Appeal details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 8555 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 6 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-07-2020
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
K
Assessment Year
2009-2010
Appeal Filed On
15-01-2014
Judgement Text
IN THE INCOME-TAX APPELLATE TRIBUNAL K BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER (VIRTUAL HEARING IN VIRTUAL COURT NO.2) ITA. NO.348/MUM/2014 (ASSESSMENT YEAR 2009-10 ) FIREMENICH AROMATICS (INDIA) PVT LTD, ARENA SPACE, BUILDING, 9 TH FLOOR, PLOT NO. 4, SURVEY NO 20, NEW SHYAM NAGAR ROAD, JOGESHWARI VIKHROLI LINK ROAD, NEXT TO KAPLTARU BUILDING, BEHIND MAJAS BEST DEPOT, MAJASWADI, JOGESWARI EAST, MUMBAI 400060, P AN: AAACF1621M VS. ACIT- CIRCLE -4(2), ROOM NO. 642, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. ITA. NO.1732/MUM/2014 (ASSESSMENT YEAR 2009-10 ) ACIT- CIRCLE - 4(2) ROOM NO. 642, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. FIREMENICH AROMATICS (INDIA) PVT LTD, ARENA SPACE, BUILDING, 9 TH FLOOR, PLOT NO. 4, SURVEY NO 20, NEW SHYAM NAGAR ROAD, JOGESHWARI VIKHROLI LINK ROAD, NEXT TO KAPLTARU BUILDING, BEHIND MAJAS BEST DEPOT, MAJASWADI, JOGESWARI EAST, MUMBAI 400060, P AN: AAACF1621M . APPELLANT RESPONDENT APPELLANT BY : SHRI BOMI DARUWALA WITH PRIYANKA JAIN (ARS) RESPONDENT BY : SHRI A. MOHAN CIT-DR (DR) DATE OF HEARING : 29.06.2020 DATE OF PRONOUNCEMENT : 15.07.2020 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 2 PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ASSESS MENT ORDER DATED 29.11.2013 PASSED UNDER SECTION 143(3) READ WITH SE CTION 144C(13) PASSED IN PURSUANCE OF DIRECTIONS OF DISPUTE RESOLU TION PENAL-1 (DRP) DATED 12.07.2016 FOR ASSESSMENT YEAR (AY) 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LA W IN COMPLETING THE ASSESSMENT UNDER SECTION 144/143(3) OF THE INCOME T AX ACT, 1961 (THE ACT) AT AN INCOME OF RS. 18,79,46,027/- AS AGAINST THE I NCOME OF RS. 8,25,82,040/- RETURNED BY THE APPELLANT. 1.1 THAT THE ASSESSING OFFICER/TPO ERRED ON FACTS AND I N LAW IN DETERMINING THE ARMS LENGTH PRICE OF IMPORT OF RAW MATERIAL AT RS. 73,20,85,000/- AS AGAINST THE TRANSACTION PRICE OF RS. 83,32,29,000/- ON ACCO UNT OF ADJUSTMENT TO THE ARMS LENGTH PRICE ON THE BASIS OF THE ORDER PASSED UNDER SECTION 92CA(3) OF THE ACT BY THE TPO. 1.2 THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LA W IN NOT EXCLUDING INTERNATIONAL FLAVORS & FRAGRANCES (I) PVT. LTD. FR OM THE SET OF COMPARABLE COMPANIES, IN TERMS OF THE DIRECTIONS IN THE ORDER PASSED UNDER SECTION 144C(5) OF THE ACT BY THE DISPUTE RESOLUTION PANEL (DRP). 1.3 THAT THE ASSESSING OFFICER / TPO ERRED ON FACTS AND IN LAW IN NOT CONSIDERING ULTRA INDUSTRIES LTD. AS PART OF COMPARABLE COMPANI ES IN TERMS OF THE DIRECTIONS IN THE ORDER PASSED UNDER SECTION 144C(5 ) OF THE ACT OF THE DRP. 1.4 THAT THE ASSESSING OFFICER / TPO ERRED ON FACT AND IN LAW IN NOT APPRECIATING THAT THE AVERAGE OPERATING PROFIT MARGIN OF THE COM PARABLE COMPANIES AFTER CONSIDERING DIRECTIONS OF THE DRP IS WORKED OUT TO 7.65 % AS AGAINST THE PROFIT MARGIN OF THE APPELLANT AT 4.015 AND THEREFO RE, THE TRANSFER PRICING ADJUSTMENT, PROPOSED BY THE TPO, WAS LIABLE TO BE D ELETED. WITHOUT PREJUDICE: 1.5 THAT THE ASSESSING OFFICER / TPO ERRED ON FACTS AND IN LAW IN OBSERVING THAT NO RECOGNIZABLE BENEFIT IS DERIVED BY THE ASSESSEE FRO M PAYMENT OF ROYALTY, TECHNICAL FEES AND DRAWING AND DESIGN FEES, AND HEN CE, ALTERNATIVELY HOLDING THAT THE ARMS LENGTH PRICE OF AFORESAID PAYMENT WA S NIL. 1.6 THAT THE ASSESSING OFFICER / TPO ERRED ON FACTS AND IN LAW IN NOT CONSIDERING ALLIED PERFUMES LTD. AS PART OF COMPARABLE COMPANIE S. 1.7 THE ASSESSING OFFICER / TPO ERRED ON FACTS AND IN L AW IN CONSIDERING THE FOLLOWING COMPANIES FOR THE PURPOSE OF BENCHMARKING THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE APPELLANT, NOT APPRE CIATING THAT SUCH COMPANIES ARE FUNCTIONALLY NOT COMPARABLE TO THE AP PELLANT. A) AVT NATURAL LTD. B) SYNTHITE INDUSTRIES LTD. C) INTERNATIONAL FLAVORS AND FRAGRANCES (I) LTD. FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 3 D) SH KELKAR CO. PVT. LTD. WITHOUT PREJUDICE: 1.8 THE ASSESSING OFFICER / TPO ERRED ON FACTS AND IN L AW, IN NOT CONSIDERING THE RISK ADJUSTMENT TO THE MARGINS OF: A) AVT NATURAL LTD. B) SYNTHITE INDUSTRIES LTD. C) INTERNATIONAL FLAVORS AND FRAGRANCES (I) LTD. D) SH KELKAR CO. PVT. LTD. WITHOUT PREJUDICE: 1.9 THE ASSESSING OFFICER /TPO ERRED ON FACTS AND IN LA W IN NOT APPRECIATING THAT THE PROFITABILITY OF THE APPELLANT WAS LOW IN THE R ELEVANT PREVIOUS YEAR DUE TO EXTRAORDINARY FACTORS, VIZ., UNUSUAL INCREASE IN RA W MATERIAL COST AND SALARY COST, FOR WHICH APPROPRIATE COMPARABILITY ADJUSTMEN T WAS WARRANTED. WITHOUT PREJUDICE: 1.10 THE ASSESSING OFFICER /TPO ERRED ON FACTS AND IN LA W IN MAKING THE ADJUSTMENT ON THE BASIS OF THE ENTIRE TURNOVER OF T HE APPELLANT AND NOT RESTRICTING THE SAME TO THE VALUE OF INTERNATIONAL TRANSACTION OF IMPORT OF RAW MATERIAL. 2. THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN MAKING DISALLOWANCE OF RS. 14,36,000/- BEING BAD DEBT WRITTEN OFF, ALLEGEDLY H OLDING THAT (I) THE APPELLANT FAILED TO ESTABLISH THAT THE DEBTORS HAVE BECOME BA D AND IRRECOVERABLE AND (II) DID NOT PROVE THAT DEBTORS WRITTEN OFF WERE OFFERED AS REVENUE INCOME IN ANY OF THE PREVIOUS YEAR. 2.1 THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT UNDER THE LAW, THERE WAS NO REQUIREMENT TO ESTABLISH THAT THE DEBTS HAVE BECOME BAD AND IRRECOVERABLE AND THAT THE REQUIREMENT FOR CLAI M OF DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT WAS COMPLIED IN THE A PPELLANTS CASE. 2. THE REVENUE IN ITS CROSS APPEAL HAS RAISED FOLLOWIN G GROUNDS OF APPEAL; 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP ERRED IN DIRECTING TPO TO EXCLUDE M/S. INTERNATIONAL FLAVORS & FRAGRANCES (I) PVT. LTD. ON THE BASIS OF VARYING ACCOUNTING PERIOD WHER EAS THE COMPARABLES ARE INCLUDABLE ON THE BASIS OF CORRESPONDING ACCOUNTING PERIOD OF COMPARABLES AND THAT OF ASSESSEE 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP ERRED IN DIRECTING TPO TO INCLUDE M/S ULTRA INTERNATIONAL CO . LTD. WHEREAS THE ASSESSEE ITSELF CONTRADICTED THE BASIS OF INCLUSION I.E. HIGH IMPORT COMPONENT OF THE COMPARABLE AND THE ASSESSEE IN THE CASE OF M /S SYNTHITE INDUSTRIES LTD.. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS A CORPORATE ENTITY ENGAGED IN THE BUSINESS OF MANUFACTURING AND MARKET ING OF INDUSTRIAL FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 4 FLAVORS, FRAGRANCES, AND CHEMICAL SPECIALTIES, FILE D ITS RETURN OF INCOME FOR AY 2009-10 ON 30.09.2009. THE ASSESSEE WHILE FILING RETURN OF INCOME REPORTED INTERNATIONAL TRANSACTION WITH ITS ASSOCIA TED ENTERPRISES (AE) AND FURNISHED REPORT UNDER FORM 3CED. CONSEQUENT UPON R EPORTING OF INTERNATIONAL TRANSACTION, THE ASSESSING OFFICER (A O) MADE REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) FOR COMPUTATION OF A RMS LENGTH PRICE (ALP) WITH REGARD THE INTERNATIONAL TRANSACTION REPORTED IN FORM-3CED. DURING THE TRANSFER PRICING ADJUSTMENT PROCEEDINGS, THE TP O IDENTIFIED INTERNATIONAL TRANSACTIONS OF IMPORT OF RAW MATERIA L OF RS. 83,32,29,182/- FOR ITS APL. THE ASSESSEE BENCHMARKED THE SAID TRAN SACTION BY ADOPTING TRANSACTION NET MARGIN METHOD (TNMM). THE ASSESSEE HAS SHOWN ITS PROFIT MARGIN @ 4.29%. THE ASSESSEE TREATED ITSELF AS A TESTED PARTY. OPERATING PROFIT / INCOME WAS CONSIDERED FOR PROFIT LEVEL INDICATOR (PLI). THE ASSESSEE SELECTED FOLLOWING FOUR COMPARABLE COM PANY FOR COMPARISON OF ITS BENCHMARKING; SR. NO COMPARABLES COMPANY MARGIN % YEAR 1 BHAGAT AROMATIC LTD 4.54 MULTIPLE YEAR DATA 2 EVEREST FLAVOURS LTD 0.70 MARCH 2006 3 PRIVI ORGANIS LTD 8.30 MARCH 2006 4 SHARP MENTHOD INDIA LTD 6.08 MULTIPLE YEAR DATA AVERAGE 4.51 ASSESSEES AVERAGE 4.29 4. ON THE BASIS OF THE AFORESAID FIGURES THE ASSESSEE CLAIMED ITS TRANSACTION AT ARMS LENGTH. THE TPO CARRIED OUT ITS OWN SEAR CH AND AFTER GIVING FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 5 SHOW NOTICE AND CONSIDERING THE REPLY OF THE ASSES SEE INCLUDED FIVE MORE COMPARABLE. THE ASSESSEE DURING THE TP ADJUSTMENT P ROCEEDINGS SUBMITTED TWO MORE COMPARABLE NAMELY; (I) ALLIED PE RFUMERS LTD AND (II) ULTRA INTERNATIONAL LTD. FOR CONSIDERING AS ADDITIO NAL COMPARABLES, HOWEVER, THE TPO REJECTED BOTH THE COMPARABLE. ON T HE BASIS OF FOLLOWING FINAL SET OF NINE (9) COMPARABLES THE TPO WORKED OUT THE MEAN MARGIN OF 9.14% ; SR. NO COMPARABLES COMPANY OP/SALES % 1 BHAGAT AROMATIC LTD 4.54 2 EVEREST FLAVOURS LTD 0.70 3 PRIVI ORGANIS LTD 8.30 4 SHARP MENTHOD INDIA LTD 6.08 5 AVT NATURALS LTD 16.47 6 SYNTHITE INDUSTRIAL LTD 16.67 7 INTERNATIONAL FLAVOURS & FRAGRANANCE 19.61 8 GOLDFIELDS FRAGRANANCE PVT LTD 5.15 9 S.H. KELKAR CO PVT LTD 13.76 (SR NO. 5 TO 9 INCLUDED BY TPO ) ASSESSEES AVERAGE 9.14% AVERAGE 4.51 5. THE TPO ALSO NOTED THAT THE ASSESSEE MADE WORKING ADJUSTMENT AT ENTITY LEVEL AND OVERALL MARGIN WAS USED TO JUSTIFY ITS CO NTROL TRANSACTION. THE TPO MADE ADJUSTMENT AT PRO-RATA BASIS. THE TPO WORK ED OUT THE ADJUSTMENT OF RS. 10,11,43,000/- IN THE FOLLOWING M ANNER; PARTICULARS AMOUNTS (RS. 000/-) TOTAL OPERATING INCOME A 1973498 TOTAL OPERATING EXPENSES -B 1894264 FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 6 OPERATING PROFIT C (A-B) 79234 NPM C/A AS PER BOOKS 4.01% INTERNATIONAL TRANSACTION OF IMPORT OF GOODS AT BOO K VALUE 833229 INTERNATIONAL TRANSACTION OF IMPORT OF GOODS AT ALP 732085 ADJUSTMENT UNDER SECTION 92 CA 101143 6. ON RECEIPT OF ORDER OF TPO UNDER SECTION 92CA(3), T HE ASSESSING OFFICER ADDED THE ADJUSTMENTS SUGGESTED BY TPO WHILE PASSIN