Seaways Liner Agencies Private Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-3(1), Hyderabad

ITA 1677/Hyd/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0737 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 27-01-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 09-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: AJIT TOLANI; MITHILESH
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Question of law; Set aside
• Section: 143(3); 10B; 201; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES : BENCH A HYDERABAD (THROUGH VIDEO CONFERENCE ) BEFORE SHRI S . S . GODARA, JUDICIAL MEMBER AND SHRI L . P . SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1677 /HYD./201 8 ASSESSMENT YEAR : 201 4 - 15 M/S SEAWAYS LINER AGENCIES PRIVATE LTD. VS. DEPUTY CIT, CIRCLE 3(1) HYDERABAD HYDERABAD PAN: AA SCS8076R (APPELLANT) (RESPONDENT) FOR ASSESSEE: SRI AJIT TOLANI & MITHILESH, A.R S . FOR REVENUE: SMT. NIVEDITA BISWAS, D.R. DATE OF HEARING : 27 /01/2021 DATE OF PRONOUNCEMENT : 18/ 0 2 /2021 O R D E R PER BENCH THIS ASSESSEES APPEAL FOR A.Y. 20 14 - 15 ARISES FROM DISPUTE RESOLUTION PANEL - 1 [DRP - 1] BENGALURUS ORDER DATED 30.05.2018 PASSED IN APPEAL NO. 0 1 /201 8 - 19 INVOLVING PROCEEDINGS U/S 143(3) R.W.S. 14 4C(13) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL. ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 2 I . THE ORDER OF THE DCIT, CIRCLE 3(1), HYDERABAD AND THE ORDER OF THE DR P ARE ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. II. THE A. O. AND THE DRP ERRED IN DETERMINING THE ADDITION TO BE MADE ON ACCOUNT OF ADJUSTMENT OF ARM'S LENGTH PRICE AT RS. 9,27,11,080/ - . III . THE LD. DRP ERRED IN HOLDING THAT PROFIT D ERIVED FROM THE NON AE SEGMENT IS 11.36% OF THE RECEIPT WITHOUT CONSIDERING THE FACT THAT THE PROFIT FROM NON AE SEGMENT IS ONLY 1.60%. IV . THE LD. DRP OUGHT TO HAVE SEEN THAT THE COMMISSION RECEIVED FROM THE OTHER LINERS IS ONLY RS. 1,06,64,128/AS AGAINS T THE TURNOVER HANDLED RS. 66,44, 10,448/ WHICH COMES RATE OF ABOUT 1.60% AND NOT 11.36%. V . THE LD. DRP ERRED IN INCLUDING THE GROSS MISCELLANEOUS INCOME OF RS. 6,48,39,254/ - AS A PART OF THE COMMISSION FROM OTHER LINERS AND ERRED IN ARRIVING AT THE TOTAL INCOME FROM THE OTHER LINERS AT RS. 7,55,03,382/ - . VI. THE LD. DRP OUGHT TO HAVE CONSIDERED THAT THE MISCELLANEOUS INCOME OF RS. 6 , 48,39,254/ - WAS DERIVED FOR THE ALLIED SERVICES AND NOT FOR THE LINERS HAN DLED BY THE APPELLANT. THE SAID RECEIPT CANNOT FORM PART OF THE COMMISSION FROM THE OTHER LINERS. V II. AS ALTERNATE THE LD. DRP OUGHT NOT TO HAVE CONSIDERED THE GROSS AMOUNT OF RS. 6,48,39,254/ - AS A PART OF INCOME RELATING TO OTHER LINERS WITHOUT CONSI DERING THAT APPELLANT INCURRED EXPENDITURE OF RS . 