TaxTMI 
TaxTMI 
2022 (12) TMI 1577
X X X X Extracts X X X X
X X X X Extracts X X X X
....this ground is also rejected. 4. Ground No. 11 is a general ground of appeal, which does not call for recording of any finding. 5. In Grounds No. 1 to 5 and 6(a) to 6(f), the assessee has agitated only one issue, i.e. whether any adjustment required to be made under section 92BA on account of domestic transaction between the Associated Enterprises (AEs) of the assessee under section 40A(2)(b) of the Income Tax Act or not. In other words, there was a transaction between the assessee and its AE with respect to 40A(2)(b, whether any transfer pricing adjustment in the value of such transaction can be made with the help of 92BA of the Income Tax Act or not? 6. The ld. Counsel for the assessee, at the very outset, submitted that similar transaction was available in A.Y. 2014-15 and the dispute travelled upto the Tribunal. The Tribunal has held that clause (i) of section 92BA regarding the domestic transaction between the AEs under section 40A(2)(b) of the Act has been omitted by the Finance Act, 2017 w.e.f. 1st April, 2017 and in view of the effect of such omission when the provision was not in existence or never existed in the statute, then whatever exercise has been done by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for scrutiny and notice u/s 143(2) of the Act was issued and served upon the assessee. The Assessing Officer found that there was large specified domestic transaction reflecting from Form 3CEB with regard to mismatch the amount paid to related persons u/s 40A(2)(b) of the Act reported in the audit report. The Assessing Officer made reference to the Transfer Pricing Officer (TPO) for determination of ALP of these domestic transactions as per Section 92BA(i) of the Act. The impugned assessment order passed u/s 143(3) r.w.s. 144C(3) of the Act on 26/12/2019 after following the order of the TPO u/s 92CA(3) of the Act and income of the assessee was determined at Rs.7,32,93,932/- which has given rise to a tax demand of Rs.3,09,25,470/-. 6. Aggrieved with the assessment order, the assessee carried the matter in appeal before the ld. First Appellate Authority. The ld. First Appellate Authority has allowed the appeal of the assessee substantially but rejected its grounds partially. Hence, both the parties are before us. 7. During the pendency of appeal before the ld. CIT(A), it was pleaded that Clause (i) to Section 92BA, accepting the domestic transactions between the AEs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....laced reliance on the order of the Co-ordinate Bench of ITAT Kolkata, in the case of M/s. Raipur Steel Casting India (P) Ltd. vs. PCIT-5, Kolkata in ITA No. 895/Kol/2019. Copy of all these decisions are placed on record. 9. The ld. CIT D/R, on the other hand, also placed reliance of the order of the ITAT Kolkata Bench in the case of M/s. Raipur Steel Casting India (P) Ltd. (supra). He mainly relied upon the written submissions filed by the ld. D/R on that case. He read over paragraph no. 10 of this order, where the stand of the revenue has been noticed by the Tribunal. This paragraph reads as under:- "10. On the other hand, Shri Vijay Shankar, (CIT DR), on behalf of the Revenue vehemently argued that clause (i) of section 92BA has been "repealed" and not "omitted." Effect of such "Repeal" means the clause (i) of section 92BA was in existence till 01.04.2017 and it was removed by the Finance Act, 2017. In the assessee's case under consideration, ld PCIT has exercised his jurisdiction under section 263 of the Act, for the assessment year 2014-15. In the assessment year 2014-15, the clause (i) of section 92BA was in force therefore, the exercise of the jurisdiction u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Against this it is submitted that Section-6 of GCA, 1897 has to be read in consonance with Section-6A of GCA, 1897. The relevant portion of the GCA, 1897 is reproduced as under- "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 enforce....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6A of the General Clauses Act, 1897. Making reference to the decision of the Hon'ble Supreme Court in the case of M/s. Shree Bhagwati Steel Rolling Mills vs. CIT Excise & Others - 2015 (326) ELT 209 (S.C.), he contended that the Hon'ble Supreme Court in this judgment has observed that an omission is also one of the modes to repeal the provision. In other words, according to the ld. CIT D/R, there is not distinction between "repeal" or "omission" and both are to be read as synonymous to each other and if omission is also to be treated as repealed then action taken under the provision when it was in subsistence would continue even after it is repealed. 