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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM
Deputy Commissioner of Income Tax- v C. G. Ispat Private Limited, s 1(1), Aayakar Bhawan, Civil Lines, Siltara Industrial Area, Raipur-492001, C.G. Raipur-492001, C.G. PAN: AACCC4876B (अपीलाथ"/Appellant) (""थ" / Respondent) . . िनधा"रती की ओर से / Assessee by : Shri R. B. Doshi, CA राज" की ओर से / Revenue by : Shri S. L. Anuragi, CIT-DR सुनवाई की तारीख / Date of Hearing : 21.07.2025 : 30.07.2025 घोषणा की तारीख / Date of Pronouncement आदेश / O R D E R Per Arun Khodpia, AM:
The captioned appeal by the revenue is directed against the order of the Commissioner of Income Tax (Appeal), Ahmedabad-13, [in short “Ld. CIT(A)”], passed on 27.12.2024, under section 250 of the Income Tax Act, 1961 (in short “the Act”) for the Assessment Year 2014-15, which in turn arises from the order of Assessing Officer, National Faceless Assessment Centre, Delhi (in short “Ld. AO”), u/s 147 r.w.s. 144B of the Act, dated 25.03.2022. 2 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd.
The grounds of appeal
raised by the revenue are as under:
1. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition made by the AO to the tune of Rs. 6,16,68,732/- on account of upward adjustment of ALP (Arm’s length Price) as per TPO’s order u/s 92CA(3) of the Act without going into the merits of the case.
2. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition made by the AO to the tune of Rs. 6,16,68,732/- by admitting additional evidences in contravention of Income Tax Rules 46A and there by ignoring the facts brought on the record by the AO.
3. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) has erred while deciding the appeal in favour of the appellant, failed to allude to relevant facts on record, misread the evidence and its probative value thereby giving rise to perversity in the order of Ld. CIT(A), which itself gives rise to Question of Law as held in several case laws including in the case of Sudarshan Silk and Sarees 300 ITR 205 (SC)?”
Brief facts of the case, as described by the Ld. CIT(A) in his order are extracted as under:
3 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. Sr. Nature of Addition Amount (Rs.) No. 1. Transfer pricing upward adjustment as per 6,16,68,732/- order 92CA(3) of the Act 2. Disallowance of TCS 43,120/- 3. Disallowance of Employees Contribution 71,758/- Total 6,17,83,610/-
Being aggrieved with the aforesaid addition, assessee preferred an appeal before the Ld. CIT(A), wherein the assessee had challenged the issue regarding addition made on account of upward adjustment u/s 92CA(3) u/s 143(3) r.w.s. 144C(3) of the Act, claiming that the same is not justified, void-ab-initio, bad in law and liable to be quashed. The said addition has been vacated by the first appellate authority, while deciding the additional ground of appeal challenging the validity of assessment order in as much as provisions of Section 92BA(i) of the Act, 1961 having been amended vide Finance Act, 2017 to exclude specified domestic transactions contained in Sec. 92BA(i) of the Act from the purview of Transfer Pricing Regulations, the findings of Ld. CIT(A) qua the said issue granting relief to the assessee are extracted here under, for the sake of completeness:
4 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 5 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 6 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 7 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 8 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 9 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 10 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 11 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 12 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 13 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 14 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 15 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 16 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 17 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd.
5. Aggrieved with the aforesaid relief granted by the Ld. CIT(A) to the assessee, now the revenue is in appeal before us, which is under consideration in the present matter.
6. Contentions of the revenue are placed before us in the form of a written statement of facts, the same is culled out as under:
18 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 19 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 20 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. 21 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd.
7. Placing reliance on the statement of facts extracted above, at the outset, Ld. CIT-DR submitted that the issue of upward adjustment amounting to Rs. 6,16,68,732/- being 10% of aggregate value of specified domestic transaction made vide order u/s 92CA(3) of the Act dated 25.10.2017 proposed by the TPO, which thereafter has been added to the taxable income of assessee by the Ld. AO vide assessment order u/s 143(3) dated 28.12.2017, has been deleted by the Ld. CIT(A) in favour of the assessee by admitting the facts in contravention of Income Tax Rule, 1961, accordingly, subject upward adjustment was wrongly vacated by the Ld. CIT(A). To substantiate further, It was the submission that the appellant failed to discharge its initial onus of providing the requisite details and information for substantiating and benchmarking the specified domestic transactions entered into with its AEs, therefore, the TPO had rightly completed transfer pricing proceedings ex-parte, by making the justified upward adjustment. It is also submitted by the Ld. CIT-DR that Ld. CIT(A) has admitted additional evidence during the appellate proceedings before him while contemplating upon the issue in contravention of provisions of Rule 46A of the Income Tax Rules. With such submission, it was the prayer by Ld. CIT-DR that the order passed by Ld. CIT(A) suffering with error that the same was passed without compliance of the Income Tax Rules and, 22 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. therefore, the same is liable to be set aside, consequently the addition made on account of impugned upward adjustment deserves to be sustained.
