TaxTMI 
TaxTMI 
2025 (5) TMI 1862
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....f Arm's Length Price of such specified domestic transaction. The TPO vide its order dated 06.10.2017 has proposed adjustment of Rs. 68,80,48,216/-. Based on such recommendation of the TPO, the final order was passed u/s 143(3) r.w.s. 144C of the Act on 30.12.2017 at a total income of Rs. 70,00,12,756/-. Against this order, an appeal was filed before ld. CIT(A) who vide order dated 30.08.2019 had dismissed the appeal of the assessee. Aggrieved by the said order of ld. CIT(A), the assessee preferred second appeal before the Tribunal. The coordinate bench of ITAT vide its order dated 03.02.2020 in ITA No. 7555/Del/2019 had restored back the issue of determination of Arm Length Price on specified domestic transaction to the file of AO / TPO for deciding afresh. 3. In compliance to the directions, the TPO vide its order dated 29.01.2022 u/s 92CA(3) of the Act had proposed adjustment of Rs. 68,80,48,216/- on account of specified domestic transaction. Thereafter the draft assessment order was passed on 11.02.2022 u/s 143(3) r.w.s. 254 r.w.s. 144C(1) of the Act. The assessee filed the objections against such draft order before the Hon'ble DRP. The Hon'ble DRP-1, New Delhi vide its order p....
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....tructure Pvt. Ltd. (an AE) as suggested by the TPO in its order giving effect to the direction of Hon'ble DRP and the total income of the assessee was assessed at Rs. 70,00,12,760/-. 6. Aggrieved with the final assessment order, the assessee is in appeal before this Tribunal on the strength of following grounds of appeal:- "1. That the assessing officer erred on facts and in law the order dated 22.12.2022 passed us 143(3) r.w.s. 254 read with Section 144B of the Income-tax Act, 1961 (the Act) imputing/confirming a total addition amounting to Rs. 68,80,48,216/- under Section 92BA of the Act. 2. That the Hon'ble DRP erred on facts and in law in failing to appreciate that since clause (1) of Section 92BA of the Act has been omitted vide Finance Act. 2017 means that the provisions were not in existence or never existed in the Statute Therefore, jurisdiction exercised by the TPO is legally invalid, thereby rendering the impugned transfer pricing addition amounting to Rs 68,80,48,216/ as unwarranted, bad in law and liable to be deleted. 3. That the Hon'ble DRP erred on facts and in law in not following the binding judicial precedents while confirming the impugned addition ....
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....ase of PCIT Vs. Taxport Overseas Pvt. Ltd. [ITA No. 392/2018 dated 12.12.2019] which order was followed by the various benches of Tribunal in following cases including Delhi Benches in the case of DLF Urban Pvt. Ltd. Vs. DCIT (ITA No. 1962/Del/2022 dated 08.04.2024), Yorkn Tech Pvt. Ltd. Vs. DCIT (ITA No. 635/Del/2021), SMR Automative Systems (I) Ltd. Vs. ACIT (ITA No. 6597/Del/2018), Shahi Exports Pvt. Ltd. Vs. ACIT (ITA No. 843/Del/2021). In all these cases, it is held that since section 92BA(i) has been omitted by Finance Act, 2017, Transfer Pricing reference and impugned proceedings and subsequent order by TPO and final order by AO will lapse and become invalid in law even for the earlier assessment years. It is also held that the omission of clause (i) of 92BA by Finance act, 2017 w.e.f. 01.04.2017 is without any saving clause of General Clauses Act thus the said clause never existed in statute books and therefore transfer pricing reference and impugned subsequent proceedings become invalid in law even for earlier assessment years. 12. The ld. AR also brought to our notice the explanatory note to Finance Act, 2017 where the scope of section 92BA of Act related to specified do....