11. We have duly considered the rival contentions and gone through the record carefully. We find that though all these arguments have been duly considered by the ITAT in the orders for the earlier years, particularly in the case of M/s. Raipur Steel Casting India (P) Ltd. (supra), but after taking note of the m, the issue was decided in favour of the assessee. In the case of M/s. DVC Emta Coal Mines Ltd. (supra), ITAT Kolkata as reproduced the finding of the ITAT Bangalore and thereafter held that effect of Finance Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e AO with the direction given in the said order. We note that the legal issue raised by the assessee goes to the root of the matter and we note that the AO has made a reference u/s. 92 Ld. CIT(A) having observed that the assessee has entered into specified domestic transactions since this case was covered u/s. 92BA of the Act but later on there was an amendment in Sec. 92BA by Finance Act, 2019 w.e.f. 01.04.2017 whereby clause (ii) of sec. 92BA relating to any expenditure in respect of which payment have been made or is to be made to a person referred to clause (b) of sub- section (2) of section 40A of the Act was omitted and, according to Ld. AR, on account of its omission, the impugned transaction would not fall within the definition of specified domestic transaction and referred to the judgment of Hon'ble Supreme Court in the case of CIT Vs. General Finance Co. Vs. ACIT 257 ITR 338 (SC) in which the Apex Court has held that the principle underlying section 6 of General Clauses Act 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 of the provision of the Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f specified domestic transaction. Therefore, it has become necessary for the assessee to raise this additional ground before the Tribunal. 4. The learned counsel for the assessee has further invited bur attention that provision of section 928A was brought on statute by the Finance Act, 2012 w.e.f. 01.04.2013 relevant to assessment year 2013-14. Therefore, it is the first year when the transactions are to be examined in the light of provision of section 928A of the Act. Since the transactions under clause (i) exceeded the prescribed limit, the AO considered it to be specified domestic transaction and made a reference to TPO for computation of ALP. Accordingly, TPO *has computed the ALP which was objected to by the assesses 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 assessee has undertaken the transactions which has exceeded the prescribed limit, was omitted by the Finance Act, 2017 w.e.f. 01.04.2017. Since clause (i) has been omitted from the statute by virtue of the, amendment, this particular sub clause shall be deeme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6. The learned DR on the other-hand has contended that even if it is held that the clause (i) of section 928A relating to expenditures 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 is not on the statute since beginning in view of the amendment and in the light of various judicial pronouncements the reference made by AO to TPO is bad in law, the AO is required to examine the claim of the assessee 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 (i), 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 AO 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. 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 10B. 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 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 10B of the Act irrespective of the fact whether during the period to which they are entitled to the benefit, the ownership 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....04.2017. The legal effect of a provision being omitted by subsequent amendment, then it would be deemed that clause (i) was never been on the statute book. While omitting the clause (i) of section 92BA, we note that nothing was specified whether the proceeding initiated or action taken on this continue. Therefore, the proceeding initiated or action taken under that clause would not survive at all. In the light of this legal position, the cognizance taken by the AO under section 92BA(i) and reference made to TPO under section 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. Therefore, the legal effect is when this clause (i) is omitted from the statute it has to be taken as though there is no clause (i) since its inception. And when looked from that angle, the AO should have framed the assessment as in normal course after making necessary enquiries of particular claim of expenditure in accordance with law. But this exercise could not happen on account of provisions of section 92BA clause (i) of the Act. Therefore, since this clause (i) has been omitted from the statute by virtue of the aforesaid....