4, 06,37,577 ON DERIVING THE MISCELLANEOUS INCOME. VIII. THE LD. DRP ERRED IN DIRECTING THE A.O. TO WORK OUT THE MARGIN OF PROFIT AT 11.36% OF THE GROSS RECEIPTS AND THE A.O. ERRED IN DETERMINING THE ADJ USTMENT AT RS. 5,77,88,600. ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 3 IX. THE LD. DRP ERRED IN HOLDING THAT THE INTEREST INCOME ON THE TRADE RECEIVABLES IS TO BE ESTIMATED AT THE RATE ADOPTED BY THE SBI ON SHORT TERM DEPOSITS. X. THE LD. DRP ERRED IN HOLDING THAT THE ENTIRE AMOUNT OF RS. 6,05,5 3,454/ - PAID BY THE APPELLANT TO SEAWAYS SHIPPING AND LOGISTICS LTD., DOES NOT REPRESENT REIMBURSEMENT OF THE EXPENSES. XI. THE LD. DRP OUGHT TO HAVE CONSIDERED THAT THE ENTIRE AMOUNT OF RS. 6,05,53,454/ - REPRESENTS THE REIMBURSEMENT OF THE EXPENSES IN CURRED BY SEAWAYS SHIPPING AND LOGISTICS LTD., HOLDING COMPANY. XII. THE LD. DRP OUGHT TO HAVE CONSIDERED THE FACT THAT THE AMOUNT OF RS. 2,25,06,270/ - REPRESENTS THE REIMBURSEMENT OF OCCUPANCY FEE PAID BY SEAWAYS SHIPPING AND LOGISTICS LTD., TO THE OWNER OF THE PROPERTY. XIII. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. LEARNED AUTHORISED REPRESENTATIVE STATED AT THE OUTSET THAT WE NEED NOT ADJUDICATE UPON ALL OF ASSESSEES GROUNDS EXTRACTED HEREINABOVE EXCEPT GROUND NOS. V, IX AND X ONLY. WE THUS DISMISS ASSESSEES GROUND NOS. I TO IV, VI TO VIII AND XI TO XIII AS NOT PRESSED DURING THE COURSE OF HEARING. 2.1. WE NOW ADVERT TO ASSESSEES V TH SUBSTANTIVE GROUND THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN INCLUDING ITS GROSS MISC. INCOME OF RS. 6,48,39,254/ - AS PART OF THE COMMISSION FROM OTHER LINERS THEREBY ARRIVING AT I N COME DERIVED THEREFROM RS.7,55,03,382/ - . IT IS VEHEMENTLY SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT ASSESSEE IN NO WAY, WHATSOEVER, STATED THAT THE MISC. INCOME IN ISSUE FORMS PART OF THE ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 4 ASSESSEES INTERNATIONAL TRANSACTION S SUBJECT MATTER OF ALP ADJUSTMENT. 2.2. THE L EARNED CIT, DR ON THE OT HER HAND HAS DRAWN STRONG SUPPORT FROM THE IMPUGNED INCLUSION OF MISC. INCOME AS PER THE DISPUTE RESOLUTION PANELS [DRP] DIRECTIONS. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO ASSESSEES FOREGOING FIRST SUBSTANTIVE GRIEVANCE. WE ARE OF THE OPIN ION THAT THE INSTANT ISSUE OF INCLUSION/EXCLUSION OF MISC. INCOME REQUIRES MORE A RECONCILIATION THAN ANY SUBSTANTIVE ADJUDICATION IN OTHER WORDS . WE EX FACIE NOTICE THAT ASSESSEES MISC. INCOME OF RS. 6,48,39,254/ - IS IN NO WAY RELATED TO ITS INTERNATIO NAL TRANSACTION S WITH OVERSEAS ASSOCIATED ENTERPRISE WHICH WOULD BE LIABLE TO BE CONSIDERED FOR THE PURPOSE OF ARRIVING AT ALP UNDER CHAPTER X OF THE ACT . T HERE IS NO JUSTIFICATION TO INCLUDE THE SAME IN THIS ENTIRE PROCESS THEREFORE. WE DEEM IT APPRO PRIATE TO RESTORE THE INSTANT FIRST ISSUE BACK TO THE TRANSFER PRICING OFFICER TPO FOR HIS APPROPRIATE ADJUDICATION AS PER LAW WITH A SPECIFIC