G DRAFT ASSESSMENT ORDER UNDER SECTION 143(3)/144C(1). THE ASSESSING O FFICER ALSO DISALLOWED CLAIM OF BAD DEBTS OF 14,36,000/-, BY TAKING VIEW THAT THE ASSESSEE DESPITE ISSUING SHOW CAUSE NOTICE FAILED TO JUSTIFI ED THE CLAIM OF BAD DEBTS. THE COPY OF DRAFT ASSESSMENT WAS SERVED UPON THE ASSESSEE. THE ASSESSEE EXERCISED ITS OPTION FOR FILING OBJECTIONS BEFORE DISPUTE RESOLUTION PENAL (DRP). THE DRP AFTER HEARING THE O BJECTIONS OF THE ASSESSEE DIRECTED THE TPO/AO TO EXCLUDE ONE COMPARA BLE NAMELY INTERNATIONAL FLAVOURS AND FRAGRANCES (I) LTD AND T O INCLUDE ULTRA INTERNATIONAL CO LTD, THUS GRANTED PARTIAL RELIEF T O THE ASSESSEE ON TP ISSUES. HOWEVER, THE DISALLOWANCE OF BAD DEBTS WAS AFFIRMED BY LD. DRP IN ITS DIRECTION DATED 21 ST OCTOBER 2013. ON RECEIPT OF DIRECTIONS OF THE DRP, THE AO PASSED THE FINAL ASSESSMENT ORDER DATED 29 TH NOVEMBER 2 013. AGGRIEVED BY THE DIRECTIONS OF DRP BOTH THE PA RTIES HAVE FILED THEIR RESPECTIVE APPEAL BEFORE THIS TRIBUNAL. 7. THE REVENUE IN ITS APPEAL HAS CHALLENGED THE DIRECT IONS FOR EXCLUSION OF COMPARABLE NAMELY, INTERNATIONAL FLAVOURS AND FRAGR ANCES (I) LTD AND FOR FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 7 INCLUSION OF ULTRA INTERNATIONAL CO LTD. THE ASSESS EE IN ITS APPEAL HAS RAISED MULTIPLE GROUNDS, WHICH WE HAVE EXTRACTED IN PARA -1 OF THIS ORDER. 8. PERUSAL OF APPEAL FILED BY REVENUE REVEALS THAT APP EAL IS FILED AFTER 43 DAYS OF PRESCRIBED PERIOD OF LIMITATION. THE ASSESS ING OFFICER/APPELLANT HAS FILED AN APPLICATION FOR SEEKING THE CONDONATIO N DONATION OF DELAY IN FILING OF APPEAL. IN THE APPLICATION THE APPLICANT HAS PLEADED THAT THERE IS DELAY OF 41 DAYS IN FILING APPEAL BEFORE THE TRIBUN AL. IT IS FURTHER PLEADED THAT THE DELAY WAS DUE TO BONAFIDE BELIEF OF ASSESS ING OFFICER THAT THE DIRECTION DRP WAS AGAINST THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE WHILE MAKING SU BMISSION RELIED UPON THE CONTENTS OF APPLICATION AND PRAYED THAT LI BERAL APPROACH MAY BE TAKEN WHILE CONSIDERING THE APPLICATION FOR CONDONA TION OF DELAY. THE LD. DR SUBMITS THAT THE DELAY IN FILING THE APPEAL WAS NOT INTENTIONAL OR DELIBERATE BUT DUE TO THE WRONG BELIEF OF ASSESSING OFFICER. THE APPEAL IS FILED BY PUBLIC SERVANT IN HIS OFFICIAL DUTIES AND THERE IS NO REASON TO DISBELIEVE THE CONTENTS OF THE APPLICATION FOR COND ONATION OF DELAY. THE LD DR FOR THE REVENUE RELIED UPON THE LEADING CASE LAW/ DECISION OF HONBLE APEX COURT IN CASE OF LAND ACQUISITION COLL ECTOR VERSUS MST KATIJI AND OTHERS [167 ITR 471 (SC)]. 9. ON THE OTHER HAND THE LEARNED AUTHORISED REPRESENTA TIVE (LD. AR) OF THE ASSESSEE VEHEMENTLY OPPOSED THE APPLICATION FOR CON DONATION OF DELAY FILED BY REVENUE. THE LD. AR FOR ASSESSEE SUBMITS THAT EACH AND EVERY FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 8 DAY OF DELAY MUST BE EXPLAINED BY THE REVENUE. THE APPROACH IN FILING APPLICATION FOR CONDONATION OF DELAY IS CAUSAL. THE APPLICATION IS DESERVE TO BE DISMISSED. IN SUPPORT OF HIS SUBMISSIONS THE LD AR FOR THE ASSESSEE RELIED ON THE COPY OF RULE -10 OF INCOME TAX (APPEL LATE TRIBUNAL) RULES, 1963, INCOME TAX APPELLATE TRIBUNAL GUIDELINES DATE D 13.04.1970 AND PARA 174 OF INCOME TAX APPELLATE TRIBUNAL MANUAL. 10. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND GONE THROUGH THE CONTENTS OF APPLICATION FOR CONDONATION OF DELA Y. WE HAVE DELIBERATED ON THE RULE -10 OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, INCOME TAX APPELLATE TRIBUNAL GUIDELINES DATED 13.04.1970 AND PARA 174 OF INCOME TAX APPELLATE TRIBUNAL MANUAL. AFTER CONSIDE RING THE SUBMISSION OF LD. DR FOR THE REVENUE THAT THE DELAY IN FILING THE APPEAL IS NOT INTENTIONAL OR DELIBERATE AND THE DECISION OF H ONBLE APEX COURT IN LAND ACQUISITION COLLECTOR VS MST KATIJI AND OTHER (SUPRA) WHEREIN THE HONBLE COURT HELD THAT WHEN SUBSTANTIAL JUSTICE AN D TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTHER, THE CA USE OF SUBSTANTIAL JUSTICE TO BE PREFERRED. THUS, CONSIDERING THE CONTENTS OF THE APPLICATION FOR CONDONATION OF DELAY AND THE SUBMISSIONS OF THE LD. DR FOR THE REVENUE THAT DELAY IN FILING THE APPEAL WAS NEITHER INTENTI ONAL NOR DELIBERATE AND IT WAS DUE TO BONAFIDE AND WRONG BELIEF OF THE AO THAT THE DIRECTIONS OF DRP IS AGAINST THE ASSESSEE, THE DELAY IN FILING AP PEAL BY REVENUE IS CONDONED. FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 9 11. THE LD. AR FOR THE ASSESSEE WHILE OBJECTING THE AP PLICATION OF CONDONATION OF DELAY RAISED ANOTHER OBJECTION THAT THE APPEAL OF REVENUE IS NOT MAINTAINABLE AND SUBMITTED THAT SUB-SECTION (2A) OF SECTION 253 WAS INSERTED BY FINANCE ACT 2014 WITH RETROSPECTIVE EFFECT FROM 01.06.2013, HOWEVER, THE SAME WAS OMITTED BY FINANC E ACT 2016 FROM 01.06.2016. IT WAS ARGUED THAT, THE SUB-SECTION (2A ) WAS OMITTED FROM THE STATUE BY WAY OF OMISSION, HENCE, THIS SUB-SECTION SHALL BE DEEMED AS IT WAS NOT ON THE STATUE BOOK RIGHT FROM THE BEGINNI NG. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT OMISSION AND REPEA L OF PROVISION IN THE STATUE CARRIES DIFFERENT MEANINGS AND EFFECT. THERE FORE, AS PER SECTION 6 OF GENERAL CLAUSES ACT, THE PROCEEDINGS INITIATED UNDE R THE OMITTED PROVISIONS CANNOT BE CONTINUED UNLESS THERE IS SAVI NG CLAUSE TO THAT EFFECT WHILE OMITTING SUCH PROVISIONS. TO BUTTRESS HIS SU BMISSIONS THE LD AR FOR THE ASSESSEE RELIED ON THE DECISION OF BANGALOR E TRIBUNAL IN TEXTPORT OVERSEAS PRIVATE LIMITED VS DCIT (IT (TP) A. 1772/B ANG/2017, WHICH HAS BEEN AFFIRMED BY HIGH COURT OF KARNATAKA VIDE O RDER DATED 12.12.2019 REPORTED VIDE [2020] 114 TAXMANN.COM 568 (KARNATAKA HIGH COURT), MUMBAI TRIBUNAL IN ADD.CIT VS WNS GLOBAL (ITA NO. 4520/MUM/2013 DATED 19.02.2019, REPORTED VIDE [2020 ] 116 TAXMANN.COM 20 (MUMBAI - TRIB.) AND THE DECISION OF HONBLE SUPREME COURT IN GENERAL FINANCE COMPANY VS ACIT [2002] 257 ITR 338(SC)/ [2002] 124 TAXMAN 432(SC). ACCORDINGLY, THE LD. AR FOR THE ASSESSEE FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 10 PRAYED FOR OUTRIGHT DISMISSAL OF THE APPEAL FILED B Y THE REVENUE/ ASSESSING OFFICER. 12. ON THE OTHER HAND THE LD. CIT-DR FOR THE REVENUE SU BMITS THAT THE ASSESSEE HAS NOT FILED CROSS OBJECTION IN THE APPEA L FILED BY THE REVENUE NOR SOUGHT ANY PERMISSION FOR RAISING OBJECTION ON THE MAINTAINABILITY OF THE APPEAL OF THE REVENUE. THE ASSESSING OFFICER FI LED THE PRESENT APPEAL DURING THE CURRENCY OF THE SUB-SECTION 253(2A) OF T HE ACT. AND THE APPEAL OF THE REVENUE CANNOT BE TREATED AS NON-MAINTAINABL E. THE LD. DR FURTHER SUBMITS THAT THE OMISSION AND REPEAL ARE BROADLY SY NONYMS TO EACH OTHER. IF THE SUBMISSIONS OF THE AR FOR THE ASSESSEE IS TA KEN FOR CONSIDERATION THAT THERE IS NO SAVING CLAUSE TO THAT EFFECT WHILE OMITTING SUCH PROVISIONS, SIMILARLY THERE IS NO PROVISO OR CLAUSE FOR ABATING THE PROCEEDINGS, WHICH WERE INITIATED DURING THE CURREN CY OF THE SUB-SECTION (2A) OF SECTION 253 OF THE ACT. THE LD. DR FOR THE REVENUE SUBMITS THAT THE CASE LAWS RELIED ON BEHALF OF ASSESSEE IS NOT A PPLICABLE ON THE FACTS OF THE PRESENT CASE. 13. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED AUTHOR ISED REPRESENTATIVE (LD AR) FOR THE ASSESSEE AND THE LEARNED DEPARTMENT AL REPRESENTATIVE (LD. DR) FOR THE REVENUE AND DELIBERATED ON THE CASE LAW S RELIED ON BEHALF OF THE ASSESSEE. IT IS AN ADMITTED POSITION THAT THE A SSESSEE HAS NEITHER FILED CROSS OBJECTION FOR OBJECTING THE MAINTAINABILITY O F THE APPEAL FILED BY THE REVENUE. HOWEVER, THE LD. AR FOR THE ASSESSEE H AS RAISED LEGAL FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 11 OBJECTION, WHICH GOES TO THE ROOT OF AMENABILITY OF THE APPEAL FILED BY THE REVENUE. THEREFORE, WE ADMIT THE OBJECTION OF THE A SSESSEE ON THE MAINTAINABILITY OF REVENUES APPEAL. FOR APPRECIATI ON OF VARIOUS LEGAL ASPECTS AND EFFECT OF REPEAL OR OMISSION, WE HA VE GONE THROUGH THE VARIOUS SECTIONS 6, 6A AND 24 OF GENERAL CLAUSES AC T. THE SECTION(S) 6, 6A AND 24 OF GENERAL CLAUSES ACT ARE READ AS UNDER ; 6. EFFECT OF REPEAL .-WHERE THIS ACT, OR ANY (CENTRAL ACT) OR REGULATIO N MADE AFTER THE COMMENCEMENT OF THIS ACT, REPEALS ANY ENA CTMENT HITHERTO MADE OR HEREAFTER TO BE MADE, THEN, UNLESS A DIFFERENT I NTENTION APPEARS, THE REPEAL SHALL NOT- (A) REVIVE ANYTHING NOT IN FORCE OR EXISTING AT THE TIME AT WHICH THE REPEAL TAKES EFFECT; OR (B) AFFECT THE PREVIOUS OPERATION OF ANY ENACTMENT SO REPEALED OR ANYTHING DULY DONE OR SUFFERED THEREUNDER; OR (C) AFFECT ANY RIGHT, PRIVILEGE, OBLIGATION OR LIAB ILITY ACQUIRED, ACCRUED OR INCURRED UNDER ANY ENACTMENT SO REPEALED; OR (D) AFFECT ANY PENALTY, FORFEITURE OR PUNISHMENT IN CURRED IN RESPECT OF ANY OFFENCE COMMITTED AGAINST ANY ENACTMENT SO REPEALED ; OR (E) AFFECT ANY INVESTIGATION, LEGAL PROCEEDING OR R EMEDY IN RESPECT OF ANY SUCH RIGHT, PRIVILEGE, OBLIGATION, LIABILITY, PENALTY, F ORFEITURE OR PUNISHMENT AS AFORESAID, AND ANY SUCH INVESTIGATION, LEGAL PROCEE DING OR REMEDY MAY BE INSTITUTED, CONTINUED OR ENFORCED, AND ANY SUCH PEN ALTY, FORFEITURE OR PUNISHMENT MAY BE IMPOSED AS IF THE REPEALING ACT O R REGULATION HAD NOT BEEN PASSED. 