TaxTMI 
TaxTMI 
2021 (8) TMI 1374
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....i) of Section 92BA has been omitted by 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 ....
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....turn of income? In response, the assessee vide reply dated 16.11.2018 had filed copy of 'business transfer agreement' dated 28.03.2016 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....
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....car parking and rejected 216 car parking. vi. DRP has not taken into account the cost of maintenance equipments. vii. DRP has not taken into account the value of maintenance receipts viii. DRP 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 th....
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....2BA never existed in the statute book, it had never been passed and to be considered as a law never been existed. * The effect of repealing a statute or deleting a provision is to obliterate it from the statute-book as completely as if it had never been passed, 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. Th....
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.... 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 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 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 specif....
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....der 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 Page / 12 M/s. Bhartia-SMSIL (JV) ITA No.ll7/Gau/2019 Assessment Year:2014-15 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." 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 ....
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....t clause till of section 92BA was never existed in the statute book. 17..... First, we take the 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(SC) the relevant paras of the said judgment are reproduced below: ....... ....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 hook. 20. We are of the view that at thi....
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....on 01.04.2017, therefore, subsequent revision proceedings by Id. PCIT u/s. 263 on dated 08.03.2019 would be invalid....'' 21. We note that the Coordinate Bench of lTAT Indore in the case of Swastik Coal Corporation Pvt. Ltd, in ITA No. 486/lnd/2018, order dated 26.07.2011, has quashed the order of Id PCIT under section 263 of the Act, on the identical facts, as narrated above. The findings of the Coordinate 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 O....
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....17, 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, Id 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 of the Act. Therefore, the action of the Assessing Officer cannot be held to be 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 ....
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....rop edit out, efface, elide, eliminate, eradicate, erase, excise, expel, expunge, extirpate, get rid of. leave out, modify bv excisions, obliterate, omit, remove, rub out, rule out, scratch out, strike off, take out, weed, wipe out." And the expression "repeal" is defined as follows: "Repeal:- Abolish, abroaare. abrogate, annul, avoid, cancel, countermand, declare null and void, delete, eliminate, formally withdraw, invalidate, make void, negate, nullify, obliterate, officially withdraw. override, overrule, 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....
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...., therefore, presumed that Parliament enacted Section 31 knowing that the decision in Rayala Corporation had stated that an omission would not amount to a repeal and it is for this reason that Section 31 was enacted. This again does not take us further as this statement of the law in Rayala Corporation is no longer the law declared by the Supreme Court after the decision in the Fibre Board's case. This reason therefore again cannot avail the appellant. 23. Fibre Board 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 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 gr....
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....socalled ratio of the Constitution Bench in Ravala Corporation (PI Ltd. cannot be said to he a ratio decidendi at all and is really in the nature of obiter dicta. 32. Secondly, we find no reference to Section 6A of the General Clauses Act in either of these Constitution Bench judgments. Section 6A reads as follows: "6A. Repeal of Act making textual amendment in Act or Regulation - Where any Central Act or Regulation made after the commencement of this Act repeals any enactment by which the text of any Central Act or Regulation was amended by the express omission, insertion 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 a....
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....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." 6. On the other hand, ld. CIT-DR strongly relied upon the order of the DRP and submitted that the provision of Section 92BA sub-clause (i) has been omitted by the Finance Act, 2017 w.e.f. 01.04.2017, i.e., for the Assessment Year 2017- 18. Here the transaction pertains to Assessment Year 2016- 17 and during that period the provision of Section 92BA subclause (1) was there in the statute. If the provision has been omitted from a particular date then it applies 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....
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....he issue in favour of the assessee and will apply mutatis mutandis in the present appeal also. However, we deem fit to deal with the relevant law on this point. The amendment made in the Act which has the effect of omitting a clause from the statute has to be read in light with Section 6 of the General Clauses Act. As per section 6 of the General Clauses Act, if an amendment for omission has a provision therein that pending proceedings shall continue then such a proceeding will continue. However, in the absence of any such provision in the statue or in the rule, the pending proceeding will lapse. Section 6 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 an....
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....nconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in section 6 or in special Acts may modify the position. Thus the operation or repeal or deletion or to the future and the past largely depends on the savings applicable. In a case where a particular provision in a statute is omitted and in its place another provision dealing with the same contingency is introduced without a saving clause in favour of pending proceedings then it can be reasonable inferred that the intention of the legislature is that the pending 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. Commiss....
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....P) Ltd. 1970 SCR (1) 639 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 and argued that an "omission" would not amount to "repeal" and that since the present case was concerned with the omission of Section 280ZA, section 24 of general clauses act would have no application as it only applied to `repeals' and not 'omissions', and also that it saved rights that were given by subordinate legislation, and as the notification dated 22.9.1967 did not by itself confer any right on the appellant, section 24 of the General Clauses Act would not be attracted. 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 an....
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....olhapur Canesugar Works Ltd. (supra)) and 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. 12. Same view has been reiterated by the Hon'ble Supreme Court in the case of Shree Bhagwati Steel Rolling v. Commissioner of Central Excise, (2016) 3 SCC 643. In this case, the appellant took a rolling mill on lease from 1997 to 2000 and manufactured rerolled non-alloyed steel products. On 1.9.1997 the compounded levy scheme was introduced by insertion of section 3A of the Central Excise Act. The appellant opted for the aforesaid scheme under Rule 96ZP of the Central Excise 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....
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....e is no substance in the argument that "repeal" amounts to an obliteration from the very beginning, whereas an "omission" is only in futuro. 12.5 The Apex Court was of the view that when the court referred to section 6A in Fibre Board's case and held that section 6A shows that a repeal can be by way of an express omission, obviously what was meant was that an amendment which repealed a provision could do so by way of an express omission. Hence section 6A undisputedly leads to the conclusion that repeal would include repeal by way of an express omission. The Apex Court arrived at the conclusion that an "omission" would amount to a "repeal" for the purpose of Section 24 of the General 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 t....