DIRECTION THAT IN CASE IF IT IS FOUND AFTER VERIFICATION OF THE RELEVANT RECORDS COMING FROM ASSESSEES LEVEL THAT THE IMPUGNED INCOME IS NOT RELEVANT FOR DETERMINATION OF A L P PERTAINING TO INTERNATIONAL TRANSACTIONS WITH THE AE (S) IT WOULD NOT BE CONSIDERED IN THE SAID CONSEQUENTIAL COMPUTATION EXERCISE. L EARNED C OUNSEL HAS ALSO PLACED ON RECORD THE TPOS ORDER FOR VERY NEXT A.Y. 2015 - 16 STATING HE HAD HIMSELF EXCLUD ED IDENTICAL MISC. INCOME FOR THE PURPOSE OF DETERMINING THE ALP ADJUSTMENT REGARDING ITS INTERNATIONAL TRANSACTION S . NEEDLESS TO SAY , THE AO ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 5 SHALL ALSO TAKE NOTE OF ALL THE SE SUBSEQUENT DEVELOPMENTS ON THIS ISSUE. ASSESSEES INSTANT V TH SUBSTANTIVE GR OUND (SUPRA) IS RESTORED BACK TO THE TPO IN AFOREMENTIONED TERMS. 4. NEXT COMES THE ISSUE OF INTEREST ON RECEIVABLES OF RS. 6,77,226/ - QUA AMOU NTS DUE FROM OVERSEAS ASSOCIATE ENTERPRISES OF RS. 1,93,29,066/ - . WE NOTICE FROM A PERUSAL OF PARA 7.8 OF TPOS ORDER DATED 27 TH MARCH, 2007 THAT HE HAD ADOPTED INTEREST RATE OF 14.75% ON ASSESSEES INTERNATIONAL TRANSACTION GOING BY THE SBIIS SHORT TERM FIXED DEPOSIT RATES. 4.1. THE TAXPAYERS PLEA IN TURN WAS THAT ITS OVERSEAS RECEIVABLES TO ITS AE(S) WERE MUCH MORE THAN AMOUNTING TO RS. 11.59 CRORES AND THEREFORE , EVEN IF IT IS HELD INTEREST IS TO BE CHARGED FROM BOTH ENDS, THE NET RESULT WOULD COME IN NEGATIVE ONLY. PARA 3.4 PAGE 9 OF DRPS DIRECTIONS DATED 30 TH MAY, 2018 REVEAL S THAT THE PANEL HAD FOUND NO MERIT IN ASSESSEES CONTENTION GOING BY RELEVANT CLA USES IN THE AGREEMENTS EXECUTED WITH THE OVERSEAS ASSOCIATED ENTERPRISES . THIS IS WHAT LEAVES ASSESSEE AGGRIEVED . 4.2. WE HAVE HEARD RIVAL CONTENTIONS ON THIS INTEREST RECEIVABLES ISSUE. WE FIND NO MERIT TO SUSTAIN THE IMPUGNED ADDITION/ADJUSTMENT. SU FFICE TO SAY, NEITHER THE TPOS ORDER NOR DRPS DIRECTIONS FORMING SUBJECT MATTER OF THE INSTANT ISSUE MAKE ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 6 IT CLEAR AS TO HOW THE ALLEGED INTEREST RATE OF 14.75% HAD BEEN ADOPTED BY DRAWING SUPPORT FROM THE RELEVANT MARKET COMPARABLES. 4.3. L EARNED C OUNSEL REFERRED US TO ASSESSEES PLEADINGS THAT THE LOWER AUTHORITIES HAVE BEEN GUIDED BY SBIS SHORT TERM INTEREST RATES TO ARRIVE AT THIS FIGURE . WE SEE NO REASON TO CONCUR WITH THIS BENCH MARK SINCE WE ARE DEALING WITH INTERNATIONAL TRANSACTIONS WITH OVERSEAS ASSOCIATE ENTERPRISES HAVING RECEIVABLES FROM BOTH SIDES INVOLVING INTERNATIONAL CURRENCY DENOMINATION WHERE AS THE AUTHORITIES HAVE GONE BY DOMESTIC DEPOSIT RATES ONLY. WE THEREBY DIRECT THE TPO TO DELETE THE IMPUGNED ADDITION ON THIS COUNT ALONE WITHOUT DEEMING IT PROPER TO CONSIDER ALL OTHER ASPECTS. THE A SSESSEE SUCCEEDS IN THE INSTANT IX TH SUBSTANTIVE GROUND. 