TaxTMI 
TaxTMI 
2023 (10) TMI 1358
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....he Ld. CIT(A) has erred in concluding that the Arm's Length Price calculated by the assessee was in accordance with the universally acceptable CUP method. In doing so, the Ld. CIT(A) has held that the CUP method should be applied on an aggregate basis, however, considering the nature of business of the assessee, wherein the prices are fluctuating a lot, monthly averages are a better CUP than the aggregate CUP." 3. "On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in concluding that since the price difference is within the range of 3%, the same is to be considered at Arm's Length However, in doing so, the 3% should have been applied on transactional level and not at an aggregate level." 3. Whereas in cross objection the assessee has raised following grounds:- 1. Ommission of Clause (i) to Section 92BA 1.1 The Learned Commissioner of Income-tax (Appeals)-56, Mumbai ("Ld. CIT (A)"] erred in confirming the action of the A.O. in initiating the Transfer Pricing proceeding against the Appellant with respect to its 'specified domestic transaction', by invoking the provisions of clause (i) of section 92BA of ....
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....btracted and effective rate per metric ton was calculated. The TPO took average monthly price of purchases made from third party and non-AEs the prices so arrived with was compared the price paid to the AE. Thus, the ld.TPO worked out adjustment of Rs 1,84,89,101/- in respect of purchase of aluminium wire rod (Alloy) and adjustment of Rs 14,47,982/- In respect of aluminium wire rod-EC. Thus, the ld. TPO has made total adjustment of Rs. 1,99,37,083/-. 6. Before the ld. CIT (A) it was submitted that the reference to the ld.TPO in respect of SDT in clause 92BA(i) has been omitted from the statute by the Finance Act, 2017 w.e.f. 01/04/2017 and therefore, the entire reference and transfer pricing adjustment made by the ld. TPO is invalid. In support certain judgments have also been relied upon including the judgment of Hon'ble Karnataka High Court in the case of PCIT vs. Texport Overseas (P) Ltd. (2020) 114 taxmann.com 568. The ld. CIT (A) accepted the said contention and held that preference made by the ld. AO to the ld. TPO in respect of such SDT is invalid and bad in law. However, he further held that the difference has worked out by the ld. TPO between the total value of purchase....
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....ontrary to the apparent and explicit legislative intent with respect to it being applicable from AY 2017-18 onwards would be an incorrect statutory interpretation. In the case of the assessee, the controversy has arisen due to the word "omitted" used at the time of the amendment to section 92BA by the Finance Act, 2017 wef 1-4-2017. It has been interpreted that since the word "omitted" has been used, the said legislation has to be interpreted differently from "repeal" and would mean that the said provision never existed right from its inception. That, therefore, any proceedings Initiated during the currency or applicability of the said provision would not survive and would be required to be held as ab initio void. However, it is the case of the Revenue that the said provision has been repealed and repeal takes omission within its ken. It is to be humbly submitted that such an Interpretation is the only interpretation which is in consonance with the apparent and explicit legislative intent. As brought out above, the object of repealing or amending by using the word omission was merely to remove an enactment which had become unnecessary and was not in consonance with the legislative ....
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....ts committed in a repealed legislation. The Court while differentiating the two terms held that "Section 6 of the General Clauses Act cannot obviously apply on the omission of Rule 132-A of the DI Rules 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." (emphasis supplied) The Supreme Court in the above judgment did not discuss the two terms 'repeal' and 'omission' before coming to the said conclusion. There is no discussion on how the two terms are separate and whether they can be used interchangeably. 3.3 Rayala Corporation case came for consideration before the five-Judge Bench of Supreme Court in Kolhapur Canesugar Works Ltd. v. Union of India [(200) 2 SCC 536]. In this case the Court dealt with the definitions of 'Central Act', 'enactment', 'regulation', 'rule' as defined in Sections 3(7), 3(19), 3(50) and 3(51) respectively in the General Clauses Act and held that Section 6 only applies to Central Act and regulations. The Court further stated that- "When the Legislature by....
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....nctly lay out the distinction between the two terms Further, both the cases (Kolhapur Canesugar and Rayala Corporation) have not considered Section 6-A of the GCA which has been reproduced hereinafter- "6-A. 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." 3.5 This argument was raised in General Finance Co. v Assistant Commissioner of Income Tax, Punjab [(2002) 7 SCC 11, to state that the earlier two Judgments neither discussed the distinction between the two terms, nor they considered Section 6-A of the GC Act. It was further argued that the "use of the words 'repeals by express omission, Insertion or substitution' will cover different aspects of repeal, that this is a further legislative indication that 'omission....
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....e, obviously the word "repeal" in both Section 6 and Section 24 would, therefore, include repeals by express omission. The absence of any reference to Section 6-A, therefore, again undoes the binding effect of these two judgments on an application of the 'per incuriam' principle." [Fibre Boards (P) Ltd vs CIT. (2015) 10 SCC 333 at p 355] 3.7 It is to humbly submit that, the same two-Judge Bench of Fibre Boards case, once again after a month decided the said issue in detail in Shree Bhagwati Steel Rolling v. Commissioner of Central Excise [(2016) 3 SCC 643] and held 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. The Court further observed that all these expressions only go to form and not to substance. It also reiterated its stand in Fibre Boards case and held that "This again does not take us further as this statement of the law in Rayala Corporation [(1969) 2 SCC 412] is no longer the law declared by the Supreme Court after the decision in the Fibre Boards case." [Fibre Boards (P) Ltd. vs CIT, (2015) 10 SCC 333 at p.....
