TaxTMI 
TaxTMI 
2021 (8) TMI 1374
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.... the Finance Act, 2017, and therefore, any reference made post omission of the provision is bad in law; and secondly, no addition on account of SDT can be made. Besides this, on merits also various grounds have been challenged that the purchase of office space was in accordance with valuation report submitted by the assessee. 2. The facts in brief are that the assessee is a subsidiary of Uphill Farms Pvt. Ltd. (Uphill) which is engaged in real estate development and in the business of construction and development of real estate projects in India. During the year under consideration, the Assessee has acquired a real estate business located at Plot No. B-36, Sector 132, Noida -201301 (including its assets and liabilities and other obligations) from its holding company, Uphill by way of slump sale as a going concern, with effect from 28th March 2016, for a lump sum consideration of Rs. 220,50,00,000. The Assessee has discharged the purchase consideration partly by issuing 93,50,000 fully paid up equity shares of face value of Rs. 10/- each at a premium of Rs. 220/- per equity share and balance of Rs. 5,45,00,000 in cheque (Rs. 2,50,00,000 paid on 28.03.2016 and balance Rs. 2,95,00,00....
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.....03.2016 along with all the annexures and copy of Form No.3CEB relating to SDT, return of valuation of immovable property and copy of Transfer Pricing Report. The ld. Assessing Officer sent a proposal to the PCIT, New Delhi to Additional CIT, Range-27 for seeking approval of making reference to the TPO for determination of Arm's Length Price as per the provision of Section 92BA r.w.s. 92C in respect of SDT with the holding company M/s. Uphill Farms Pvt. Ltd. The approval was granted for making reference to the TPO vide letter dated 28.11.2018 by the Pr. CIT. The TPO computed the value adopting the method of NOIDA Authority vide order dated 31st October, 2019 passed u/s.92CA(3) and proposed and adjustment of Rs.38,70,19,094/- after valuing the property at Rs.166,80,68,357/-. The reasons given by the TPO for rejecting the value adopted by the assessee were as under: i. The TPO rejected rates of 99acres.com stating that the Assessee had furnished only 4 listings with hugely varying rates from Rs. 5,600-14,200 per sq ft. whereas Ld. TPO had stated rates as per magic bricks which were between Rs. 3,379- Rs. 8,182 per sq. ft. ii. He also rejected rates of 99acres.com wrongly stating....
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....RP has not allowed appropriate adjustments of cost of interiors incurred by holding company on the property sold. 12. The Ld. TPO passed the appeal effect order on 16.04.2021 and consequently, the Ld. AO passed order dated 26.04.2021 under section 143(3] read with section 144C [13] and 144B of the Act giving effect to the directions of Hon'ble DRP and made addition of Rs. 6,93,89,490/- and raised demand of Rs. 3,70,09,330/- (including interest]. In view of the above, the Ld. AO computed the income of the Assessee as under:- Returned income as declared by the Assessee company Rs. 3,77,140/- Add: Adjustment on account of specified domestic transaction as directed by DRP Rs. 6,93,89,490/- Total Income Rs. 6,97,66,630/- 14. Before us, ld. counsel for the appellant-assessee, Mr. Ajay Wadhwa submitted that since clause (i) of Section 92BA have been omitted by the statute from the Finance Act, 2017 w.e.f. 01.04.2017, therefore, it is deemed that the said clause was never part of the Act. The proceedings initiated after an omitted section cannot be made unless there is saving clause provided in the Act at the time of omission. Here in this case notice u/s.143(2) for selecting t....
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....ssed, and the statute must be considered as a law that never existed. The only decision by the Hon'ble High Court squarely on the issue is as under: a. Principal Commissioner of Income Tax -7 vs. Texport Overseas P. Ltd. (2020) 114 taxmann.com 568 (Karnataka) "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. 01.04.2019 by Finance Act, 2014. As to whether omission would save the acts is an issue which is no more res intigra 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 where under Apex Court has examined the effect of repeal of a statute vis-a-vis deletion/addition of a provision in an enactment and its effect thereof. The import of section 6 of General Clauses Act has also been examined and it came to be held: "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 ha....
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....s not referred to determine the arm's length price to the TPO. Since the provision itself stood omitted at the time when the order was passed hv the Ld. Pr. CIT. under these undisputed facts in the light of the Judgement of the Hon'ble Supreme Court rendered in the case of General Finance Company (supra) as well as the order of the coordinate bench rendered in the case of Texport Overseas Pvt. Ltd. [supra]. the impugned order cannot be sustained, hence is hereby quashed. The order impugned is thus quashed and the grounds raised in the appeal are allowed." 10. On the very identical facts, the Coordinate Bench of IT AT Kolkata in the case of M/s Raipur Steel Casting India Pvt Ltd, in 1TA No.895/Kol/2019, for A.Y. 2014- 15, order dated 10.06.2020 held as follows: "12... We note that Id 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 BA was never existed in the statute book....