On the other hand, Ld. AR on behalf of the assessee has placed his reliance on the decision of ITAT, Raipur in the case of Goldbricks Infrastructure Pvt. Ltd. vs. ACIT in IT(TP)A No. 1/RPR/2024 vide order dated 13.12.2024, wherein the tribunal had decided the similar issue in favour of the assessee following the judgment of Hon’ble Karnatka High Court in the case of PCIT vs. M/s Texport Overseas Pvt. Ltd. (2020) 271 Taxman 170 (Kar.). Fort the sake of interpretation, the relevant findings of the ITAT, Raipur in the case of Goldbricks Infrastructure Pvt. Ltd. (supra) are extracted hereunder: 14. Ground No. 1 & 2: Assailing the upward adjustment made by the Transfer Pricing Officer u/s 92CA(3), thereby disallowance made by the Ld. AO and confirmed by the Ld. CIT(A). 14.1 At the outset, it was argued by Ld. AR that clause(i) of section 92BA has been omitted by the Finance Act, 2017 w.e.f. 01.04.2017, accordingly, the revenue was not empowered make any adjustment qua the impugned transaction carried out by appellant with related parties, as such transactions would no more qualify to be brought within the definition of “Specified Domestic Transactions” after the aforesaid amendment in section 92BA, therefore, no adjustment can be made under the said section. Ld. AR, to substantiate the aforesaid claim, placed his reliance on the judgment by Hon’ble Karnataka High Court in the case of PCIT vs M/s Taxport Overseas Pvt. Ltd. (2020) 271 taxman 170 (Kar), wherein Hon’ble High Court has held as under:
23 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd.
Having heard learned Advocates appearing for parties and on perusal of records in general and order passed by tribunal in particular • is clearly noticeable at Clause (i) of Section 92BA of the Act came to be omitted w.e.f. 01.04.2017 by Finance Act, 2017. As to whether omission would save the acts is an issue which is no more res-intigra in the light of authoritative pronouncement of Hon'ble Apex Court in the matter of KOHL4PUR CANESUGAR WORKS LTD. v. UNION OF INDIA reported in AIR 2000 SC 811 whereunder Apex Court has examined the effect of repeal of a statute visa-vis deletion/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 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 without a saving clause in favour of pending proceedings then it can be reasonably inferred that the intention of the legislature is that the pending proceedings shall not continue but fresh proceedings for the same purpose may be initiated under the new provision.
In fact, Coordinate Bench under similar circumstances had examined the effect of omission of sub-section (9) to Section 10B of the Act w.e.f. 01.04.2004 by Finance Act, 2003 and held that there was no saving clause or provision introduced by way of amendment by omitting sub- section (9) of Section 10B. In the matter of GENERAL FINANCE CO. vs. ACIT, which judgment has also been taken note of by the tribunal while repelling the contention raised by revenue with regard to retrospectivity of Section 92BA(i) of the Act. Thus, when clause (i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.04.2017 from the Statute the resultant effect is that it had never been passed and to be considered as 24 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. a law never been existed. Hence, decision taken by the Assessing Officer under the effect of Section 92BI and reference made to the order of Transfer Pricing Officer- TOP under Section 92CA could be invalid and bad in law.
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 authoritative principles enunciated by the Hon'ble Supreme Court in Kolhapur Canesugar Works Ltd referred to herein supra which has been followed by Co-ordinate Bench of this Court in the matter of M/s. GE Thermometrias India Private Ltd., stated supra. As such we are of the considered view that first substantial question of law raised in the appeal by the revenue in respective appeal memorandum could not arise for consideration particularly when the said issue being no more res integra.
