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TMI Blog2024 (2) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Corporation Limited 5 to 8 3 AO/TPO erred in making addition of INR 1,64,00,000/- on account of payment of commission expenses to non- executive directors 9 to 15 4 AO / TPO has erred in disallowing an amount of INR 593,63,45,000/- under section 14A of the Act 16 5 AO/TPO has erred in disallowing an amount of INR 592,90,63,345/- under section 14A to the book profits u/s. 115JB of the Act 17 6 Addition of income on toll roads of Rs. 77,64,000 18 7 Disallowance of depreciation on printers, routers, scanners and computer software amounting to Rs. 59,32,663 19 8 Disallowance of brought forward losses and unabsorbed depreciation of Rs. 27,77,31,728 20 9 Disallowance of MAT credit u/s 115JAA 21 10 Disallowance of deduction of education cess and secondary and higher education cess amounting to Rs. 6,55,87,421 22 3. In so far as ground No.2-15 are concerned, they relate to transfer pricing adjustment in respect of specified domestic transactions for advisory services charge paid to its related parties i.e. IL & FS Infrastructure Development Corporation Limited and on account of payment of commission expenses to non-executive Directors. Assessee is one of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. TPO noted that assessee has paid commission expanses to Non- Executive Director to S.B Mathur, Micheal Pinto, Harish Engineer and Jairthith Rao of Rs. 31,00,000 each and Rs. 40,00,000 to K.C Bhargava(OM). In this regard the assessee was requested to show cause as to why the ALP on the entire commission expenses should not be benchmarked as Nil by using other method in absence of any additional benefit being derived by the assessee from such payments, as even otherwise the Directors are being regularly remunerated. In response, the assessee made submissions vide letter dated 23/10/2019 stating that these Non-executive and independent directors are in various internal committees of the Company and thereafter submitted copies of the Board Resolution appointing them to such committees. 7. However, the ld. TPO did not accept the assessee's submissions and held that in the Board resolution there is no mention of additional commission to be paid to these directors to discharge of its functions. Secondly, the appointments are administrative and routine in nature against which payment of Rs. 31 lakhs each to every person does not arise in any business, accordingly, he made adjustment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omission was brought by the amendment by the Finance Act 2017 w.e.f. 01/04/2017. Therefore, the reference at that point of time was valid. This issue has been discussed by the Hon'ble Karnataka High Court in the case of PCIT vs. Texport Overseas (P) Ltd. wherein the Hon'ble High Court relying upon the judgment of Hon'ble Apex Court in the case of Kolhapur Canesugar Works Ltd vs. Union of India supra have held that once the statute has omitted clause (i) of Section 92BA by the Finance Act, 2017, the resultant fact is that it had never been enacted and to be considered as a law and it never existed. However, the ld. DR referred to various judgments of the Apex Court including the judgment of Hon'ble Supreme Court in the case of Shri Bhagwati Steel Rolling vs. Commissioner of Central Excise. This exact issue has been dealt in detail in the case of Yorkn Tech Pvt. Ltd., wherein Tribunal has observed and held as under:- 7. We have heard the rival submissions and also perused the relevant facts arising out from the records on the legal issue raised by the ld. counsel. It is an undisputed fact that the SDT for purchase of office space as inventory was by way of Slump Sale of a going c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding will lapse. Section 6 and 6A of the General Clauses Act for sake of ready reference are reproduced herein below:- "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 enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislature is that the pending proceedings shall not continue but fresh proceedings for the same purpose may be initiated under the new provision." 10. Thus, if a provision or statute is unconditionally omitted without any saving clause in favour of the pending proceedings, all actions must stop where such an omission is found, especially when action has been taken after the provision has been omitted. During the course of argument a reference was made to the judgment of Hon'ble Supreme Court in the case of Fiber Boards (P) Ltd., Bangalore v. Commissioner of Income Tax, Bangalore, (2015) 10 SCC 333 and Shree Bhagwati Steel Rolling v. Commissioner of Central Excise (2016) 3 SCC 643 to convass the point that the earlier judgments of Constitutional Bench in the case of Rayala Corporation Pvt. Ltd., 1970 SCR 1 (69) and Kohlapur Cane Sugar [supra] have been not followed or have been overruled. First of all, nowhere the Hon'ble Apex Court in both the judgments have overruled earlier two judgment of the Constitutional bench of the Hon'ble Apex Court rather they have explained it in detail and went on to held that the word repealed in both section of 6A and Section 24 of General Clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght on the appellant, section 24 of the General Clauses Act would not be attracted. 