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....red thereunder and all such legal proceedings or remedy may be continued for enforced as if the repealing rule and regulation had not been passed. As per ld. DR since the general rules with regard to the omission / repeal / amendment are common for all laws, therefore, what is important is the basic principle which regulate the effect the such omission / repeal. Ld. DR also placed reliance on the judgment of Hon'ble Delhi High Court in the case of Madhu Koda Vs. State through CBI in CRL.A. No. 1186/2017 dated 22.05.2020 wherein it was claimed by the appellant that "whether the appellant is liable to be acquitted in view of the enactment of the PC (Amendment) Act, 2018. It was contended on behalf of the appellant that he is entitled to the benefit of the doctrine of beneficial construction. Since the misconduct as contemplated u/s 13(1)(d) of the PC is no longer an offence punishable under the PC Act as amended by virtue of the PC Amendment Act 2018, the benefit of the same ought to be extended to the appellant. Mr. Bhandari had sought to draw strength from the decision of the Supreme Court in T. Barai (supra) for canvassing the above contention." The Hon'ble Court in para 54 of the....
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....from the statute book, section 280Y(d) having no independent existence would for all practical purposes also be "dead". On this reasoning, the Apex Court decided in favour of the appellant by holding that omission of section 280ZA and its re-enactment with modification in section 54G, section 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." 19. Further the findings in Shree Bhagwati Steel Rolling have been distinguished from para 12 onwards in the order of the Tribunal. 20. With regard to the judgment of Madhu Koda (supra) the ld. AR distinguished the same on facts by making following submission: A. Case dealt with the substituted provision of Section 13 of Prevention of Corruption (Amendment) Act, 2018 (Criminal Law does not apply retrospectively) - Present appeal deals with omission of Section 92BA(1) of the Act, vide Finance Act, 2017 b. Subject matter has attained finality before the amendment came into force. The subject matter in the present matter has not attained any finality. Impugned proceedings are barred by enforcement of Finance Act, 2017. 21. The ld. AR accordingly....
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....rd and the submissions we observe that the Id. DR could not dispute the fact that the Hon'ble Karnataka High Court in case of Texport Overseas Pvt. Ltd. (supra) and the coordinate Benches of this Tribunal in several cases, as referred by the Id. AR has held that once this section is omitted w.e.f 01.04.2017, the resultant effect is that it had never been passed to be considered as a law and never been existed. However, in the light of the Explanatory Notes to the Finance Act, 2017 relied by the Id. DR along with the judgement of the Hon'ble Supreme Court in the case of Fiber Boards Pvt. Ltd. (supra) and Shree Bhagwati Steel Rolling Mills (supra) which have been considered by the Mumbai Bench in the case of Firemenich Aromatics (India) Pvt. Ltd. (supra) we need to decide the impact of the judgement of the Hon'ble non-jurisdictional High Court in a situation in which these decisions canvassed a view contrary to what has been decided by another non-Jurisdictional High Court. 28. In this context, without much indulgence on our part, we would like to rely on the order of the Mumbai Bench of the Tribunal in the case of Sirn Slimpharma Pvt. Ltd. vs. ITO in ITA No.847/Mum/201....
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....ooked that the Income-tax Act is an All-India statute. Until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land" Of course, these observations were in the context of a provision being held to be unconstitutional, an issue on which the Tribunal could not have adjudicated anyway, as evident from the observation "Actually, the question of authoritative or persuasive decision does not arise in the present case because a Tribunal constituted under the Act has no jurisdiction to go into the question of constitutionality of the provisions of that statute" but nevertheless the respect for the higher judicial forum was unambiguous. In Tej International Pvt Ltd Vs DCIT [(2000) 69 TTJ 650 (Del)), a coordinate bench has, on this issue, observed that "In the hierarchical judicial system that we have, better wisdom of the Court below has to yield to higher wisdom of the Court above and, therefore, one a authority higher than this Tribunal has expressed an opinion on that issue, we are no longer at....
