TaxTMI 
TaxTMI 
2023 (8) TMI 717
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..../- as against returned loss of Rs. 28,82,10,558/ declared by the appellant. 3. The addition of Rs. 60,92,02,263/- being adjustment under section 92CA, 234B and general disallowance of the Act made by the Assessing Officer is bad in law. 4. The TPO, DRP and the Assessing Officer erred in - * Rejecting the TP study of the appellant. * Selecting TNM Method for determining the Arm's Length Price (ALP) as against the CUP Method followed by the Company resulting in an illogical comparison of financial data. * Without prejudice to CUP method selected by the Company, we would like to bring to your kind attention that the provisions of Sec, 92C(1) required taxpayer to select the method that under the facts and circumstances provides the most reliable measure of Arm's Length Price. * Based on the facts and circumstances, the most reliable measure of the Arm's Length Price is CUP method. However, the other immediate most appropriate method which would be applicable for Company is Resale Price Method (RPM). 5. The authorities have erred in not giving effect to the reduction in scope of Transfer Pricing for Specified Domestic Transa....
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.... DRP and the CO failed to understand the spirit and intent of Rule 10B(1)(e)(ii) as per which even if one of the comparables selected by the appellant satisfies the computation mechanism for determination of the ALP, the determination of ALP by using arithmetic mean of difference comparables is not warranted under the facts and circumstances of the case. 14. The appellant denies itself liable to be levied to interest under sections 234B of the Act and further, the computation of interest under sections 234B was not provided to the appellant as regard to the rate, period and method of calculations of interest under the facts and circumstances of the case. 15. The appellant craves leave to add, alter, delete, and modify any of the grounds which are urged above. 16. For the above and such other grounds as may be urged at the time of hearing the appellant prays your Honour to consider the facts and circumstances of the case and justice be rendered. Grounds of appeal in ITA No. 1599/Bang/2019 for Assessment Year 2015-16 1. The Learned Transfer Pricing Officer (TPO) and the Learned Assessing Officer (AO) has failed to consider the fact that th....
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....t was noticed that for determination of ALP by the assessee for international transactions as well as specified domestic transactions (SDT). CUP method was adopted by the assessee. The learned TPO after examining the details, rejected the CUP method and applied TNMM method and he determined the adjustment of Rs. 25,72,10,127/-. The AO after receipt of the order under section 92CA passed by the TPO, proceeded to complete the assessment. The AO further observed that the assessee had creditors to which the AO issued notice under section 133(6) of the Act to 13 creditors to ascertain the turnover and also to confirm the balance as on 31.03.2014. The AO partly received replies from the creditors and after examining the information received from the creditors, he observed differences in the closing balance shown by the creditors in their books and the assessee's books and he summarized in the chart as under : Name Ledger Extract Replied Difference Nava Karnataka Steels Pvt Ltd 1,45,42,41,671 1,45,42,41,671 NIL Triveni Movers Pvt Ltd 1,91,88,192 18735117 4,53,075 Nizam Coal Pvt Ltd 5,54,475 5,54,475 M S Metals & Steels 5,46,618 ....
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....section 92CA of the Act. He further submitted that the addition made towards difference in closing balance is correct. 7. Considering the rival submissions, and perusing the material on record, we note that the assessee has raised issue in regard to the applicability of section 92BA(i) on the SDT. It is clear that the assessee has undertaken SDT with its AEs of Rs. 35,76,44,188/-. The TPO suggested for adjustment of Rs. 25,72,10,127- & the assessee has also undertaken other international transactions of Rs. 21,15,692/- as is evident from the TPO order at para No. 3. This issue was raised before the ld. DRP but they did not accept the objection of the assessee. Before deciding this issue, first we refer to the Memorandum of the Finance Bill 2012 in this regard which is as under:- TRANSFER PRICING REGULATIONS TO APPLY TO CERTAIN DOMESTIC TRANSACTIONS Section 40A of the Act empowers the Assessing Officer to disallow unreasonable expenditure incurred between related parties. Further, under Chapter VI-A and section 10AA, the Assessing Officer is empowered to re-compute the income (based on fair market value) of the undertaking to which profit linked deduction is pro....
