Whether omission of any provision from the statute, like Clause (i) of Section 92BA of the Income-tax Act, 1961, amounts to omission from its inception?
In the recent landmark judgement of Texport Overseas Private Limited v. DCIT [IT(TP)A No. 1722/Bang/2017], Honorable Bangalore Tribunal held that: it would be deemed that clause (i) of Section 92BA of the Income-tax Act, 1961 (‘the Act”) was never been on the statute as it has been omitted w.e.f. April 01, 2017 vide Finance Act, 2017 and nothing was specified whether the proceeding initiated or action taken on this continue. This is a really a welcome decision.
The Tribunal relied on the following landmark judgements of the pertaining to the Section 6 of the General Clauses Act, 1897 (GCA):
1. Kolhapur Canesugar Works Ltd. v. Union of India in Appeal (Civil) 2132 of 1994 vide judgment dated 01.02.2000 (SC)
2. General Finance Co. v. Assistant Commissioner of Income-tax 257 ITR 338 (SC)
3. CIT v. GE Thermometrics India Pvt. Ltd., in ITA No. 876/2008(Kar)
In all the above cases the Courts laid down following tests or principles in deciding whether omissions of particular provisions from a statute deemed to be omitted from inception:
a. The court is to look to the provisions in the rule which has been introduced after omission of the previous rule to determine whether a pending proceeding will continue or lapse.
b. If there is a provision therein that pending proceedings shall continue and be disposed of under the old rule as if the rule has not been deleted or omitted then such a proceeding will continue.
c. If the case is covered by Section 6 of the GCA or there is a pari-materia provision in the statute under which the rule has been framed in that case also the pending proceeding will not be affected by omission of the rule.
d. In the absence of any such provisions, as per point (b) or (c) above, in the statute or in the rule, the pending proceeding will lapse under rule under which the notice was issued or proceeding being omitted or deleted.
Therefore, the Tribunal on applying above principles in the instant case of Texport Overseas (supra), held that clause (i) of section 92BA deemed to be omitted from its inception and that clause (i) was never been part of the Act. This is due to the reason that while omitting the clause (i) of section 92BA, nothing was specified whether the proceeding initiated or action taken on this continue. Therefore, the proceeding initiated or action taken under that clause would not survive at all in the absence of any specific provisions for continuance of any proceedings under the said provision. As a result if any proceedings have been initiated, it would be considered or held as invalid and bad in law.
On the basis I would like to request or urge the Government or CBDT to take back or cancel any such assessment or appeal cases of Domestic Transfer Pricing which are relating to the omitted Clause (i) of Section 92BA of the Act vide Finance Act, 2017. As was done after the landmark judgement of Vodafone India Services Pvt. Ltd. for AY 2009-10 (WP No. 871/2014) by Honorable Bombay High Court vide Instruction No. 2/2015 dated January 29, 2015. This is due to the reason that this would be win-win situation for all, i.e. the Judiciary, the Government and assessees (who are already burdened with compliances under various other statutes) and can be elaborated as follows:
1. Reduction in such non-productive cases of Domestic Transfer Pricing
2. Reduction in litigations will lead to save resources of judiciary and thereby fast and effective disposal of other important cases by the Courts
3. Reduction in compliance or litigation costs of the Income-tax Department (“ the Department”) as well as assessee
4. A step towards “Ease of Doing Business”
5. Application of time and other important resources of the Department towards more beneficial cases
6. Giving message to the assessees that Department works in direction of assessee’s betterment
7. Increasing faith of assessee in the Department
8. Ultimately, increase in effectiveness and efficiency in Nation building by the judiciary, administration, assessee, the professionals involved and other stakeholders.
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