THE DCIT CIRCLE-1(1)(1), AHMEDABAD vs. ABHILASHA PHARMA PVT. LTD., AHMEDABAD

The brief facts of the case are that the assessee is a private limited company, engaged in the business of manufacturing of bulk drugs and formulations. The assesse filed its return of income on 12.09.2016 declaring total income of Rs.28,55,340/-. The assessee had entered into specified domestic transactions of Rs.16,34,41,898/-. Therefore, the case was referred to Transfer The DCIT Vs. Abhilasha Pharma Pvt Ltd. AY : 2015-16 2 Pricing Officer (TPO) for computing the Arm’s Length Price (ALP) in respect of the specified domestic transactions entered into by the assessee. The TPO passed order u/s 92CA(3) of the Act on 26.10.2018 whereby upward adjustment of Rs.3,45,39,464/- was made. The Assessing Officer, while completing the assessment, upheld the upward adjustment determined by the TPO and demanded tax thereon.

Aggrieved against the same, the assessee filed an appeal before the CIT(A). The CIT(A) held the transactions carried out by the assessee are not international transactions and the provisions of Section 92BA of the Act will not be applicable and thereby deleted the upward adjustment made by the Assessing Officer by observing as follows:-

Aggrieved against the same, the Revenue is in appeal before us raising the solitary ground that the CIT(A) erred in deleting the upward adjustment of Rs.3,45,39,464/- in respect of “Specified Domestic Transactions”.

Ld. Sr. Counsel Shri S. N. Soparkar, appearing for the assessee, submitted before us that this issue is no more res integra following the judgment passed by the Hon’ble Karnataka High Court in the case of PCIT Vs. Texport Overseas (P.) Ltd., reported in [2020] 114 taxmann.com 568 (Karnataka). It was further submitted that the principle laid down by the Hon’ble Karnataka High Court in regard to the applicability of Section 92BA(i) of the Act, after the omission from the statute by and under the Finance Act, 2017 with effect from 01.04.2017, was followed by different Benches of the Hon’ble ITAT in the case of Ammann India Pvt. Ltd. Vs. ACIT in Shri Durga Loha Bhandar (P.) Ltd. Vs. PCIT, reported in [2023] 151 taxmann.com 483 (Delhi Trib.) and Intas Pharmaceuticals Ltd Vs. ACIT, reported in [2023] 156 taxmann.com 391 (Ahmedabad Trib.). Respectfully following the same, the order The DCIT Vs. Abhilasha Pharma Pvt Ltd. AY : 2015-16 4 passed by the ld. CIT(A) does not require any interference and the appeal of the Revenue is liable to be dismissed.

Per contra, the ld. CIT-DR, Dr. Darsi Suman Ratnam, appearing for the Revenue, supported the order passed by the ld. TPO and the Assessing Officer.

We have given our thoughtful consideration and perused the materials available on record including the case laws filed by the assessee. The short point to be decided is the maintainability of the order passed by the Assessing Officer on the issue as to whether under the present facts and circumstances of the case Section 92BA(i) would be applicable, particularly when the said section was omitted from the statute by the Finance Act, 2017 w.e.f. 01.04.2017. In fact, it is to be considered as to whether Clause (i) of Section 92BA of the Act, which has been omitted w.e.f. 01.04.2017, would be applicable retrospectively. It is a settled principle of law that when a particular provision is repealed from the statue, the normal effect would be 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. Further that in a case where a particular provision in a statute is unconditionally 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 proceeding shall not continue, but fresh proceedings for the same purpose may be initiated under the new provision. If that be so, then since the Clause (i) of Section 92BA was omitted by Finance Act, 2017 w.e.f. 01.04.2017 from the statute, the same cannot be made applicable in the pending proceeding. It is, therefore, to be The DCIT Vs. Abhilasha Pharma Pvt Ltd. AY : 2015-16 5 considered non-est in the concerned statute as if it had never been passed.

In that view of the matter once the said clause being omitted w.e.f. 01.04.2017, the decision made by AO/TPO invoking such Section 91BA is without any basis, and/or jurisdiction, invalid and bad in law and thus, the same is liable to be quashed. On this aspect, we have further carefully considered the judgment passed by the Hon’ble Karnataka High Court in the case of Texport Overseas (P.) Ltd. (cited supra). While dealing with the issue the Hon’ble Court was pleased to observe as follows:

Thus, relying upon the ratio laid down upon the Hon’ble Karnataka High Court and different benches of the Tribunal, we find no justification in the order passed by the TPO/AO making upward adjustment invoking Section 92BA(i) of the Act, in the present facts and circumstances of the case, particularly when the said section stood omitted w.e.f. 01.04.2017 from the statute itself. Hence, we find that the order passed by the TPO/AO is without any basis, void The DCIT Vs. Abhilasha Pharma Pvt Ltd. AY : 2015-16 6 ab initio and without jurisdiction. We, therefore, uphold the order passed by the CIT(A) deleting the upward adjustment made by the TPO/AO of Rs.3,45,39,464/- u/s 92BA of the Act in respect of “Specified Domestic Transactions”.

In the result, the appeal filed by the Revenue is hereby dismissed.