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....as to be effective/applicable from AY 2017-18 onwards, the un-amended provisions of clause (1) of sec 92BA of the Income-tax Act, 1961 would become applicable for AY 2013-14 for it is an AY prior to AY 2017-18. It is therefore prayed that the un-amended provisions of clause (1) of sec 92BA of the Income-tax Act, 1961 be held applicable for AY 2015-16 which is the AY under consideration in the instant appeal 5. In view of the above, it is humbly prayed that Cross Objections of the assessee Appellant may be dismissed. It is prayed accordingly. It is to humbly state that these submissions are only with respect to Ground No. 1 in Cross Objections of the assessee Appellant and may kindly be taken on record and favourably considered while deciding the case. 8. Before us ld. Counsel for the assessee relied upon the decision of ITAT Delhi Bench in the case of Yorkn Tech Pvt. Ltd. vs. DCIT in ITA No. 635/Del/2021 order dated 18/08/2021, wherein the Tribunal has discussed all these decisions as relied upon by the ld. DR including the judgment of Hon'ble Karnataka High Court in the case of Texport Overseas (P) Ltd supra. Following these decisions from various judgments of this Tri....
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....t the said clause was never part of the Act and any proceedings commenced under the omitted provision cannot be enforced or action can be taken thereafter. In support, the judgment of Hon'ble Karnataka High Court has been relied upon in the case of PCIT vs. Textport Overseas Pvt. Ltd., reported in (2020) 114 taxmann.com 568 (Karnataka) and catena of ITAT Judgments cited supra, the relevant text of which have already been incorporated above. The Finance Act 2017 has omitted SDT whereby any expenditure in respect of which payment has been made or has to be made to a person referred to in clause (b) of sub-Section (ii) of Section 40. It has been omitted w.e.f. 01.04.2017. This precise issue had come up for consideration before the Hon'ble Karnataka High Court wherein the Hon'ble High Court have held that when clause (i) of Section 92BA have been omitted by the Finance Act, 2017 w.e.f. 01.04.2017 from the statute, the resultant effect is that, it had never been passed and to be considered as a law never been existed and therefore order of TPO u/s.92BA could be invalid and bad in law, While coming to this conclusion the Hon'ble High Court has referred and relied upon the judgment of Hon....
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....on 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. 9. Ergo, for the purpose of present issue involved, clause (a) of Section 6 of the General Clauses Act is applicable which provides that the effect of the repeal shall not revive anything not in force or existing at the time of repeal takes effect. Section 6A provides that where any Act or Regulation repeals any enactment by which the text of any Act or Regulation is amended by express omission and 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. There is absolutely no saving clause while omitting (i) of Section 92BA by the Finance Act, 2017. The Constitutional Bench of Hon'ble Supreme Court in the case of Kolhapur Canesugar Works Ltd. & Anr. v. Union of India & Ors., (2000) 2 SCC 536 has observed and held as under: "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 com....
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.... Boards (P) Ltd. Bangalore v. Commissioner of Income Tax, Bangalore, (supra) the appellant had an industrial unit at Thane which was a notified urban area. With a view to shift its industrial undertaking from an urban area to a non-urban area, it sold its land, building and plant and machinery situated at Thane and earned capital gain and claimed exemption under section 54G. Chapter XXII-B of the Income Tax Act, prior to 1.4.1988, contained section 280ZA which when read with the definition of "urban area" in section 280Y(d) and notification dated 22.9.1967 issued under section 280Y(d) by which Thane had been declared to be an urban area for the purpose of Chapter XXII- B, gave to a person who shifted from an urban area to another area, a tax credit certificate with reference to the tax payable by the company on income-tax chargeable under capital gains and would be given relief accordingly. The Appellant contended that section 54G was inserted on 1.4.1988 and at the same time section 280ZA was omitted and that therefore Section 24 of the General Clauses Act would be attracted to the notification dated 22.09.1967. That notification would inure to the benefit of the appellan....
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....on 24 of the General Clauses Act would apply, and the notification dated 22.9.1967 would be continued under and for the purposes of Section 54G. 11.3 The Apex court while rendering its decision in the aforesaid case held that in Rayala Corporation, what fell for decision was whether proceedings could be validly continued on a complaint in respect of a charge made under Rule 132A of the Defence of India Rules, which ceased to be in existence before the accused were convicted in respect of the charge made under the said rule. It stated that once it is held by the constitution bench in Rayala that section 6 itself would not apply, it would be wholly superfluous to further state that on an interpretation of the word "repeal", an "omission" would not be included and therefore the second so- called ratio of the Constitution Bench in Rayala Corporation cannot be said to be a ratio decidendi at all and is really in the nature of obiter dicta. The Apex Court was of the opinion that the word "repeal" in both section 6 and section 24 would include repeals by express omission. An implied repeal is covered by the expression "repeal" and repeals may take any form and so long as a statut....
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....contended that section 6A which was relied upon in Fibre Board's case did not state that an "omission" would be included within the expression "repeal", but that if section 6A were carefully read, an "omission" would only be included in an "amendment" which, under the section, can be by way of omission, insertion or substitution. Therefore, it is fallacious to state that section 6A would lead to the conclusion that "omissions" are included in "repeals" and for various reasons Fibre Boards requires a relook and ought to be referred to a larger Bench of three Judges. The appellant further contended that the true ratio decidendi of the Constitution Bench decision in Rayala Corporation is that an "omission" cannot amount to a "repeal". 12.3 The revenue supported the judgment in the Fibre Board's case. 12.4 The Apex Court held that when section 6 of the General Clauses Act speaks of the repeal of any enactment, it refers not merely to the enactment as a whole but also to any provision contained in any Act and if a part of a statute is deleted, section 6 would nonetheless apply. The Apex court referred to Fibre Board (supra) wherein it is stated that the expression "omi....