Omission of clause from statue- Deemed to be from inception or not?

Texport Overseas Private Limited Vs. Dy. CIT (ITAT Bangalore)

Pursuant to the amendment made by Finance Act 2017, omission of clause (i) of Section 92BA of the IT Act, 1961 (“The Act”) be deemed to be removed from statute since the beginning until and unless there is some saving clause or provision that pending proceedings shall be continued and be disposed off under old rules.

Outcome: In favor of Assessee

Issue:

Whether on account of omission of clause (i) from the statute, the proceedings already initiated or action taken under clause (i) becomes redundant or otiose?

Assessee’s Contention:

That sub clause (i) of section 92BA of the Act under which the assessee has undertaken the transactions which has exceeded the prescribed limit, was omitted by the Finance Act 2017 w.e.f. 01.04.2017. Since clause (i) has been omitted from the Statute by virtue of an amendment, this particular sub clause shall be deemed not to be on statute since the beginning.

Relied on following pronouncements wherein it was held that omission of any provision of section from the Act be deemed to be removed from statute since the beginning until and unless there is some saving clause or provision that pending proceedings shall be continued and be disposed off under old rules:

 Kohlapur Canesugar Works Limited vs. UOI (Civil) 2132 of 1994 [SC]

 General Finance Co. vs. Asst. CIT 257 ITR 338 [SC]

 CITGE Thermometrics India Private Limited, ITA No. 876/2008 [HC]

Revenue’s Contention:

Even if it is held that clause (i) of section 92BA of the Act be removed from statute since beginning in view of the amendment and in the light of various judicial pronouncements the reference made by AO to TPO is bad in law, the AO is required to examine the claim of the assessee in the light of the other provisions of the Act.

Honorable ITAT’s Decision:

Having placed reliance on the decisions of various courts as relied upon by the assessee, the Honorable ITAT held that once a particular provision of section is omitted from the statute, it shall be deemed to be omitted from its inception unless and until there is some saving clause or provision that action taken or proceedings initiated under that provision or section would continue and would not be left on account of omission.

Therefore, held that the cognizance taken by the AO u/s 92BA (i) of the Act and reference made to TPO u/s 92CA of the Act is invalid. Hence, the consequential order passed by TPO and DRP is also not sustainable.