TaxTMI 
TaxTMI 
2026 (9) TMI 375
X X X X Extracts X X X X
X X X X Extracts X X X X
..../appellant manufactured audio video electronic products in India in the relevant previous year. And also that it had executed the impugned specified domestic transactions involving purchase of goods, payments of job charges and rent etc. with the persons covered under section 40A(2)(b) of the Act which duly came within the ambit of Chapter X of the Act at that point of time. The Transfer Pricing Officer "TPO" made the necessary reference so as to ascertain the arm's length price "ALP" thereof. We wish to emphasize here that the assessee had declared its operating profits/sales margin for the relevant previous year @ 1.65% after adopting the transactional net margin method "TNMM" to buttress the point that its aforesaid OP/sales margin was indeed at arm's length. The "TPO" appears to have passed his order on 10.10.2016, inter alia, rejecting the same and arrived at revised average OP/sales margin @ 4.70% thereby proposing upward adjustment of Rs. 5,12,70,379/- in question. Learned Dispute Resolution Panel "DRP" issued its direction on 31.07.2017 upholding the same. It is in this factual backdrop that the learned Assessing Officer has framed his impugned assessment on 28.08.2017 maki....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 whereunder 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. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment in the Act vide Finance Act, 2017 w.e.f. 01.04.2017 in principle. He places on record the Explanatory Memorandum thereof that the same would "take effect from 1st April, 2017 and will accordingly apply from assessment year 2017-18 and subsequent assessment years', reading as under: "44. Scope of section 92BA of the Income-tax Act relating to Specified Domestic Transactions (SDTs). 44.1 Before amendment by the Act, the provisions of section 92BA of the Income-tax Act provided inter alia ^Sf any expenditure in respect of which payment has been made by the assessee to certain "specified persons" under section 40A(2)(b) of the Income-tax Act were covered within the ambit of SDTs. 44.2 As a matter of compliance and reporting, taxpayers needed to obtain the chartered accountant's certificate in Form 3CEB providing the details such as list of related parties, nature and value of SDTs, method used to determine the arm's length price for SDTs, positions taken with regard to certain transactions not considered as SDTs, etc. This had considerably increased the compliance burden of the taxpayers. 44.3 In order to reduce the compliance burden of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erican Express Bank Ltd. (2025) 484 ITR 137 (SC), as under: "27. Before addressing the aforementioned issue, we consider it appropriate to first discuss certain principles that guide the interpretation of taxing statutes. (i) Basic Principles of Interpretation 28. It is a well-established rule that taxing statutes have to be strictly construed. In CIT v. Kasturi & Sons Ltd. [1999] 237 ITR 24/103 Taxman 342 (SC)/(1999) 3 SCC 346, this Court was determining the meaning of the word 'moneys' in the expression 'money's payable' under Section 41(2) of the Act, 1961. In that context, the Court referenced the following concerning the strict interpretation of taxation statutes: "9. The principle that a taxing statute should be strictly construed is well settled. In Principles of Statutory Interpretation by Justice G.P. Singh, 6th Edn., 1996, the law is stated thus: "The well-established rule in the familiar words of Lord Wensleydale, reaffirmed by Lord Halsbury and Lord Simonds, means: 'The subject is not to be taxed without clear words for that purpose; and also that every Act of Parliament must be read according to the n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh v. Dr. Vijay Anand Maharaj [1962] 45 ITR 414 (SC)/1962 SCC OnLine SC 12, M.V. Joshi v. M.U. Shimpi 1961 SCC OnLine SC 56 & Godrej & Boyce Manufacturing Company Ltd. v. Dy. CIT [2017] 81 taxmann.com 111/394 ITR 449/247 Taxman 361 (SC)/(2017) 7 SCC 421. 31. While, at first glance, the principle of plain meaning, as referred to above, may seem simple and self-contained, it is crucial to understand the nuances involved when applying it to disputes surrounding statutory interpretation. The same has been lucidly spelt out in the Principles of Statutory Interpretation by Justice G.P. Singh, fourteenth edition (2016), and reads thus: "It may look somewhat paradoxical that plain meaning rule is not plain and requires some explanation. The rule, that plain words require no construction, starts with the premise that the words are plain, which is itself a conclusion reached after construing the words. It is not possible to decide whether certain words are plain or ambiguous unless they are studied in their context and construed. The rule, therefore, in reality means that after you have construed the words and have come to the conclusion that they can bear only one meaning,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... process of construction. One cannot simply declare words to be clear without first studying them, and (ii) secondly, true unambiguity depends on context, not just grammar. Words cannot be judged in isolation, as most words are capable of multiple meanings. A provision is seen as unambiguous only when, after being examined in its specific context, almost anyone competent would assign to it a single, appropriate meaning to the exclusion of others, i.e., the words are unambiguous in the context of the provision in question. 