DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-4, NAGPUR vs. SHRI VIVEK VINAYAK VAIDYA, NAGPUR

आदेश/ ORDER

PER DR. DIPAK P. RIPOTE, AM:

Submission of Ld.DR : 2. Ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the AO. Ld.DR submitted that the AO had made adjustment as per the Order u/s 92CA(3) of the Act passed by the Transfer Pricing officer with reference to Specified Domestic Transactions as it existed at that time. The subsequent amendment is not retrospective and it is applicable from 2017. Therefore, Ld.CIT(A) erred in deleting the addition.

Submission of Ld.AR : 3. Ld.Authorised Reresentative(ld.AR) submitted that the Ld.CIT(A) has deleted the Adjustments made by the AO with reference to Specific Domestic transactions following Hon’ble ITAT Bangalore’s Decision in the case of Texport Overseas Pvt. Ltd Vs. DCIT ITA(TP) No.2213/Bang/2018. Ld.AR further submitted that the said decision of ITAT has been upheld by Hon’ble Karnataka High Court. Ld.AR therefore submitted that CIT(A)’s order may please be upheld.

Findings and Analysis: 4. We have heard both the parties and perused the records.

4.1 It emanates from the Assessment Order dated 31/12/2018 that the Assistant Commissioner of Income Tax, Circle-4, Nagpur(AO) had referred the issue of determination of Arm’s Length Price of Specified Domestic Transaction to the Transfer Pricing officer as per CBDT Circular Number 03/2016. The AO had obtained approval of the Pr.Commissioner of Income Tax-3, Nagpur vide his letter dated 13/12/2017 before making reference to Transfer pricing Officer. The Transfer pricing officer (TPO) recommended an adjustment of Rs.2,09,29,258/- to the value of the specified domestic transaction of the Assessee vide his order dated 30/10/2018 u/s 92CA(3) of the Act. The AO accordingly made addition of Rs.2,09,29,258/- to the Total Income of the assessee. Aggrieved by the order of the AO the Assessee filed appeal before the Ld.CIT(A) who deleted the said addition following the decision of ITAT Bangalore Bench in the case of Texport Overseas Pvt. Ltd (supra).

4.2 The Hon’ble Karnataka High Court has upheld the said decision of ITAT Bangalore Bench. It is observed that the issue is decided in favour of the assessee by Hon’ble Karnataka High Court in the case of Texport Overseas Pvt. Ltd., 313 CTR 485 (Kar). The Hon’ble Karnataka High Court has held as under : Quote, “3. It is the contention of learned Advocates appearing for revenue that tribunal was not justified in arriving at a conclusion that Clause (i) of section 92BA of the Act, which had been omitted w.e.f. 01.04.2017 would be applicable retrospectively by presuming the retrospectivity, particularly when the statue itself explicitly stated it to be prospective in nature. As such they have sought for formulating substantial questions of law and have sought for answering the same in favour of revenue and against the assessee.

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4.3 Thus, the Hon’ble High Court has categorically held that once the section 92BA(i) was omitted by Finance Act, 2017, the resultant effect is that it had never existed. The Ld.DR has not brought to our notice any contrary decision of the Hon’ble Jurisdictional High Court. As per the Law of Precedence, we are duty bound to follow the decision of the Hon’ble Karnataka High Court in the absence of any contrary decision of the Hon’ble Jurisdictional High Court on the issue. Therefore, we uphold the decision of Ld.CIT(A).

4.4 Accordingly, Ground No.1 of the Revenue is Dismissed.

4.5 Ground Number 2 is general in nature, revenue has not raised any additional ground or amended the grounds. Accordingly, the said Ground Number 2 is dismissed.