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TMI Blog2024 (8) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... law. Accordingly, the AO/TPO is directed to delete the adjustment made. Accordingly, the Ground Number 1 of the Assessee is allowed. Impugned transaction may be set aside to the AO for de-novo consideration under section 40A(2)(b) - As observed that the AO has no where invoked the section 40A(2)(b) of the Act for the impugned payments in the Assessment Order. Rather it is observed that the DRP has held we are of the view that without prejudice this transaction is also covered under Section 40A(2)(b), the payments made to the related parties to be disallowed. However, in the Assessment Order u/s 143(3) r.w.s 144C(13) dated 15/10/2019, the AO has not mentioned anything about the without prejudice disallowance u/s.40A(2)(b) of the Act. Once the AO has not invoked the relevant provisions of the Act in the assessment order the CIT(DR) cannot improve the Assessment Order at this stage. As relying on Mahindra Mahindra [ 2009 (4) TMI 207 - ITAT BOMBAY-H ] once AO has not invoked section 40A(2)(b) of the Act in the assessment order, ld.DR cannot raise the issue at this stage. Therefore, the contention raised by Ld.DR is rejected. - Dr. Dipak P. Ripote, Accountant Member And Shri Vinay Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous contentions. 5. Without prejudice to the above grounds, the learned Assessing Officer acting under directions of leaned Dispute Resolution Panel erred both on facts and in law in adding 2 new companies into set of comparable companies without appreciating the fact that these companies are not at all comparable with the assessee company during application of external transactional net margin method. 6. The learned Assessing Officer acting under the direction: of learned Dispute Resolution Panel erred both on facts and in law in using Profit Level Indicator (PLI) calculated by aggregating Related as well as Unrelated party transactions. He failed to appreciate the fact that, the assessee has used the segmental PLI i.e. PLI of only Related Party transactions for benchmarking which is also a settled position in law. 1.3 The Ld.AR submitted the additional ground of appeal as under : 1. The learned Assessing Officer erred on facts and in law in passing the final assessment order beyond the time limits prescribed for the same u/s 153(1) r.w.s 153(4) OF THE Act thereby making the said order invalid and bad-in-law. Brief facts of the case : 2. In this case the assessee filed retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been omitted w.e.f. 01.04.2017 and that once this clause is omitted by subsequent amendment, it would be deemed that the said clause (i) was never been on the statute. The Hon ble ITAT held that while omitting the clause (i) of section 92BA, nothing was specified whether the proceeding initiated or action taken on this would continue. Therefore, it was held that the proceeding initiated or action taken under that clause would not survive at all. This view has been subsequently upheld by the Hon ble Karnataka High Court in Texport Overseas Pvt. Ltd. ITA No. 392/2018, order dated 12.12.2019 [313 CTR 485 (Kar)]. 3.1 The ld.AR for the assessee relied on the following case laws : - The DCIT, Circle-4, Nagpur vs. Vivek Vinayak Vaidya - ITAT Nagpur Bench - ITA No.33/NAG/2020 dated 22.11.2023 - S. B. Cotgin Pvt Ltd vs. The Pr. CIT-2, Nagpur - ITAT Nagpur Bench - ITA NO.88/NAG/2020 dated 05.07.2021 - Shree Shai Smelters (I) Ltd. vs. ACIT - ITAT Gauhati - ITA No.228/GAU/2019 dated 31.07.2020 - M/s Cauvery Aqua Pvt Ltd vs. DCIT - ITAT Bangalore - ITA No. 2021/Bang/2019 dated 17.02.2021 - Sobha City vs. ACIT - ITAT Bangalore - ITA No. 2936/Bang/2018 dated 22.04.2021 Mahindra Two Wheelers Ltd v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Glaxo Smith Kine Asia (P.) Ltd. 3. With regard to the words repeal and omission with respect to the apex court decisions referred in M/s Texport Overseas Private Limited [ITA 1722/Bang/2017] and other decisions mentioned in the table at para-1.4 above, it is to humbly submit as under: 3.1 The words repeal , substitute and omission have different tenor in a literal sense but tend to denote a similar meaning when used in the context of any amendment of law. While the words themselves may not cause a conflict, it is the consequences of the amendment on the rights and liabilities of the parties that have led to the courts differentiating between these terms. It is to humbly submit that the Supreme Court has dealt with these three terms used by the legislature while amending any law in the afore-mentioned backdrop,. 