "8. Admittedly, in the instant case, there is no saving cla....

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....re in acc~rdance with law. But this exercise could not have been done on account of provisions of section 92BA Clause (i) of the Act. Now when this clause (i) has been omitted from the statute by virtue of the aforesaid amendments, the AO is required to adjudicate the issue of claim of expenditures in accordance with law after affording opportunity of being heard to the assessee. We therefore set aside the orders of the AO and the DRP and restore the matter to the AO with the direction to readjudicate the issue of claim of expenditure incurred in respect of which payment has been made or is to be made to person referred to in clause (b) of sub section 2 of section 40A of the Act. Accordingly, since we have restored the matter to the AO, we find no justification to deal with the other issues on merit. Accordingly, appeal of the assessee stand allowed for statistical purposes." 16. This decision of the coordinate bench was confirmed by the Hon'ble Karnataka High Court in ITA No. 392/2018 along with ITA No. 170/2019. The relevant findings of the Hon'ble High Court read as under: "5. Having heard learned Advocates appearing for parties an....