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Income Tax Appellate Tribunal, NAGPUR BENCH : : NAGPUR
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Dy. Commissioner of Income Tax Circle 4 Nagpur against the order of the Commissioner of Income Tax(Appeal)-1, Nagpur dated 29/11/2019 emanating from the Assessment Order under section 143(3)dated 31.12.2018 for AY 2015-16.
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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In fact, Co-ordinate 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. v. 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 01.07.2017 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 92BI and reference made to the order of Transfer Pricing Officer- TPO 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.”Unquote.
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.
In the result appeal of the Revenue is Dismissed. Order pronounced in the open Court on 22nd November, 2023.