5. LASTLY COMES ASSESSEES X TH SUBSTANTIVE GROUND THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ENTIRE AMOUNT OF RS.6,05,53,454/ - PAID TO M/S SEAWAYS SHIPPING AND LOGISTICS LTD. D OES NOT REPRESENT MERE REIMBURSE MENT OF EXPENSES. WE NOTICE DURING THE COURSE OF HEARING THAT THE TPOS OBSERVATIONS IN PAGE 7 PARA 7.8 TREATING THE IMPUGNED SEGMENT AS COVERED UNDER SPECIFIED DOMESTIC TRANSACTION WHICH STANDS REPEALED BY THE FINANCE ACT, 2013. THIS TRIBUNAL DECISI ON IN ITA 2213/BANGALORE/ 20 18 IN TEXPORT OVERSEAS PVT. LTD. VS. DCIT, BANGALORE DATED 12.09.2018 ( FOR THE VERY SAME AY ) HOLDS THAT THE NECESSARY CONSEQUENCE THAT FLOWS FROM LEGISLATIVE ACTION ; AFTER REPEALING CORRESPONDING PROVISION, IS ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 7 THAT THE SAME N EVER EXISTED IN THE ACT. RELEVANT OBSERVATIONS TO THIS EFFECT READ AS FOLLOWS: 4 . HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AUTHORITIES, WE FIND THAT IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2013 - 14. THE RELEVANT OBSERVATION OF THE TRIBUNAL IS EXTRACTED HERE UNDER FOR THE SAKE OF REFERENCE: '7. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS AND RELEVANT PROVISIONS AND VARIOUS JUDICIAL PRONOUNCEMENTS, WE FIND THAT BY VIRTUE OF THE INSERTION OF SECTION 92BA ON THE ST ATUTE AS PER CLAUSE (I), ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT HAS BEEN MADE OR IS TO BE MADE TO PERSON REFERRED TO IN CLAUSE (B) OF SUB SECTION 2 OF SECTION 40A EXCEEDS THE PRESCRIBED LIMIT, IT WOULD BE A SPECIFIED DOMESTIC TRANSACTION FOR WHICH AO IS REQUIRED TO MAKE A REFERENCE TO TPO UNDER SECTION 92CA OF THE ACT FOR DETERMINATION OF THE ALP. IN THE INSTANT CASE, SINCE THE TRANSACTION EXCEEDS THE PRESCRIBED LIMIT IT BECOMES THE SPECIFIED DOMESTIC TRANSACTION FOR WHICH REFERENCE WAS MADE BY THE AO TO THE TPO UNDER SECTION 92CA FOR DETERMINATION OF THE ALP. CONSEQUENTLY, THE TPO SUBMITTED A REPORT WHICH WAS OBJECTED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE AND FILED A OBJECTION BEFORE THE DRP. HAVING ADJUDICATED THE OBJECTIONS, THE DRP HAS ISSUED C ERTAIN DIRECTIONS AND CONSEQUENTLY THE AO PASSED AN ORDER. SUBSEQUENTLY, BY FINANCE ACT, 2017 W.E.F. 01.04.2017, CLAUSE (I) OF SECTION 92BA WAS OMITTED FROM THE STATUTE. NOW THE QUESTION ARISES AS TO WHETHER ON ACCOUNT OF OMISSION OF CLAUSE (I) FROM THE ST ATUTE, THE PROCEEDINGS ALREADY INITIATED OR ACTION TAKEN UNDER CLAUSE (I) BECOMES REDUNDANT OR OTIOSE. IN THIS REGARD, OUR ATTENTION WAS INVITED TO JUDGMENT OF THE APEX COURT IN THE CASE OF KOLHAPUR CANESUGAR WORKS LTD., (SUPRA) IN WHICH THE IMPACT OF OMIS SION OF OLD RULE 10 AND 10A WAS EXAMINED. HAVING CAREFULLY EXAMINED THE ISSUE IN THE LIGHT OF PROVISIONS OF SECTION 6 OF THE GENERAL CLAUSES ACT, THEIR LORDSHIP HAS OBSERVED 'THAT IN SUCH A CASE, THE COURT IS TO LOOK TO THE PROVISIONS IN THE RULE WHICH HAS BEEN INTRODUCED IT(TP)A NO. 2213/BANG/2018 AFTER OMISSION OF THE PREVIOUS RULE TO DETERMINE WHETHER A PENDING PROCEEDING WILL CONTINUE OR LAPSE. 