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....gregate amount of all such domestic transactions exceeds Rupees 5 crore in a year. It is further proposed to amend the meaning of related persons as provided in section 40A to include companies having the same holding company. This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the Assessment Year 2013-14 and subsequent assessment years. [Clauses 12, 23, 29, 33, 35, 37, 38, 92, 94, 97] 7.1. For the sake of convenience we are reproducing the relevant clause of the Finance Bill 2017 as under:- Scope of section 92BA of the Income-tax Act relating to Specified Domestic Transactions The existing provisions of section 92BA of the Act, inter-alia provide that any expenditure in respect of which payment has been made by the assessee to certain "specified persons" under section 40A(2)(b) are covered within the ambit of specified domestic transactions. As a matter of compliance and reporting, taxpayers need to obtain the chartered accountant's certificate in Form 3CEB providing the details such as list of related parties, nature and value of specified domestic transactions (SDTs), method used to ....
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....ned in the light of provision of section 92BA of the Act. The AO having observed that the assessee has entered into specified domestic transaction covered under section 92BA of the IT Act and made a reference under section 92CA, to TPO for computation of ALP. Accordingly, TPO has computed the ALP which, was objected to by the assessee before the DRP and DRP disposed off the objections with certain findings/directions. 5. The learned counsel for the assessee further contended that sub clause (I) of section 92BA under which has undertaken the transactions which has exceeded the prescribed limit, was omitted by the Finance Act, 2017 w.e.f. 1- 4-2017. Since clause (i) has been omitted from the statute by virtue of the amendment, this particular sub clause shall be deemed not to be on the statute since the beginning. In support of his contention, the learned counsel for the assessee has placed a heavy reliance upon the judgment of the Apex Court in the case of Kolliapur Canesugar Works Ltd. v. Union of India in Appeal (Civil) 2132 of 1994 vide judgment dated 1-2-2000 in which the constitution bench has held that section 6 only applies to repeals and not to omissions, and applie....
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....claim of the in the light of other provisions of the Act. 7. Having carefully examined the orders of authorities below in the light of rival submissions and relevant provisions and various judicial pronouncements, we find that by virtue of the insertion of section 92BA on the statute as per clause (1), any expenditure 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 exceeds the prescribed limit, it would be a specified domestic transaction for which AU is required to make a reference to TPO under section 92CA of the Act for determination of the ALP. In the instant case, since the transaction exceeds the prescribed limit it becomes the specified domestic transaction for which reference was made by the AO to the TPO under section 92CA for determination of the ALP. Consequently, the TPO submitted a report which was objected to by the learned counsel for the assessee and filed a objection before the DRP. Having adjudicated the objections, the DRP has issued certain directions and consequently the AO passed an order. Subsequently, by Finance Act, 2017 w.e.f. 1-4-2017, clause (i) of section 92BA was om....
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.... was not justified in taking note of a provision which was not in the statute book and denying benefit to the assessee. The whole object of such omission is to extend the benefit under section 1OB of the Act irrespective of the fact whether during the period to which they are entitled to the benefit, the owners continues with the original assessee or it is transferred to another person. Benefit is to the undertaking and not to the person who is running the business. We do not see any merit in these appeals. The substantial question of law is answered in favour of the assessee and against the revenue. Accordingly, the appeals are dismissed." 9. From the aforesaid judgments, it has become abundantly clear that once a particular provision of section is omitted from the statute, it shall be deemed to be omitted from its inception unless and until there is some saving clause or provision to make it clear that action taken or proceeding initiated under that provision or section would continue and would not be left on account of omission. 10. In the instant case, undisputedly, by the Finance Act, 2017, clause (1) of section 92BA has been omitted w.e.f. 14-20 17. Once thi....
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....he 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 had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engrafted by the provisions of section 6(1). 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 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 of repeal or deletion as 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 ....
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....692 which is less than Rs. 1 crore, therefore the TP adjustment should not be made. With these observations, we remit this issue to the file of the AO for examination and decide as per law. This issue is allowed for statistical purpose. The other grounds raised by the assessee with regard to adjustment towards international transactions are left open. 8. In respect of ground No. 7, the assessee has raised the issue that the unconfirmed creditors which were based on the letter written as unserved and addition made towards differences noted by the AO are baseless and no proper opportunity was granted to the assessee. This issue was also raised before the ld. DRP but the DRP decided the issue against the assessee. The ld. AR of the assessee undertook that if a chance is given to the assessee for verification of the creditors, the assessee would be able to prove that the creditors are genuine. Considering the prayer of the assessee, this issue is remitted back to the AO to decide the issue as per law after giving reasonable opportunity to the assessee and the assessee is directed not to seek unnecessary adjournments. Accordingly ground No. 7 is allowed for statistical purposes. 9....