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TMI Blog2022 (7) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to TP adjustment after the Finance Act, 2017, as discussed above. Consequently, no addition on account of TP Adjustment is sustainable because it has been categorically held that omission of a provision would mean that it was never on the statue book - It has to be deemed that it was not in existence in A.Y. 2014-15 and if there was no such provision for recommending the transactions u/s 40A(2)(b) for determination of ALP, there cannot be any adjustment in the income of the assessee on the ground of TP adjustment. Accordingly these grounds of the assessee are allowed. The additions made in the income of the assessee on account of TP adjustment in the domestic transaction are deleted. TDS credit denied - as contended by the assessee that the Assessing Officer has erred in treating the TDS credit of Rs.30,48,824/- only in the assessment order instead of additional claim of TDS credit of Rs.1,22,317/- on mobilization advance claimed by the assessee during the course of assessment proceedings - HELD THAT:- CIT(A) has relegated this issue to the file of the Assessing Officer with a direction to grant TDS credit. Since the ld. CIT(A) has already issued direction to the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 u/s 40A(2)(b) of the Act has been omitted by the Finance Act, 2017 w.e.f. 01/04/2017 and in view of the effect of such omission, when the above provision was not in existence or never existed in the statute, whatever e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under section 263 of the Act during the currency of the Act is very much valid. Shri Vijay Shankar, (CIT-DR), also submitted before the Bench that the judgments of Hon`ble Supreme Court, which were used by the assessee, in the case of Kolhapur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed. 6A. Repeal of Act making textual amendment in Act or Regulation. - Where any [Central Act] or Regulation made after the commencement of this Act repeals an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act, 2017 for omission of sub-clause to Section 92BA is that it would be deemed that such clause was never been on the statute book and, therefore, no Transfer Pricing adjustment can be examined with regard to the transactions falling u/s 40A(2)(b) of the Act. The finding recorded by the Tribunal in this case reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act. The Ld. AR also referred to the decision of the Hon'ble Supreme Court in the case of Kolhapur Canesugar Works Ltd. Vs. Union of India in Appeal (Civil) 2132 of 1994 by judgment dated 01.02.2000 in which the Constitution Bench has held that section 6 of General Clauses Act only applies to repeals and not to omissions, and applies whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-14. 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 deemed not to be on the statute since the beginning. In support of his contention, the learned counsel for the assessee has placed a heavy reliance upon the judgment of the Apex Court in the case of Kolhapur Canesugar Works Ltd., Vs. Union of India in Appeal (Civil) 2132 of 1994 vide judgment dated 01.02.2000 in which the constitution bench has held that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 becomes the specified domestic transaction for which reference was made by the AO to the TPO under section 92CA for determination of the ALP. Consequently, the TPO submitted a report which was objected to by the learned counsel for the assessee and filed a objection before the ORP. Having adjudicated the objections the ORP has issued certain directions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clear that once a particular provision of section is omitted from the statute, it shall be deemed to be omitted from its inception unless and until there is some saving clause or provision to make it clear that action taken or proceeding initiated under that provision or section would continue and would not be left on account of omission. 10. In the instant cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld 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 amendments, the AO is required to adjudicate the issue of claim of expenditures in accordance with law after affording opportunity of being heard to the assessee. We therefore set aside the orders of the AO and the DRP and restore the matter back to the AO with the direction to readjudicate the issue of claim of expenditure incurred in respect of which payment has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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