6 -A. REPEAL OF ACT MAKING TEXTUAL AMENDMENT IN ACT O R REGULATION : WHERE ANY [CENTRAL ACT] OR REGULATION MADE AFTE R THE COMMENCEMENT OF THIS ACT REPEALS ANY ENACTMENT BY WHICH THE TEXT OF ANY [CENTRAL ACT] OR REGULATION WAS AMENDED BY THE EXPRESS OMISSION, INS ERTION OR SUBSTITUTION OF ANY MATTER, THEN, UNLESS A DIFFERENT INTENTION A PPEARS, THE REPEAL SHALL NOT AFFECT THE CONTINUANCE OF ANY SUCH AMENDMENT MA DE BY THE ENACTMENT SO REPEALED AND IN OPERATION AT THE TIME OF SUCH RE PEAL. 24. CONTINUATION OF ORDERS, ETC., ISSUED UNDER ENAC TMENTS REPEALED AND RE- ENACTED,. WHERE ANY (CENTRAL ACT) OR REGULATION, IS, AFTE R THE COMMENCEMENT OF THIS ACT, REPEALED AND RE-ENACTED WITH OR WITHOUT MODIFI CATION, THEN, UNLESS IT IS OTHERWISE EXPRESSLY PROVIDED ANY (APPOINTMENT NO TIFICATION,) ORDER, SCHEME, RULE, FORM OR BYE-LAW, (MADE OR) ISSUED UND ER THE REPEALED ACT OR REGULATION, SHALL, SO FAR AS IT IS NOT INCONSISTENT WITH THE PROVISIONS RE- ENACTED, CONTINUE IN FORCE AND BE DEEMED TO HAVE BE EN (MADE OR) ISSUED FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 12 UNDER THE PROVISIONS SO RE-ENACTED, UNLESS AND UNTI L IT IS SUPERSEDED BY ANY (APPOINTMENT, NOTIFICATION,) ORDER, SCHEME, RULE, F ORM OR BYE-LAW, (MADE OR) ISSUED UNDER THE PROVISIONS SO RE-ENACTED (AND WHEN ANY (CENTRAL ACT) OR REGULATION, WHICH, BY A NOTIFICATION UNDER SECTI ON 5 OR 5A OF THE SCHEDULED DISTRICTS ACT, 1874, (14 OF 1874) OR ANY LIKE LAW, HAS BEEN EXTENDED TO ANY LOCAL AREA, HAS, BY A SUBSEQUENT NO TIFICATION, BEEN WITHDRAWN FORM THE RE-EXTENDED TO SUCH AREA OR ANY PART THEREOF THE PROVISIONS OF SUCH ACT OR REGULATIONS SHALL BE DEEM ED TO HAVE BEEN REPEALED AND RE-ENACTED IN SUCH AREA OR PART WITHIN THE MEANING OF THIS SECTION). 14. A CAREFUL READING OF SECTION 6 OF GENERAL CLAUSES A CT (THIS ACT) MAKES IT CLEAR THAT MADE AFTER THE COMMENCEMENT OF GENERAL CLAUSES ACT, ANY CENTRAL ACT OR REGULATION REPEALS ANY ENA CTMENT HITHERTO MADE OR HEREAFTER TO BE MADE, THEN, UNLESS A DIFFERENT INTENTION APPEARS, THE REPEAL SHALL NOT EFFECT AFFECT ANY INV ESTIGATION, LEGAL PROCEEDING OR REMEDY IN RESPECT OF ANY SUCH RIGHT, PRIVILEGE, OBLIGATION, LIABILITY, PENALTY, FORFEITURE OR PUNISHMENT AS AFO RESAID, AND ANY SUCH INVESTIGATION, LEGAL PROCEEDING OR REMEDY MAY BE IN STITUTED, CONTINUED OR ENFORCED, AND ANY SUCH PENALTY, FORFEITURE OR PUNIS HMENT MAY BE IMPOSED AS IF THE REPEALING ACT OR REGULATION HAD NOT BEEN PASSED . 15. FURTHER A CAREFUL READING OF SECTION 6A THIS ACT MA KE IT CLEAR THAT WHERE ANY CENTRAL ACT OR REGULATION MADE AFTER THE COMMEN CEMENT OF THIS ACT REPEALS ANY ENACTMENT BY WHICH THE TEXT OF ANY CENT RAL ACT OR REGULATION WAS AMENDED BY THE EXPRESS OMISSION, INSERTION OR S UBSTITUTION OF ANY MATTER, THEN, UNLESS A DIFFERENT INTENTION APPEARS, THE REPEAL SHALL NOT AFFECT THE CONTINUANCE OF ANY SUCH AMENDMENT MADE BY THE E NACTMENT SO REPEALED AND IN OPERATION AT THE TIME OF SUCH REPEA L. FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 13 16. THE HONBLE SUPREME COURT IN BHAGAT RAM SHARMA VS U NION OF INDIA (AIR 1988 SC 740) HELD THAT IT IS A MATTER OF LEGIS LATIVE PRACTICE TO PROVIDE WHILE ENACTING AN AMENDING LAW THAT AN EXIS TING PROVISION SHALL BE DELETED AND A NEW PROVISION SUBSTITUTED. SUCH DE LETION HAS THE EFFECT OF REPEAL OF THE EXISTING PROVISION. SUCH A LAW MAY AL SO PROVIDE FOR THE INTRODUCTION OF A NEW PROVISION. THERE IS NO REAL D ISTINCTION BETWEEN 'REPEAL' AND AN 'AMENDMENT'. AS PER THE COMMENTARY ON PRINCIPLES OF STATUTORY INTERPRETATION BY JUSTICE G.P. SINGH, TH E LEGISLATIVE PRACTICE IN INDIA SHOWS THAT OMISSION OF A PROVISION IS TREAT ED AS AMENDMENT . (PAGE 675, CHAPTER; EXPRESS REPEAL). FURTHER HON BLE SUPREME COURT IN EKAMBRARAPPA VS EPTO (AIR 1967 1541), HELD THAT AMENDING ACT WHICH LIMITS THE AREA OF OPERATION OF EXISTING ACT BY MODIFYING THE EXTENT CLAUSE, RESULT IN PARTIAL REPEAL OF THE ACT IN RESP ECT OF THE AREA WHICH ITS OPERATION IS EXCLUDED ( EMPHASIS AND UNDER LINES ARE ADDED BY US ). 17. FURTHER, THE HONBLE SUPREME COURT IN THE MATTER OF FIBRE BOARDS P. LTD DATED 11.08.2015 REPORTED VIDE [(2015) 52 TAXMANN.C OM 135] /(2015) 10 SCC 333, AS WELL AS IN THE MATTER OF M/S. SHREE BHA GWATI STEEL ROLLING MILLS [CA NO.4280 OF 2007, DT.24.11.2015], REPORTED VIDE (2016) 3 SCC 643, WHEREIN THE HONBLE SUPREME COURT IN THESE TW O CASES ELABORATELY DISCUSSED THE ISSUE OF REPEAL /OMISSION/ AMENDMENT ETC, AND HELD THAT OMISSION WOULD AMOUNT TO REPEAL. IT IS ALSO HE LD THAT THERE IS NO REAL FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 14 DISTINCTION BETWEEN AN AMENDMENT AND THAT AMENDMEN T IS IN FACT A WIDER TERM WHICH INCLUDES DELETION OF THE PROVISION IN AN EXISTING STATUE. 18. THE HONBLE COURT IN M/S. SHREE BHAGWATI STEEL ROLLING MILLS (SUPRA) IN A LATER DECISION, WHILE REFERRING ITS ORDER IN F IBRE BOARD PRIVATE LTD (SUPRA) HELD THAT OMISSION WOULD AMOUNT TO REPEAL. ON THE ARGUMENT OF THE CONTESTING PARTIES THAT THE OMITTED PROVISION B EING TREATED AS IT NEVER EXISTED AS PER SECTION 6 OF GENERAL CLAUSES ACT WOU LD NOT APPLY TO ALLOW THE PREVIOUS OPERATION OF THE PROVISIONS IS OMITTED OR ANYTHING DONE OR SUFFERED THEREUNDER. NOR MAY A LEGAL PROCEEDING IN RESPECT OF ANY RIGHTS AND LIABILITY ACQUIRED OR INCURRED UNDER THE ENACTM ENT SO OMITTED. THE HONBLE APEX COURT TOOK A VIEW THAT IN MAJORITY OF THE CASES, THIS WOULD CAUSE GREAT PUBLIC MISCHIEF, AND THAT THE DECISION IN FIBRE BOARD CASE WAS THEREFORE CLEARLY DELIVERED BY THEIR LORDSHIP FOR T HE PUBLIC GOOD, BEING, AT THE LEAST REASONABLY POSSIBLE VIEW AND THAT NO ASPE CT OF THE QUESTION AT THEIR HAND WAS REMAINED UNNOTICED IN FIBRE BOARD CA SE .