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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 ..... had suo-moto disallowed u/s. 14A - 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 - HELD THAT:- 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 CIT vs. South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] no disallowance of interest can be made. However, in so far as disallowance under Rule 8D(2)(iii) is concerned, the only condition of the assessee is that no disallowance should be made with respect to investment which had not yielded any exempt income. Thus, it has been submitted that this issue is covered in favour of the assessee by the decision of the Tribunal in assessee s own case right from A.Y.2008-09 to 2012-13. Accordingly, the contention of the assessee is upheld that only exempt yielding investment should be worked out for the purpose of disallowance wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 leading infrastructure development and finance companies and is also involved in infrastructure projects. Assessee has reported various specific domestic transactions, however, with respect to transaction of advisory fees paid to IIDC, the ld. TPO noted that during the year under consideration payment towards advisory services has been made to IIDC in conne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 Rs. 1,64,00,000/-. One of the issues raised before the ld. TPO was that since SDT provisions have been omitted from the statement, therefore, no adjustment should be made, the ld. TPO had rejected his conditions stating that it was prevalent during the year under consideration i.e.A.Y.2016-17. 8. Even the ld. DRP has rejected the assessee s c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 concern w.e.f. 28 th March, 2016. The assessee s case was selected for scrutiny on 21.07.2017 and reference to the TPO was made for determination of Arm s Length Price of SDT after seeking approval of PCIT on29.11.2018. The core argument of the ld. counsel is that, once the reference which has been made under clause (i) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 any enactment by which the text of any [Central Act] or Regulation was amended by the express omission, insertion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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 Act would include repeals by expression omission ‟ and the expression delete and omission ‟ are used interchangeably. 11. However, it would be apposite to understand the judgments relied upon in terms of their facts and ratio and thereafter apply the same to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing 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 Section 280ZA is omitted from the statute book, section 280Y (d) having no independent existence would for all practical purposes also be dead . On this reasoning, the Apex Court decided in favour of the appellant by holding that omission of section 280ZA and its re-enactment wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 6 of the General Clauses Act would not so save things already done under the repealed statute. He further argued that repeal is normally used when an entire statute is done away with, as opposed to an omission which is applied only when part of the statute is del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction 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 of any right or liability be instituted, continued or enforced in respect of rights and liabilities acquired or incurred under the enactment so omitted. Hence, section 6 would apply to omission of section 3A. 14. Further, it is a very well recogni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Supreme Court in the case of CIT vs. South Indian Bank Ltd. reported in 130 taxmann.com 178, no disallowance of interest can be made. However, in so far as disallowance under Rule 8D(2)(iii) is concerned, the only condition of the assessee i ..... 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