33. This aspect of interpreting the words of a statute in their specific context has also been affirmed by this Court. In Commissioner of Gift Tax, Madras v. N.S. Getty Chettiar, reported in (1971) 2 SCC 741, this Court examined the meaning that should be given to words "disposition, conveyance, assignment, settlement, delivery, payment, and alienation" appearing in Section 2(xxiv) of the Gift Tax Act, 1958. The court observed that the true meaning of statutory language cannot be understood merely by holding the text in one hand and a dictionary in the other. Instead, the words must be interpreted by considering the context in which they are used and the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to repair an omission in the Act, it should be possible to state with certainty that these or similar words would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law." 36. If legislative intention is to be principally assessed based on the language of the enactment, then under what circumstances should the objects and purposes behind a legislation be taken into account? This Court in Shashikant Laxman Kale v. UOI [1990] 185 ITR 104/52 Taxman 352 (SC)/(1990) 4 SCC 366, established a distinction between the purpose or object of an enactment and the legislative intent. It held that while the former is to provide a remedy for the malady, the latter relates to the meaning or exposition of the remedy as enacted. Thus, the object and purpose are elements that are taken into account more concretely when the court is applying the mischief rule of interpretation. 37. The mischief rule of interpretation, also known as Heydon's Rule, was established in England as far back as 1584. This rule states that for the sure and true interpretation of all statutes in general, four things are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The legislative intent is primarily to be gathered from the specific words used by the legislature. Reference to the object and purpose becomes crucial in those situations where the language is ambiguous and capable of multiple constructions. (e) Under ordinary circumstances, it is impermissible for the Court to add or read words into the statute, especially when the language is plain and unambiguous, on the notion that such words would appear to better serve the legislative object or purpose. 7. We afforded rebuttal opportunities to the assessee. Learned counsel submits that the fact that the very issue stands settled in an hon'ble high court's decision (supra), this tribunal is very much bound by the said decision. And that no second opinion in such an instance is possible regarding the instant legal issue. He further quotes Kolahpur Canesugar Works Vs. UOI (supra) that the legislative omission in statute has to be interpreted in such a manner that the same never existed as contrary to the Revenue stand. 8. We have given our thoughtful consideration to the assessee's and the Revenue's foregoing vehement submissions. There could be hardly any dispute that the forego....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs from another Division Bench of the same High Court, it should refer the case to a larger Bench. (iii) Where there are conflicting decisions of courts of co-ordinate jurisdiction, the later decision is to be preferred it reached after full consideration of the earlier decisions. (d) The decision of one High Court is neither binding precedent for another High Court nor for courts or Tribunals outside its own territorial jurisdiction. It is well settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect. By no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or Tribunal within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare dec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onditioned system, cooling products and professional electronics etc., the former twin segments involve manufacturing activity as is the case sought to be made out before us. We thus accept its case on both these counts regarding the instant twin comparables in principle and direct the learned TPO to frame his consequential computation as per law in very terms therefore. 10. The assessee's further case before us is that it has all along objected to the inclusion of M/s. Mold-Tek Packaging Ltd. and M/s. National Plastic Technologies Ltd. since engaged in the corresponding diverse business segments i.e. manufacturing of plastic containers, pet bottles and blow molding, moulded plastic products for consumers. We thus conclude in this factual backdrop that the Revenue's vehement stands supporting inclusion of these twin comparables entities does not carry any merit. We thus direct the learned TPO to exclude both of them in his consequential computation therefore. The assessee's instant first and foremost substantive ground is treated as partly allowed in foregoing terms. 11. Next comes the second substantive issue of correctness to section 14A r.w. Rule 8D disallowance amounting ....