( EMPHASIS ADDED BY US ) 19. WITH THE AFORESAID LEGAL BACK GROUND AND WITH UTMOS T REGARD TO THE DECISION OF COORDINATE BENCH THE COORDINATE BENCH R ELIED BY LD AR FOR THE ASSESSEE IN TEXPORT OVERSEAS (SUPRA), WE HAVE NO TED THAT THE BENCH WAS NOT HAVING THE BENEFIT OF THE LATEST JUDGMENT O F THE HONBLE SUPREME COURT IN THE MATTER OF FIBRE BOARDS P. LTD [(2015) 52 TAXMANN.COM 135] AS WELL AS IN THE MATTER OF M/S. SHREE BHAGWATI STE EL ROLLING MILLS [CA FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 15 NO.4280 OF 2007, DT.24.11.2015] WHICH WERE NOT BRO UGHT TO THE NOTICE OF THE BENCH BY EITHER OF THE PARTIES. 20. THE HONBLE SUPREME COURT IN THESE TWO MATTERS HAD ELABORATELY DISCUSSED THE ISSUE OF REPEAL /OMISSION AND AFTER R ELYING UPON THE DECISION OF THE COORDINATE BENCH HAD DECIDED THE ISSUE THAT OMISSION WILL ALSO BE REPEALED AND THEREFORE BY VIRTUE OF SECTION 6 AND 6 A THE ACTION TAKEN PURSUANT TO THE VALID LEGISLATION DURING ITS LIFE T IME BEFORE OMISSION WILL BE SAVED AND WILL NOT COME TO END. THE DECISION IN THE CASE OF TEXPORT OVERSEAS PRIVATE LTD (SUPRA) WAS RENDERED WITHOUT C ONSIDERING THE DECISIONS OF THE HONBLE APEX COURT IN THE CASES OF (I) M/S. FIBRE BOARDS PVT. LTD AND (II) M/S SHREE BHAGWATI STEEL ROLLING VS. COMMISSIONER OF CENTRAL EXCISE & ANOTHER AND ALSO THE STATUTORY PRO VISION CONTAINED IN SECTION 6A OF GENERAL CLAUSES ACT AND HENCE, LACKS ANY BINDING OR PERSUASIVE VALUE. 16. THE HON'BLE APEX COURT IN THE CASE OF FIBRE BOARDS PVT. LTD AND M/S. SHREE BHAGWATI STEEL ROLLING HAS DOUBTED AND DISAPP ROVED ITS EARLIER DECISIONS RENDERED IN THE CASE OF RAYALA CORPORATIO N (P) LTD VS ENFORCEMENT (1969) 2 SCR 412 AND KOLHAPUR CANE SUGA R WORKS LTD VS UNION OF INDIA (2000) 2SCC536 AND IN THE CASE OF GE NERAL FINANCE COMPANY VS CIT (2002) 7 SCC 1. FURTHER, THE HON'BLE SUPREME COURT IN THE CASE OF FIBRE BOARDS (I) LTD, AFTER REFERRING T O THE PROVISIONS OF SECTION 6A OF THE GENERAL CLAUSES ACT HELD THAT 'A REPEAL CAN BE BY WAY FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 16 OF AN EXPRESS OMISSION' AND THAT EVEN AN IMPLIED R EPEAL OF A STATUTE WOULD FALL WITHIN THE EXPRESSION 'REPEAL' IN SECTIO N 6 OF THE GENERAL CLAUSES ACT. REPEALS MAY TAKE ANY FORM AND SO LONG AS A STATUTE OR PART OF IT IS OBLITERATED, SUCH OBLITERATION WOULD BE COVER ED BY THE EXPRESSION 'REPEAL' IN SECTION 6 OF GENERAL CLAUSES ACT. CONSI DERING THE LATEST DECISION OF HONBLE SUPREME COURT IN FIBRE BOARD AN D BHAGWATI STEEL, THE EARLIER DECISIONS RENDERED BY THE CONSTITUTION BENCH IN RAYALA CORPORATION (P) LTD AND KOLHAPUR CANSUGAR WORKS CA NNOT BE SAID TO HAVE LAID DOWN ANY RATIO DECIDENDI ON AN INTERPRETA TION OF THE WORD 'REPEAL' AN 'OMISSION' WOULD NOT BE INCLUDED. THEIR OBSERVATIONS ARE IN THE NATURE OF OBITER DICTA AS HELD BY THE SUPREME COURT IN FIBRE BOARDS. IT IS ALSO HELD THAT THE EARLIER DECISIONS HAVE NOT RE FERRED TO SECTION 6A OF THE GENERAL CLAUSES ACT AND THEY LOSE THEIR BINDING EFFECT ON AN APPLICATION OF THE ' PER INCURIAM PRINCIPLE, AS HELD BY THE SUPREME COURT IN THE CASE OF FIBRE BOARDS PRIVATE LIMITED. THUS, IN OUR VIEW THE DECISION RENDERED IN ROYALA CORPORATION PVT. LTD LA CKS BINDING VALUE FOR THE REASONS DISCUSSED BY THE APEX COURT IN FIBRE BO ARDS PVT. LTD, THE DECISION RENDERED IN THE CASE OF KOLHAPUR CANE SUGA R WORKS LTD AS ALSO IN THE CASE OF GENERAL FINANCE COMPANY FOLLOWING TH E DECISION IN ROYALA CORPORATION LTD, LOSES ITS BINDING VALUE. 17. AS WE HAVE ALREADY NOTED THAT THE HON'BLE SUPREME C OURT IN THE CASE OF SHREE BHAGWATI STEEL ROLLING MILLS AGAIN REITERATED THAT REPEAL WOULD FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 17 INCLUDE REPEAL BY WAY OF AN EXPRESS OMISSION. THE S UPREME COURT FURTHER HELD THAT THE DECISION IN FIBRE BOARDS PRIVATE LIMI TED CLARIFIES THE LAW IN HOLDING THAN AN OMISSION WOULD AMOUNT TO REPEAL. AS A RESULT, THE PROVISIONS OF SEC. 6 OF THE GENERAL CLAUSES ACT WOU LD APPLY TO ALLOW THE PREVIOUS OPERATION OF THE PROVISION SO OMITTED OR A NYTHING DULY DONE OR SUFFERED THEREUNDER, AND SUCH A VIEW IS REASONABLE AND FOR THE PUBLIC GOOD . 