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....ourts are thus placed at a level certainly below the Hon'ble High Court, and it's a conscious call that is required to be taken with respect to the question whether, on the facts of a particular situation, the non-jurisdictional High Court is required to be followed. The decisions of non-jurisdictional High Courts do not, therefore, constitute a binding judicial precedent in all situations. To a forum like us, following a jurisdictional High Court decision is a compulsion of law and absolutely sacrosanct that way, but following a non-jurisdictional High Court is a call of judicial propriety which is never absolute, as it is inherently required to be blended with many other important considerations within the framework of law, or something which cannot be, in deserving cases, deviated from. [Emphasis, by underlining, supplied by us] 8. ................... At one place, this decision, inter alia, states that "To a forum like us, following a jurisdictional High Court decision is a compulsion of law and absolutely sacrosanct that way, but following a non-jurisdictional High Court is a call of judicial propriety.....which can...be, in deserving cases, deviated from". Implicit....
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.... there in the statute when the appeal was filed and, subsequently, if the statute had omitted the provision, the substantive right of appeal vested in a party would not be taken away by holding the repeal to be retrospective However, However, in the case in hand, a substantive provision, being infact a charging provision, has been omitted/deleted and consequently benefit of the same has to be given to the assessee. Thus, we are inclined to follow the Hon'ble Karnataka High Court judgement and, on that basis, the additional ground raised by the assessee deserves to be allowed and consequently the whole exercise done by ld. AO to bench mark the transaction of purchase of development right, stands being void. 32. Similarly in the case of SMR Automotive Systems (I) Ltd. (supra) the coordinate bench of Tribunal in para 14 and 15 of the order has held the reference made to the TPO u/s 92CA of the Act to be invalid and bad in law. The relevant observations of the tribunal as contained in para 14 & 15 are as under: "14. We find that an identical issue came up for adjudication before the coordinate bench, Bangalore in IT(TP)A No. 1722/2017. The relevant findings of the coordinate ben....
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....e 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 clause or provision introduced by way of an amendment while omitting sub-section (9) of Section 1 OB. Therefore, once the aforesaid section is omitted from the statute book, the result is it had never been passed and be considered as a law that never exists and therefore, when the assessment orders were passed in 2006, the AO was not justified in talking note of a provision which was not i....
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.... and the DRP and restore the matter to the AO with the direction to re-adjudicate 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 and on perusal of records in general and order passed by tribunal in particular it is clearly noticeable that Clause (1) 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 KOHLAPUR CANESUGAR WORKS LTD. v. UNION OF INDIA reported in AIR 2000 SC 811 whereunder Ape....
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....invalid and bad in law. 7. It is for this precise reason, tribunal has rightly held that order passed by the TPO and DRP is unsustainable in the eyes of law The said finding is based on the authoritative principles enunciated by the Hon'ble Supreme Court in Kolhapur Canesugar Works Ltd referred to herein supra which has been followed by Co-ordinate Bench of this Court in the matter of M/S.GE Thermometrias India Private Ltd., stated supra. As such we are of the considered view that first substantial question of law raised in the appeal by the revenue in respective appeal memorandum could not arise for consideration particularly when the said issue being no more res integra" 15. Respectfully following the decision of the co-ordinate bench [supra] which has been upheld by the Hon'ble High Court of Karnataka [supra] we have no hesitation in holding that the cognizance taken by the Assessing Officer u/s 92CA is invalid and bad in law. Therefore, the consequential order passed by the TPO and DRP is also not sustainable in the eyes of law. 33. The analysis of various judgments of Hon'ble Supreme Court on the issue of application of any provision after its omission from statut....
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....s that - "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 favor 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." From the aforementioned, it can be seen that the Hon'ble Court uses the term repeal, omission and deletion interchangeably. This is also inferable that in case a provision is omitted, Section 6 may change the position which is contrary to what Rayala Corporation judgment says. Rayala Corporation clearly states that Section 6 of GCA is only applicable to the ma....
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....uriam as they did not consider Section 6-A of the GC Act and with this effect held that: "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 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." In the case of Bhagwati Steel Rolling V. Commissioner of Central Excise (2016) 3 SCC 643, the same two-Judge Bench of Fibre Boards case, once again after a month decided the present issue in detail in Shree Bhagwati Steel Rolling v. Commissioner of Central Excise 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 is no longer the....