14.2 Considering the aforesaid judgment of Hon’ble Karnataka High Court which is followed by various coordinate benches of this Tribunal refer to by the Ld. AR in his synopsis (supra), coming to the facts of present case that the order of TPO was passed on 31.10.2017 and the assessment order by the Ld. AO on 29.12.2017, being both the date falls after 01.04.2017, therefore, the issue in present case is expressly covered by the ratio of judgment rendered by the Hon’ble Karnataka High Court in the case of M/s Taxport (supra), hence the addition made on the basis of omitted provision of the law is unsustainable and have no standing in the eyes of law. Consequently, the addition of Rs.80,06,666/- made as an upward adjustment treating the transaction with related party as SDT is directed to be deleted. In result, ground no. 1 & 2 of the present appeal of the assessee stands allowed.
In terms of aforesaid submission, it was the prayer by Ld. AR that since the Ld. CIT(A) had followed the analogy drawn by Hon’ble ITAT in the case of Goldbricks Infrastructure Pvt. Ltd. (supra) which is supported by the judgment of Hon’ble Karnatka High Court in the case of M/s Taxport 25 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. (supra), wherein it has been held that “when clause (i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.04.2017 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 92BI and reference made to the order of Transfer Pricing Officer- TOP under Section 92CA could be invalid and bad in law”. Therefore, the order passed by Ld. CIT(A) was justified, based on proper appreciation of the facts & law and well in accordance with the principle laid down in the jurisprudence referred to herein above, therefore, had rightly decided the issue in favour of the assessee, resultantly, the same deserves to be upheld.
We have considered the rival submissions, perused the material available on record and case laws relied upon by the assessee. On perusal of the facts of present case. It is noticed that the order of TPO u/s 92CA(3) of the Act was passed on 25.10.2017 and thereafter the order of Ld. AO u/s 143(3) r.w.s 144C(3) of the Act was passed on 28.12.2017, which was impugned before the Ld. CIT(A). Since both the aforesaid impugned orders are after 01.04.2017, the date effective from which the provisions of Section 92BA(i) have been omitted by Finance Act, 2017 from the Income Tax Act, therefore, the facts of present case are found to be identical with the facts in the case of Goldbricks Infrastructure (supra). Accordingly, respectfully following the principle of law interpreted by Hon’ble Karnatka High Court in 26 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd. the case of M/s Texport Overseas Pvt. Ltd.(supra), the assessment passed by Ld. AO under section 143(3) dated 25.03.2022, making an addition u/s 92BA(i) and order passed by the TPO u/s 92CA(3) are invalid and bad in law.
In terms of aforesaid discussion, following the judgments (supra), we find substance in the contention raised by the assessee, accordingly, the present matter is squarely covered by the decision in the case of Goldbricks Infrastructure Pvt. Ltd. (supra), therefore, we are of the considered view that there is no infirmity in the order of Ld. CIT(A) in deleting the upward adjustment amounting to Rs. 6,16,68,732/- being 10% of aggregate value of specified domestic transaction vide order u/s 92CA(3) of the Act, so we upheld the same.
In sum and substance, the contention of the revenue challenging the order of Ld. CIT(A) in vacating of an addition, is devoid of substance and bereft of merits, for the reason that the said addition was made by invoking the provision of Section 92BA(i) after 01.04.2017, wherefrom the provisions of Section 92BA(i) have been omitted by Finance Act, 2017, thus, became otiose and cannot be acted upon against the assessee dehors any saving clause attached thereto. Consequently, we reject the same and in turn the appeal of revenue stands dismissed.
27 DCIT-1(1), Raipur vs. C. G. Ispat Pvt. Ltd.
Before parting with, it is to be clarified that since the provisions of section 92BA(i) itself had omitted from the statute w.e.f. 01.04.2017, therefore, the same has no legal standing to be applied for specified transactions covered within its scope, effective from 01.04.2017, therefore, the upward adjustment proposed by TPO-2, Ahmedabad vide order dated 25.10.2017 (a date after 01.04.2017) has been deleted, following the judgment in the case of Taxport (supra). Under such facts and circumstances, the other contention raised by the revenue regarding adherence to section 46A by the Ld. CIT(A) becomes infructuous, the same, therefore, became academic only.
In result, appeal of the revenue in has been rendered as dismissed, in terms of our aforesaid observations.
Order pronounced in the open court on 30/07/2025. (ARUN KHODPIA) (PARTHA SARATHI CHAUDHURY) "ाियक सद" / JUDICIAL MEMBER लेखा सद" / ACCOUNTANT MEMBER रायपुर / Raipur; िदनांक Dated 30/07/2025 Vaibhav Shrivastav