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....it would be treated that said since clause(i) of section 92BA was never existed in the statute book." ll. Therefore based on the above judgements of the Coordinate Benches.[ in the case of Swastik Coal Corporation Pvt Ltd and in the case of M/s Raipur Steel Casting India (p) Ltd-supra)] we hold that since clause (i) section 92 A was omitted with effect from 1st April. 2017 and the effect of such omission is that the said clause(i) was never existed in the statute. Hence. Ld. PC1T can not exercise the jurisdiction u/s 263 of the Act." C. M/s. Raipur Steel Casting India fPl I.td. v. P.C.I.T. ITA No. 895/Kol/2019 AY 2014-15 and M/s. Srinath li Furnishing Pvt. Limited v. P.C.I.T. ITA No.l035/Kol/2019 "11 As we noticed that clause (i) of section 92BA has been 'omitted" with effect from 01.04.2017. The effect of such omission without any saving clause of General Clauses Act, means that the above provision was not in existence or never existed in the statute hook. If it is held that effect o f such "omission" of clause (i) of section 92BA means that this provision was never existed in the statute book, then in that situation the exercise of jurisdiction by the Id PCIT [ in respec....
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....reme 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 hook. 20. We are of the view that at this juncture it is necessary to examine, the meaning of saving clause? As Per the law.Com Law Dictionary & Black's Law Dictionary 2nd Ed. the saving clause has been defined as follows: "A saving clause in a statute is an exception of a special thing out of the general things mentioned in the statute; it is ordinarily a restriction in a repealing act which is intended to save righ....
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....ordinate Bench is reproduced below: "8. We find that the above view of the Ld. Pr. CIT is not correct. In view of the aforesaid discussion, moreover, the coordinate bench has also examined the issue in the case of Excise. (2016) 3 STexport Overseas Pvt. Ltd. in IT[TP]A No.1722/Bang/2017. Admittedly, in this case, the order has been revised purely on the basis that the assessing officer has not referred to determine the arm's length price to the TPO. Since the provision itself stood omitted at the time when the order was passed by the Ld. Pr. CIT, under these undisputed facts in the light of the Judgement of the Hon'ble Supreme Court rendered in the case of General Finance Company [supra] as well as the order of the coordinate bench rendered in the case of Textport Overseas Pvt. Ltd. [supra], the impugned order cannot be sustained, hence is hereby quashed. The order impugned is thus quashed and the grounds raised in the appeal are allowed." 22. To conclude: If a provision of a statute is unconditionally omitted without a saving Clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the o....
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....erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances as narrated above. Thus, the usurpation of jurisdiction of exercising revisional jurisdiction by the Principal CIT is "null" in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 of the Act by the Principal CIT. Therefore, we quash the order of the Principal CIT dated 08.03.2019 being ab initio void." d. Swastik Coal Corporation Pvt. Ltd. v. Pr. CIT-2 ITA No.486/Ind /2018 "8. We find that the above view of the Id. Pr. CIT is not correct. In view of the aforesaid discussion, moreover, the coordinate bench has also examined the issue in the case of Texport Overseas Pvt. Ltd. in IT(TP)A No.1722/Bang/2017. Admittedly, in this case, the order has been revised purely on the basis that the assessing officer has not referred to determine the arm's length price to the TPO. Since the provision itself stood omitted at the time when the order was passed by the Ld. Pr. CIT. under these undisputed facts in the light of the judaement of the Hon'ble Supreme Court rendered in the case of General Finance Comp....
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....verrule, quash, recall, render invalid, rescind, rescindere. retract, reverse, revoke, set aside, vacate, void, withdraw." 13. On a conjoint reading of the three expressions "delete", "omit", and "repeal", it becomes clear that "delete" and "omit" are used interchangeably, so that when the expression "repeal" refers to "delete" it would necessarily take within its ken an omission as well. This being the case, we do not find anv substance in the argument that a "repeal" amounts to an obliteration from the very beginning, whereas an "omission" is only in futuro. If the expression "delete" would amount to a "repeal", which the appellant's counsel does not deny, it is clear that a conjoint reading of Halsburv's Laws of England and the Legal Thesaurus cited here in abvove both lead to the same result, namely, that an "omission" being tantamount to a "deletion" is a form of repeal. 18. We also find that Section 6 could not possibly apply to the facts in Rayala Corporation's case for yet another reason. Clause 2 of the amendment rules which was referred to in paragraph 14 of the judgment in Rayala Corporation reads as follows:- "In the Defence of India Rules, 1962, rule 132A ....