3.2 It is to submit that, one of the earliest authorities which brought up the question of at odds interpretation between repeal and omission is the five- Judge Bench judgment of the Supreme Court in Rayala Corporation (P) Ltd. v. Director of Enforcement, New Delhi[(1969) 2 SCC 412]. The question which arose for consideration before the Supreme Court in this case was if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the same way as it happens in repeal. The Court discussed the two terms and concluded that it is clear that 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. The Court then went ahead and nullified the effect of the above five- Judge Bench judgment with respect to difference between repeal and omission. The Court held that: 31 ...once it is found that Section 6 itself would not apply, it would be wholly superfluous to further state that on an interpretation of the word repeal , an omission would not be included. We are, therefore, of the view that the second so-called ratio of the Constitution Bench in Rayala Corporation (P) Ltd.[(1969) 2 SCC 412] cannot be said to be a ratio decidendi at all and is really in the nature of obiter dicta. [(2015) 10 SCC 333 at p. 354] The Court even declared that the two five-Judge Bench decisions (.Rayala Corporation and Kolhapur Canesugar) were per incuriam as they did not consider Section 6-A of the GC Act. The Court with this effect held that: 33. A reading of this section would show that a repeal by an amendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 12.12.2019 [313 CTR 485 (Kar)]. 4.1 The ld.DR for the Revenue relied on the following case law: Firemenich Aromatics (I)(P) Ltd., Vs. ACIT of ITA Nos.348, 1732/MUM/2014 dated 15.07.2020 [2020] 118 taxmann.com 3 (Mumbai Tribunal). Findings Analysis : 5. We have heard both the parties at length, perused the records. In this case certain admitted basic facts are as under : Date Date of filling Return of Income 30/09/2015 Date of filling revised return 26/03/2016 Date of issue of Notice u/s 143(2) 18/03/2016 Date of Amendment Omitting Specified Domestic Transaction u/s.92BA(i) 01/04/2017 Date of Reference to Transfer Pricing Officer u/s 92CA for Specified Domestic transaction by ACIT 18/09/2017 Date of Transfer Pricing Officer s Order making adjustments to Specified Domestic Transactions 30/10/2018 5.1 Before proceeding further we will reproduce the unamended Section 92BA (prior to 1/4/2017) as under : Meaning of specified domestic transaction. 92BA. For the purposes of this section and sections 92, 92C, 92D and 92E, specified domestic transaction in case of an assessee means any of the following transactions, not being an international transaction, namely: (i) any expenditure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order for the specified domestic transaction. The LD.AR demonstrated that the specified Domestic Transaction in the case of the assessee were the expenditure in which payment has been made to persons specified in section 40A(2)(b) of the Act. Therefore, the Ld.AR pleaded that the reference and the Transfer Pricing order was void ab initio. The Ld.AR relied mainly on the decision of Hon ble Karnataka High Court in the case of M/s.Texport Overseas Pvt Ltd., 271 Taxman 170 (Karnataka). 5.5 The Hon ble Karnataka High Court in the case of M/s.Texport Overseas Pvt Ltd., held as under : Quote, .. Thus, when clause(i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.07.2017 from the Statute the resultant effect is that it had never been passed and to be considered as a law never been existed. Hence, decision taken by the Assessing Officer under the effect of section 92BA and reference made to the order of Transfer Pricing Officer-TPO under section 92CA could be invalid and bad in law. 7. It is for this precise reason, tribunal has rightly held that order passed by the TPO and DRP is unsustainable in the eyes of law. The said finding is based on the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Hon ble Jurisdictional High Court. The Ld.DR mainly relied on the decision of the Hon ble Supreme Court which explains the meaning of the words repeal omission . 5.9.1 We have considered the elaborate submission of the Ld.DR but unable to agree to the proposition laid down by him as the Hon ble Karnataka High Court has considered the decision of Hon ble Supreme Court and other decisions and concluded that once the Section 92BA(i) was omitted w.e.f 01/04/2017, it means it never existed on statute. We have already quoted the decision of Hon ble Bombay High Court on the rule of precedence. In these facts and circumstances, as per the rule of precedence, we have to follow the decision of Hon ble Karnataka High Court in the case of Texport Overseas P Ltd (supra). In this case the reference to TPO was made on 18/09/2017, i.e. after the section 92BA(i) was omitted, also the Transfer Pricing Order was passed on 30/10/2018 i.e. after the section 92BA(i) was omitted, respectfully following the Hon ble Karnataka High Court s decision (supra) we hold that the Transfer Pricing Order dated 30/10/2018 for A.Y.2015-16 is unsustainable in law. Accordingly, the AO/TPO is directed to delete t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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