11.1 The Apex Court in the case of Fibre Boards (supra) was of the view that there is no need for the later enactment to state in express terms that an earlier enactment has been repealed by using any particular set of words or form of drafting but that if the legislative intent to supersede the earlier law is manifested by the enactment of provisions as to effect such supersession, then there is in law a repeal notwithstanding the absence of the word „repeal‟ in the later statute. Repeals may take any form and so long as a statute or part of it is obliterated, such obliteration would be covered by the expression "repeal" in Section 6 of the General Clauses Act. All that is required is that an intention to abrogate the enactment or portion in question should be clearly shown. 11.2 The Apex Court held that the idea of omitting section 280ZA and introducing Section 54G on the same date was to do away with the tax credit certificate scheme together with the prior approval required by the Board and to substitute the repealed provision with the new scheme contained in Section 54G.Once S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Central Excise Act. The appellant opted for the aforesaid scheme under Rule 96ZP of the Central Excise Rules. When the lease expired, the appellant surrendered its registration certificate on 1.6.2000. Section 3A was omitted in 2001. On 19.8.2005 notice was issued to the appellant demanding interest for delayed payment of central excise duty under section 3A of the Central Excise Act for the period 1997 to 2000. 12.1 The question framed before the Hon'ble High Court was whether "omission" of the compounded levy scheme in 2001 wipes out the liability of the assessee for the period during which the scheme was in operation. The Hon'ble High Court held that on omission of section 3A, the liability of the assessee was not wiped out. 12.2 The appellant contended that there is a fundamental distinction between "repeal" and an "omission", in the case of a "repeal" the statute is obliterated from the very beginning whereas in the case of an "omission" what gets omitted is only from the date of "omission" and not before. This being the case, it is clear that things already done in the case of an "omission" would be saved. However, a "repeal" without a savings clause like secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt arrived at the conclusion that an "omission" would amount to a "repeal" for the purpose of Section 24 of the General Clauses Act. Since the same expression, namely, "repeal" is used both in Section 6 and Section 24 of the General Clauses Act, the construction of the said expression in both sections would, therefore, include within it "omissions" made by the legislature. 12.6 The Court was also of the view that merely because the Constitution Bench in case of Rayala Corporation referred to a repeal not amounting to an omission this would not undo the effect of decision in Fibre Board's case and the statement of the law in Rayala Corporation is no longer the law declared by the Hon'ble Supreme Court after the decision in the Fibre Board's case. Fibre Board (supra) is a recent judgment which clarifies the law in holding that an omission would amount to a „repeal‟. 13. The converse view of the law led to an omitted provision being treated as if it never existed, as section 6 of the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a legal proceeding in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment can be made under SDT. Accordingly, ground Nos.2-15 is treated as allowed. 12. Next issue relates to disallowance u/s. 14A of Rs. 593,63,45,000/-. 13. The brief facts are that assessee is a core investment company for non-banking financial services and its main business is lending and investing in good companies. The assessee had shown exempt income of Rs. 495,05,32,509/-. The assessee had suo-moto disallowed Rs. 211,45,48,825/- u/s. 14A. The assessee had worked out the disallowance by taking investment which has yielded dividend income and has moved those investments which have not yielded any exempt income. However, the ld. AO proceeded to claim the disallowance u/s. 14A r.w.r. 8D of Rs. 593,63,45,000/- and after taking into account the disallowance of Rs. 211.45 Crores finally made disallowance of Rs. 382,17,96,175/-. After relying upon CBDT Circular 5/2014 dated 11/02/2014. Before us ld. Counsel submitted that in so far as assessee suomoto disallowance under Rule 8D(2)(i), there is no dispute. However, with regard to disallowance of interest under Rule 8D(2)(ii), he submitted that assessee had huge surplus funds and therefore, in view of the decision of the Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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