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....an, 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 there under. 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 Board 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 reason also we decline to accept Shri Aggarwal's persuasive plea to reconsider the judgment in Fibre Board case. This being the case, it is clear that on point one the present appeal would have to be dismissed as being concluded by the decision in Fibre Board case." 34. Shri Radhakrishnan, learned senior advo....
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....ertion or substitution of any matter, then, unless a different intention appears, the repeal shall not affect the continuance of any such amendment made by the enactment so repealed and in operation at the time of such repeal." 33. A reading of this Section would show that a repeal by an amending Act can be by way of an express omission. This being the case, obviously the word ''repeal" in both Section 6 and Section 24 would, therefore, include repeals bv 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. 34. 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: "....Now, if the legislative intent to supersede the earlier law is the basis upon which the doctrine of implied repeal is founded could there be any incongruity in attributing to the later legislation the same intent which Section 6 presumes where the word 'repeal' is expressly used. So far as statutory construction is concerned,....
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....ies prospective and not retrospective. In support, she relied upon the judgment of Sobha City vs. ACIT in ITA No.2936/Bang/2018 in which the case was restored to the file of the Assessing Officer with the direction to examine the claim of expenditure in accordance with the provision of Section 40A(2) of the IT Act. She also placed reliance upon the decision rendered by the Mumbai Bench of Tribunal in the case of Firemenich Aromatics India Pvt. Ltd. vs. ACIT in ITA No. 348/Mum/2014 dated 15.07.2020 in which the decision rendered by the Hon'ble Apex Court in the case of Fiber Bores Pvt. Ltd. (2015) 52 Taxmann.com 135. Further, she placed reliance in the case of M/s. Shree Bhagwati Steel Rolling Mills Ltd. (CA No.4280/2007 dated 24.11.2015 which were not considered by the Tribunal as well as the by Hon'ble High Court in the case of Texport Overseas Pvt. Ltd. in ITA No.392/2018 dated 12.21.2019. 7. We have heard the rival submissions and also perused the relevant facts arising out from the records on the legal issue raised by the ld. counsel. It is an undisputed fact that the SDT for purchase of office space as inventory was by way of Slump Sale of a going concern w.e.f. 28th March, 2....
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....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) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed." ....
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.... 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, Bangalore, (2015) 10 SCC 333 and Shree Bhagwati Steel Rolling v. Commissioner of Central Excise (2016) 3 SCC 643 to convass the point that the earlier judgments of Constitutional Bench in the case of Rayala Corporation Pvt. Ltd., 1970 SCR 1 (69) and Kohlapur Cane Sugar [supra] have been not followed or have been overruled. First of all, nowhere the Hon'ble Apex Court in both the judgments have overruled earlier two judgment of the Constitutional bench of the Hon'ble Apex Court rather they have explained it in detail and went on to held that the word repealed in both section of 6A and Section 24 of General Clauses Act would include repeals by ....
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....racted. 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 any form and so long as a statute or part of it is obliterated, such obliteration would be covered by the expression "repeal" in Section 6 of the General Clauses Act. All that is required is that an intention to abrogate the enactment or portion in question should be clearly shown. 11.2 The Apex Court held that the idea of omitting section 280ZA and introducing Section 54G on the same date was to do away with the tax credit certificate scheme together with the prior approval required by the Board and to substitute the repealed provision with the new scheme contained in Section 54G.Once Section 280ZA is omitted from the statute book, section 280Y (d) having no independent existe....
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....ise 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 the scheme was in operation. The Hon'ble High Court held that on omission of section 3A, the liability of the assessee was not wiped out. 12.2 The appellant contended that there is a fundamental distinction between "repeal" and an "omission", in the case of a "repeal" the statute is obliterated from the very beginning whereas in the case of an "omission" what gets omitted is only from the date of "omission" and not before. This being the case, it is clear that things already done in the case of an "omission" would be saved. However, a "repeal" without a savings clause like section 6 of the General Clauses Act would not so save things already done under the repealed statute. He further arg....
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....al 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. 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 the statement of the law in Rayala Corporation is no longer the law declared by the Hon'ble Supreme Court after the decision in the Fibre Board's case. Fibre Board (supra) is a recent judgment which clarifies the law in holding that an omission would amount to a 'repeal'. 13. The converse view of the law 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 ena....