18. AT THE COAST OF REPETITION WE MAY NOTE THAT THE HON BLE SUPREME COURT IN THE MATTER OF FIBRE BOARD (SUPRA) AND BHAGWATI STEE L ROLLING (SUPRA) HAD ELABORATELY REPRODUCED THE PARAGRAPHS OF GENERAL FI NANCE CO., (SUPRA) AND ALSO THE EARLIER TWO JUDGMENTS RELIED IN GENERA L FINANCE CO., (SUPRA), NAMELY RAYALA CORPORATION P. LTD AND KOLHAPUR CANE SUGAR WORKS LTD, AND OBSERVED THAT EVEN THE COURT HAS NOT REFERRED T HE MATTER TO THE LARGER BENCH. THE HONBLE SUPREME COURT IN FIBRE BOARD (S UPRA) AND BHAGWATI STEEL ROLLING (SUPRA) HAD ALSO DISCUSSED THE PROVIS ION OF LAW INCLUDING THE GENERAL CLAUSES ACT, SECTION 6A AND 24 AND THER EAFTER HELD THAT THE REPEAL, OMISSION AND DELETION ARE INTERCHANGEABLE A ND THEREAFTER HAD HELD THAT OMISSION WILL HAVE AN EFFECT OF REPEAL AND REPEAL WILL HAVE AN EFFECT OF OMISSION. THE DISTINCTION CARVED OUT IN RAYALA CORPORATION (SUPRA) WAS NOT CORRECT AND FURTHER THE REFERENCE T O THE CONSTITUTION BENCH HAS NOT CONSIDERED IN VIEW OF A BINDING JUDGMENT OF THE CONSTITUTION BENCH IN THE MATTER OF M.A.TULLOCH & CO AS WELL AS THE PROVISIONS OF FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 18 SECTION 6A OF THE GENERAL CLAUSES ACT AND THEREAFTE R THE COURT HAD HELD THAT THE DECISION, IN THE MATTER OF RAYALA CORPORAT ION (SUPRA) WAS PER INCURIUM . 19. IN OUR HUMBLE VIEW THE HONBLE SUPREME COURT IN FIB RE BOARD (SUPRA) AND BHAGWATI STEEL ROLLING (SUPRA) HAVE DECLARED TH AT THE LAW IN RAYALA CORPORATION IS PER IN CURIUM , ON THE BASIS OF WHICH GENERAL FINANCE CO., (SUPRA) WAS PASSED. THUS, THE LATER JUDGMENTS IN FI BRE BOARD (SUPRA) AND BHAGWATI STEEL ROLLING (SUPRA) SHALL HAVE A BINDING PRECEDENT ON ALL COURTS IN INDIA INCLUDING THIS TRIBUNAL. 20. WE MAY MENTION THAT THE DECISION OF THE HONBLE APE X COURT IS DECLARATION OF LAW AS PER ARTICLE 141 OF THE CONSTI TUTION OF INDIA. THE LAW DECLARED BY HONBLE APEX COURT IN FIBRE BOARDS (P) LTD (SUPRA) DATED 11.08.2015, WAS AVAILABLE WHEN THE DECISIONS WAS RE NDERED BY BANGALORE TRIBUNAL TEXTPORT OVERSEAS PVT LIMITED VS DCIT (SUP RA), HOWEVER, THE SAME WAS NOT BROUGHT TO THE NOTICE OF THE BENCH. TH E COORDINATE BENCH WHILE RENDERING THE DECISION RELIED ON THE DECISION OF HONBLE APEX COURT IN GENERAL FINANCE CO. VS ACIT (SUPRA), WHICH WAS ALREADY DECLARED AS PER-IN CURIUM . SIMILARLY, THE DECISION IN GENERAL FINANCE CO (SUPRA) IS BASED ON RAYALA CORPORATION P. LTD VS DI RECTOR OF ENFORCEMENT (SUPRA) AND KOLHAPUR CANESUGAR WORKS LT D VS UNION OF INDIA (SUPRA). CONSIDERING THE AFORESAID LEGAL POSI TION AND THE DATES OF VARIOUS JUDGMENTS OF THE HONBLE APEX COURT, WE ARE OF THE VIEW THAT THE FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 19 LD. AR FOR THE ASSESSEE HAS REFERRED AND RELIED ON THE DECISIONS OF GENERAL FINANCE COMPANY VS ACIT (SUPRA) WHICH HAVE BEEN DEC LARED AS PER-IN CURIUM BY HONBLE APEX COURT. 21. WE ARE CONSCIOUS OF THE FACTS THAT THE LATEST LAW D ECLARED BY HONBLE APEX COURT IN VARIOUS CASES (SUPRA) WAS NOT CONFRON TED WITH THE LD. AR FOR THE ASSESSEE; HOWEVER, IT IS ALWAYS PRESUMED TH AT THE LAW DECLARED BY THE COURT IS IN THE KNOWLEDGE OF THE LEGAL PRACTITI ONER. WE INSTEAD OF GOING IN FURTHER DISCUSSIONS ARE OF THE VIEW THAT I N VIEW OF THE DECISION OF HONBLE APEX COURT IN FIBRE BOARDS (P) LTD (SUPRA), THE WORD REPEAL INCLUDES OMISSION. THUS, WE DO NOT FIND ANY MERIT IN THE OBJECTION RAISED BY THE LD. AR FOR THE ASSESSEE WHICH WE ARE REJECTING, BEING WITHOUT ANY MERIT AND HELD THAT APPEAL FILED BY THE REVENUE WITH IN CURRENCY OF THE SUB-SECTION 2A OF SECTION 253 OF TH E ACT, IS VALID. 22. NOW, WE SHALL ADVERT TO VARIOUS GROUNDS OF THE APPE ALS FILED BY THE PARTIES. GROUND NO. 1 & 1.1 IN ASSESSEES APPEAL IS GENERAL AND NEEDS NO SPECIFIC ADJUDICATION. GROUND NO. 1.2 TO 1.4 IN ASS ESSEES APPEAL AND GROUND NO. 2 & 3 OF REVENUES APPEAL ARE INTERCONNE CTED. THE ASSESSEE IS SUPPORTING THE EXCLUSION OF COMPARABLE COMPANY NAME LY INTERNATIONAL FLAVORS & FRAGRANCES (I) LTD (IFF) AND INCLUSION OF ULTRA INDUSTRIES LTD (UIL). ON THE CONTRARY THE REVENUE IN ITS APPEAL IS CHALLENGING THE EXCLUSION OF COMPARABLE IFF AND INCLUSION OF UIL. THE LD. AR FOR THE ASSESSEE SUBMITS THAT DESPITE THE DIRECTION OF DRP FOR EXCLUSION OF FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 20 COMPARABLE IFF AND INCLUSION OF UIL, IF THE DIRECTI ON IS FOLLOWED THE MARGIN OF FINAL SET OF COMPARABLE WOULD BE WITHIN T OLERANCE RANGE AND THE ADJUSTMENT SUGGESTED BY TPO IS LIABLE TO BE DELETED . TO SUPPORT THE EXCLUSION OF IFF THE LD. AR FOR THE ASSESSEE SUBMIT S THAT THIS COMPARABLE COMPANY IS ALSO ENGAGED IN TRADING OF GOODS. THIS C OMPANY TRADED THE GOODS OF RS. 242.72 CRORE WHICH IS MORE THAN 16%. HOWEVER, THE ASSESSEE IS ONLY ENGAGED IN MANUFACTURING AND SALE OF INDUSTRIAL FLAVORS AND DURING THE PREVIOUS YEAR NOT ENGAGED IN TRADING . THE FINANCIAL DATA OF THIS COMPARABLE IS NOT AVAILABLE IN PUBLIC DOMAIN. THE ACCOUNTS OF THIS COMPANY ARE AVAILABLE FOR THE PERIOD FROM DECEMBER 2007 TO JANUARY 2009. THUS, IT WOULD BE NOT PROPER TO COMPARE AND BENCHMARK THE TRANSACTION ON THE BASIS OF FINANCIAL FOR DIFFERENT FINANCIAL PERIOD. THIRDLY, THIS COMPARABLE IS ALSO ENGAGED IN RESEARCH AND DEV ELOPMENT (R&D) ACTIVITY DUE TO WHICH EARNING HIGHER PROFIT. THE CO MPANY ENGAGED IN R&D ACTIVITY MAY ASSUME HIGH RISK AND LEAD TO GENER ATION OF INTELLECTUAL PROPERTY RIGHT (IPR). IN SUPPORT OF HIS SUBMISSIONS THE LD. AR FOR THE ASSESSEE RELIED ON THE DECISION OF PUNE TRIBUNAL IN HONEYWELL AUTOMATION INDIA LTD INDIA LTD VS DCIT (ITA NO. 4/P UNE/08) AND BOMBAY HIGH COURT IN CIT VS PTC SOFTWARE (I) (P) LT D 395 ITR 176. 