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. IF THE CASE IS COVERED BY SECTION 6 OF THE GENERAL CLAUSES ACT OR THERE IS A PARI - MATERIA PROVISION IN THE STATUTE UNDER WHICH THE RULE HAS BEEN FRAMED IN THAT CASE ALSO T HE PENDING PROCEEDING WILL NOT BE AFFECTED BY OMISSION OF THE RULE. IN THE ABSENCE OF ANY SUCH PROVISIONS IN THE STATUTE OR IN THE RULE, ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 8 THE PENDING PROCEEDING WILL LAPSE UNDER RULE UNDER WHICH THE NOTICE WAS ISSUED OR PROCEEDING BEING OMITTED OR DELETED'. 8. IN THE CASE OF GENERAL FINANCE CO., VS. ACIT, THEIR LORDSHIP OF THE APEX COURT HAS AGAIN EXAMINED THE ISSUE AND HELD THAT THE PRINCIPLE UNDERLYING SECTION 6 AS SAVING THE RIGHT TO INITIATE PROCEEDINGS FOR LIABILITIES INCURRED DURING THE CURRENCY OF TH E ACT WILL NOT APPLY TO OMISSION OF A PROVISION IN AN ACT BUT ONLY TO REPEAL, OMISSION BEING DIFFERENT FROM REPEAL AS HELD IN DIFFERENT CASES. FOLLOWING THE AFORESAID JUDGMENTS, THE JURISDICTIONAL HIGH COURT HAS ALSO EXPRESSED THE SAME VIEW IN THE CASE OF CIT VS. GE THERMOMETRICS INDIA PVT. LTD. THE RELEVANT OBSERVATION OF THE JURISDICTIONAL HIGH COURT IS EXTRACTED HEREUNDER: '8. ADMITTEDLY, IN THE INSTANT CASE, THERE IS NO SAVING CLAUSE OR PROVISION INTRODUCED BY WAY OF AN AMENDMENT WHILE OMITTING SUB - SECT ION (9) OF SECTION 10B. THEREFORE, ONCE THE AFORESAID SECTION IS OMITTED FROM THE STATUTE BOOK, THE RESULT IS IT HAD NEVER BEEN PASSED AND BE CONSIDERED AS A LAW THAT NEVER EXISTS AND THEREFORE, WHEN THE ASSESSMENT ORDERS WERE PASSED IN 2006, THE AO WAS NO T JUSTIFIED IN TAKING NOTE OF A PROVISION WHICH WAS NOT IN THE STATUTE BOOK AND DENYING BENEFIT TO THE ASSESSEE. THE WHOLE OBJECT OF SUCH OMISSION IS TO EXTEND THE BENEFIT UNDER SECTION 10B OF THE ACT IRRESPECTIVE OF THE FACT WHETHER DURING THE PERIOD TO W HICH THEY ARE ENTITLED TO THE BENEFIT, THE OWNERSHIP CONTINUES WITH THE ORIGINAL ASSESSEE OR IT IS TRANSFERRED TO ANOTHER PERSON. BENEFIT IS TO THE UNDERTAKING AND NOT TO THE PERSON WHO IS RUNNING THE BUSINESS. WE DO NOT SEE ANY MERIT IN THESE APPEALS. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE APPEALS ARE DISMISSED.' 9. FROM THE AFORESAID JUDGMENTS, IT HAS BECOME ABUNDANTLY CLEAR THAT ONCE A PARTICULAR PROVISION OF SECTION IS OMITTED FRO M THE STATUTE, IT SHALL BE DEEMED TO BE OMITTED FROM ITS INCEPTION UNLESS AND UNTIL THERE IS SOME SAVING CLAUSE OR PROVISION TO MAKE IT CLEAR THAT ACTION TAKEN OR PROCEEDING INITIATED UNDER THAT PROVISION OR SECTION WOULD CONTINUE AND WOULD NOT BE LEFT ON ACCOUNT OF OMISSION. 