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TMI Blog2022 (2) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... section 40A(2) of the Act - reference to the TPO in respect of specified domestic transactions mentioned in clause (i) of sec.92BA is not valid, as the said provision has been omitted. Accordingly, we direct the AO to delete the addition relating to specified domestic transactions made u/s 92CA. As pointed out by D.R, the co-ordinate bench, in the case of Texport overseas P Ltd, has restored the matter to the file of the A.O. with the direction to examine the claim of expenditure in accordance with the provisions of section 40A(2) - we restore this issue to the file of the AO with the direction to examine the claim of expenditure mentioned above in terms of the provisions of section 40A(2) of the Act. In view of the above conclusion, we refrain from adjudicating other issues raised by the assessee in the grounds of appeal with regard to correctness of determination of ALP of the SDT. Addition u/s 68 - assessee has failed to prove the genuineness, identity and creditworthiness of the creditors - failure of the assessee to furnish copy of stock register - HELD THAT:- This cannot be a proper reason for rejecting the claim of the assessee when the confirmation letter, purchase registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gerial Remuneration 6,72,99,383 Other Method The remuneration is commensurate with the qualification, experience, expertise of the directors and hence considered as at arm's length 4 Reimbursement of expenses 8,99,95,940 Other Method Reimbursements are at cost and therefore at arm's length. With respect to purchase of finished goods, the assessee in its TP study had selected NIPL as tested party. This was for the reason that database do not contain any companies, which are engaged in trading of animal feeds and only comparables engaged in manufacturing of animal feeds were available. If assessee is taken as tested party, no comparables would be available. The Assessee selected 18 comparables in its Transfer Pricing study. The Operating Cost Margin ('OCM') of Manufacturing segment of NIPL was of 0.51% and that of comparables was ranging from 0.92% to 3.34% with a median of 2.31%. Therefore, it was concluded that SDT related to purchase of finished goods were at arm's length. 4. The margin of the Assessee & NIPL (entity wise) are tabulated as below: Particulars NFPL NIPL Operating Revenue 253,01,56,578 761,85,99,508 Operating Cost 251,76,43,451 757,95,90,789 Oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO against which the assessee has preferred the present appeal before the Tribunal. 10. We shall take up for consideration ground No.4 raised by the assessee as a preliminary ground as it goes to the root of the additions made under section 92BA of the Act. Ground No.4 reads as follows: "4. The lower authorities have erred in not appreciating that section 92BA(i) of the Act is omitted, without any saving clause by Finance Act 2017, which has retrospective effect as if the clause was never in existence and therefore TP addition made with respect to SDT transactions are bad in law. 11. The learned Counsel for the assessee submitted that post the amendment vide Finance Act 2017, transfer pricing provisions are not applicable to transactions entered by the assessee with the related parties covered under section 40A(2)(b). The Courts have held that omission of 92BA(i) is retrospective in the following decisions: * Texport Overseas Pvt Ltd v DCIT IT(TP)A.1722/Bang/2017 which was upheld by Karnataka High Court in ITA No 392/2018 and ITA No 170/2019; TS-1222-HC-2019(KAR)-TP [Refer Pg 887 to 896 of PB-II] * M/s. Cauvery Aqua Private Limited vs DCIT, Circle-2(1)(1), Bengaluru ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by, any such enterprise shall be determined having regard to the arm's length price of such benefit, service or facility, as the case may be.Section 92(2A) provided that any allowance for an expenditure or interest or allocation of any cost or expense or any income in relation to the specified domestic transaction shall be computed having regard to the arm's length price. 14. In terms of the above statutory provisions of Sec.92BA(i) the transactions in question are to be regarded as falling with the ambit of Sec.40A(2)(b) of the Act and therefore covered by the provisions of Sec.92BA(i). Before DRP, the assessee submitted (i) that the transaction between the Assessee cannot be regarded as SDT, because by Finance Act, 2017 w.e.f. 01.04.2017, clause (i) of section 92BA was omitted from the statute and by virtue of omission of clause (i) from the statute, the proceedings already initiated or action taken under clause (i) becomes redundant or otiose. In this regard, the Assessee placed reliance on decision of ITAT Bangalore Bench in the case of Textport Overseas Pvt.Ltd. Vs. DCIT IT(TP)A.No.1772/Bang/2017 order dated 22.4.2021 wherein it was held that in the light of provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eletion/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 ITA No.2936/Bang/20180 M/s. Sobha City, Bangalore 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. In a case where a particular provision in a statute is omitted and in its place another provision dealing with the same contingency is introduced with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 17. We however notice that the co-ordinate bench in the case of Textport Overseas (supra) has restored the matter to the file of the A.O. with the direction to examine the claim of expenditure in accordance with the provisions of section 40A(2) of the Act. Following the same, we restore this issue to the file of the AO with the direction to examine the claim of expenditure mentioned above in terms of the provisions of section 40A(2) of the Act. Accordingly, following the binding decision rendered by Hon'ble High Court of Karnataka in the case of Texport Overseas P Ltd (supra), we hold that the reference to the TPO in respect of specified domestic transactions mentioned in clause (i) of sec.92BA is not valid, as the said provision has been omitted. Accordingly, we direct the AO to delete the addition relating to specified domestic transactions made u/s 92CA of the Act. However, as pointed out by Ld D.R, the co-ordinate bench, in the case of Texport overseas P Ltd, has restored the matter to the file of the A.O. with the direction to examine the claim of expenditure in accordance with the provisions of section 40A(2) of the Act. Following the same, we restore this iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se register along with sample invoices Pg 876-878 of Paper Book-I Manoj Traders Copy of Ledger extract Pg 858-859 of Paper Book-I Copy of Confirmation Letter Pg 361 of Paper Book-I Bank Statements Pg 860-875 of Paper Book-I Purchase register along with sample invoices Pg 876-878 of Paper Book-I 21. However, the AO without making any reference to the above evidence filed by the Assessee, passed the final assessment order making additions of Rs.52,87,093/- for the above 3 creditors. 22. In this regard, the learned Counsel for assessee submits that the genuineness of transaction is proved as all the supporting evidences are filed. The goods were purchased and payments have been made through banking channel. None of this is doubted by the AO. Further, it was submitted that when the AO has accepted the purchases, sales & trading results disclosed, therefore additions cannot be made for balances of sundry creditors as these represents figures of purchases. Therefore, provisions of section 68 of the Act are not attracted in the instant case. In support of the same, the following decisions were relied upon: * Annamaria Travels & Tours (P) Ltd vs Dy CIT [(2005) 95 TTJ 71 (Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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