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TMI Blog2019 (2) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... ot vary by an amount in excess of 5% from the arithmetical mean and not from the invoiced price. There is absolutely no reference to the invoiced price insofar as the option made available to the assessee by the proviso as it existed from 01.04.2002, introduced by Finance Act, 2002 relevant to the subject assessment year. Subsequently sub-section (2A) was was brought into Section 92C by Finance Act, 2012, and contention of the assessee that the amendments in 2009 are clarificatory in nature rejected. Hence, the statute, for the relevant year, did not at all provide an acceptance of the invoiced price on any count and not at all on the ground that the difference between the invoiced price and the ALP determined not exceeding 5%. The mitigation provided by the CBDT is on the proviso introduced by the Finance Act, 2001. The same cannot be applied to the proviso introduced by way of substitution, by the Finance Act, 2002. The substituted proviso, which applied from 01.04.2002 erased the earlier proviso from the statute totally. It granted an option to the assessee; but only insofar as adopting one of the prices from which the average price is determined; that too in cases of more th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y when more than one price is determined by the most appropriate method. The proviso contemplated adoption of the arithmetic mean in such cases and an option was given to the assessee to seek adoption as ALP, a price which does not vary from the arithmetical mean in excess of 5%. The option so provided was to select one of the prices arrived at by the most appropriate method and not the invoiced price; the price at which the assessee asserted the transaction to have been undertaken. The provision applicable for the subject year was hence substantially different. 4. Smt.Nisha John, the learned Counsel for the assessee, points out that the Central Board of Direct Taxes [CBDT] has also issued a Circular bearing No.12/2001 dated 23.08.2001, wherein there is a specific restriction on the Assessing Officer to make any adjustments to the ALP determined by the tax payer, if such price is up to 5% less or up to 5% more, than the ALP determined by the A.O or the TPO. When the A.O. himself or the TPO on a reference, determines the ALP, necessarily the mitigation offered by the CBDT has to be applied with full force. In the present case, from the facts noticed, it is very clear that the ALP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. Later, in the year 1984, the CBDT brought out a further Circular, specifying that such interest credited to bad and doubtful debts would be included in the taxable income only for three consecutive years; in which there is no recovery effected. After that, for the subsequent years, the interest even though accruing in the doubtful debts would not be taxable as income. It was also clarified that, if there is any recovery after the three year period, then only those amounts actually recovered would be taxable. The question arose as to whether the CBDT had the power to vary the provisions of the statute and offer a mitigation in excess of that provided in the statute. The Hon'ble Supreme Court held that: The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Income-Tax Act which are binding on the authorities in the administration of the Act. (sic) 7. We immediately notice that UCO Bank [supra] is no more good law for reason of the decision of a Constitution Bench of the Hon'ble Supreme Court in Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LP being determined with reference to the invoiced price of the assessee does not at all apply. The Circular was not with respect to the amended proviso, brought in by Finance Act,2002; which was also made applicable from 01.04.2002, is the compelling argument. 9. We have to first notice the amendments brought in, in the subsequent years. Section 92C(2) read as follows, as it existed: ( 2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of arm's length price, in the manner as may be prescribed . A proviso was added by Finance Act, 2001, with effect from 01.04.2002, which reads as below: Provided that where more than one price may be determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices . The proviso was substituted by Finance Act, 2002, again with effect from 01.04.2002, as follows: Provided that where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices, or, at the option of the assessee, a price which may va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne price by the most appropriate method. In that context it does not offer an option to compare the ALP determined with reference to the invoiced price, being the price at which the transaction is undertaken. When there are more than one price determined then the average has to be taken and the assessee has an option to adopt one of the prices determined by the A.O or the TPO; which does not vary by an amount in excess of 5% from the arithmetical mean and not from the invoiced price. There is absolutely no reference to the invoiced price insofar as the option made available to the assessee by the proviso as it existed from 01.04.2002, introduced by Finance Act, 2002 relevant to the subject assessment year. 14. We also have to notice that subsequently sub-section (2A) was was brought into Section 92C by Finance Act, 2012, which reads as follows: ( 2A) Where the first proviso to sub-section (2) as it stood before its amendment by the finance (No.2) Act, 2009 (33 of 2009), is applicable in respect of an international transaction for an assessment year and the variation between the arithmetical mean referred to in the said proviso and the price at which such transaction has ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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