10. IN THE INSTANT CASE, UNDISPUTEDLY, BY THE FINANCE ACT, 2017, CLAUSE (I) OF SECTION 92BA HAS BEEN OMITTED W.E.F. 01.04.2017. ONCE THIS CLAUSE IS OMITTED BY SUBSEQUENT AMENDMENT, IT WOULD BE DEEMED THAT CLAUSE (I) WAS NEVER BEEN ON THE STATUTE. WHILE OMITTING THE CLAUSE (I) OF SECTION 92BA, IT(TP)A NO. 2213/BANG/2018 NOTHING WAS SPECIFIED WHETHER THE PROCEEDING INITIATED ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 9 OR ACTION TAKEN ON THIS CONTINUE. THEREFORE, THE PROCEEDING INITIATED OR ACTION TAKEN UNDER THAT CLAUSE WOULD NOT SURVIVE AT ALL. IN THIS LEGAL POSITION, THE COGNIZANCE TAKEN BY THE AO UNDER SECTION 92B(I) AND REFERENCE MADE TO TPO UNDER SECTION 92CA IS INVALID AND BAD IN LAW. THEREFORE, THE CONSEQUENTIAL ORDER PASSED BY THE TPO AND DRP IS ALSO NOT SUSTAINABLE IN THE EYES OF LAW. 11. UNDER THESE CIRCUMSTANCES, WHERE THIS CLAUSE (I) IS OMITTED FROM THE STATUTE SINCE ITS INCEPTION, THE AO OUGHT HAVE REQUIRED TO FRAME THE ASSESSMENT IN NORMAL COURSE AFTER MAKING NECESSARY ENQUIRIES OF PARTICULAR CLAIM OF EXPENDITURE IN AC CORDANCE WITH LAW. BUT THIS EXERCISE COULD NOT HAVE BEEN DONE ON ACCOUNT OF PROVISIONS OF SECTION 92BA CLAUSE (I) OF THE ACT. NOW WHEN THIS CLAUSE (I) HAS BEEN OMITTED FROM THE STATUTE BY VIRTUE OF THE AFORESAID AMENDMENTS, THE AO IS REQUIRED TO ADJUDICATE THE ISSUE OF CLAIM OF EXPENDITURES IN ACCORDANCE WITH LAW AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE THEREFORE SET ASIDE THE ORDERS OF THE AO AND THE DRP AND RESTORE THE MATTER TO THE AO WITH THE DIRECTION TO READJUDICATE THE ISSUE OF CLAIM OF EXPENDITURE INCURRED IN RESPECT OF WHICH PAYMENT HAS BEEN MADE OR IS TO BE MADE TO PERSON REFERRED TO IN CLAUSE (B) OF SUB SECTION 2 OF SECTION 40A OF THE ACT. ACCORDINGLY, SINCE WE HAVE RESTORED THE MATTER TO THE AO, WE FIND NO JUSTIFICATION TO D EAL WITH THE OTHER ISSUES ON MERIT. ACCORDINGLY, APPEAL OF THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES.' 5. SINCE THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MA TTER TO THE AO, FOLLOWING EARLIER ORDER OF THE TRIBUNAL. 5.1. WE ADOPT THE ABOVE EXTRACTED DETAILED DISCUSSION MUTATIS MUTANDIS TO REVERSE LOWER AUTHORITIES ACTION ON THIS COUNT ALONE. THE A SSESSEE SUCCEEDS IN THE INSTANT X TH SUBSTANTI V E GROUND. NECESSARY COMPUTATION SHALL FOLLOW AS PER LAW. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN FOREGOING TERMS. PRONOUNCED IN OPEN COURT ON 18 TH FEBRUARY, 2021. S D / - SD / - (L . P . SAHU) (S . S . GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 18 TH FEBRUARY, 2021. * GMV ITA NO. 1677/HYD/2018 AY 2014 - 15 SEAWAYS LINER AGENCIES PVT.LTD. 10 COPY OF THE ORDER FORWARDED TO: 1. M/S SEAWAYS LINER AGENCIES PR IVATE LIMITED , PLOT NO.731, ROAD NO.36, JUBILEE HILLS, HYDERABAD 500 034 , TELANGANA 2. DY.CIT, CIRCLE 3 ( 1 ), HYDERABAD 3. ACIT, RANGE 3 , HYDERABAD. 4. JCIT, TRANSFER PRICING, HYDERABAD. 5. DRP - 1, BENGALURU 6 . PR.CIT - 3 , HYDERABAD 7 . DR, ITAT, HYDERABAD. 8 . GUARD FILE.