23. PER CONTRA THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF TPO. THE LD. DR FOR THE REVENUE SUBMITS THAT THE ACCOUNTS OF THI S COMPARABLE ARE AVAILABLE IN THE PUBLIC DOMAIN AND THE REVENUE HAS FILED THE COPIES OF THE FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 21 FINANCIAL / ANNUAL REPORT OF IFF. THE LD. DR FURTHE R SUBMITS THAT THERE ARE DECISIONS OF TRIBUNAL HOLDING THAT IF CONTEMPORANEO US DATA IS AVAILABLE AND FINANCIALS ARE AVAILABLE AND DATA CAN BE EXTRAP OLATED FOR THE FINANCIAL YEAR, THE COMPARABLE SHOULD NOT BE EXCLUDED. THE LD . DR SUBMITS THAT THE COMPARABILITY OF THIS COMPANY MAY BE RESTORED TO TH E FILE OF TPO FOR EXTRAPOLATING AND TO EXAMINE THE COMPARABILITY. IN SUPPORT OF HIS SUBMISSIONS THE LD DR RELIED ON THE DECISION OF MUM BAI TRIBUNAL PANGEA3 LEGAL DATABASE SYSTEM (P) LTD VS ITO [2017] 79 TAXMANN.COM (MUM- TRIB). ON THE RATIO THAT IF THE FINANCIAL DAT A IS AVAILABLE FOR ALL QUARTERS AND IT IS OTHERWISE POSSIBLE TO DETERMINE THE TRANSACTION AS WELL AS PROFITABILITY DURING THE CORRESPONDING PERIOD, T HEN IT WOULD BE SUFFICE COMPARABILITY CRITERIA AND RELIED ON THE DECISION O F PUNE TRIBUNAL IN SCHLUMBERGER INDIA TECHNOLOGY CENTER (P) LTD VS DCI T [2018] TAXMANN.COM 19 (PUNE- TRIB). 24. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. REPRE SENTATIVES OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE LOW ER AUTHORITIES. THE TPO PROPOSED TO INCLUDE IFF AS A VALID COMPARABLE C OMPANY BY TAKING VIEW THAT THE ASSESSEE WHILE MAKING TP RESEARCH FOR COMPARABLE, REJECTED THIS COMPANY ONLY ON THE GROUND OF (RPT) RELATED P ARTY TRANSACTION (TABLE II PAGE 2 OF TPO ORDER). ON SHOW CAUSE THE ASSESSEE VIDE ITS REPLY DATED 29.10.2012 SUBMITTED THAT RPT IS RS. 36.98 CR ORE OUT OF TOTAL TRANSACTION OF RS. 382 CRORE. THE TPO CONCLUDED THA T RPT IS LESS THAN FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 22 10% HENCE; THE OBJECTION AGAINST THE INCLUSION WAS REJECTED. THE LD DRP EXCLUDED THIS COMPARABLE ON THE GROUND THAT THAT TH E ACCOUNTS FOR THIS COMPANY IS FOR THE PERIOD OF 27 TH DECEMBER 2007 TO 2 ND JANUARY 2009, THEREFORE, IT DOES NOT FULFILLS THE CONDITIONS OF C ONTEMPORARY DATES AND DIRECTED TPO TO EXCLUDE. BEFORE US THE LD. DR FOR T HE REVENUE SUBMITTED THE FINANCIAL DATA FOR THE PERIOD OF 27 DECEMBER 20 07 TO 2 ND JANUARY 2009. 25. THE HONBLE BOMBAY HIGH COURT IN CIT VS PTC SOFTWAR E [2016] 376 ITR 176 (BOM), WHILE CONSIDERING THE QUESTION OF LA W IF THE TRIBUNAL ERRED IN EXCLUDING COMPARABLE ONLY ON THE GROUND TH AT THE SAID COMPARABLE HAD PREPARED THE FINANCIAL FOR THE YEAR ENDING ON JUNE AGAINST THE ASSESSEE AS ON MARCH. THE HIGH COURT HELD THAT RULE 10B(4) OF INCOME TAX RULES, ARE CLEAR AND OBLIGATES THAT THE DATA TO BE USED FOR COMPARISON SHOULD BE DATA RELATING TO THE SAME FIN ANCIAL YEAR IN WHICH THE INTERNATIONAL TRANSACTION WERE ENTERED BY THE T ESTED PARTY. THE CONTENTION OF THE REVENUE THAT MANDATES OF RULE 10B CAN BE IGNORED AS DIFFERENCE OF THREE MONTHS WAS ALSO REJECTED. THE C ASE LAW RELIED BY LD DR FOR THE REVENUE IN PANGEA3 LEGAL DATABASE SYSTEM (P) LTD VS ITO (SUPRA) IS NOT HELPFUL TO HIM AS THE QUARTER WISE A CCOUNTS FOR IFF IS NOT AVAILABLE IN THE FINANCIAL STATEMENTS OF THIS COMPA RABLE. EVEN OTHERWISE THE DECISION OF JURISDICTIONAL HIGH COURT IS HAVING BINDING EFFECT. THUS, CONSIDERING THE DECISION OF THE JURISDICTIONAL HIGH COURT, WE AFFIRM THE FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 23 ORDER OF LD. DRP FOR EXCLUSION OF IFF. IN THE RESU LT THE GROUND NO. 1 OF REVENUES APPEAL IS DISMISSED. 26. NOW TURNING TO THE COMPARABILITY OF UIL. THE LD.AR FOR THE ASSESSEE SUPPORTED ORDER OF DRP ON INCLUSION OF UIL AND ALSO SUBMITS THAT THE ACTIVITIES OF THIS COMPARABLE ARE SIMILAR TO THE AS SESSEE. 27. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF TPO. THE LD. DR FURTHER SUBMITS THAT THE IF THE ASSESSEE CLAIMS THAT SYNTHITE INDUSTRIES SHOULD EXCLUDED ON THE BASIS OF HIGH IMP ORT TURNOVER COMPONENT, THEN UIL SHOULD ALSO BE EXCLUDED. THUS, THIS COMPARABLE SHOULD NOT BE ACCEPTED FOR INCLUSION IN THE FINAL S ET OF COMPARABLES. 28. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES A ND HAVE GONE THROUGH THE ORDERS OF THE TPO AND DRP. DURING THE TP PROCEE DINGS THE ASSESSEE VIDE ITS LETTER DATED 29.10.2012 ASK TO TPO TO INCL UDE THIS COMPARABLE AS THE DATA OF THIS COMPANY WAS NOT AVAILABLE AT THE T IME OF SEARCH. THE TPO REJECTED THE PRAYER OF THE ASSESSEE BY TAKING VIEW THAT FAR (FUNCTIONS PERFORMED ASSET EMPLOYED AND THE RISK ASSUMED) ANAL YSIS WAS NOT DONE, AND THAT IN PREVIOUS YEAR THIS COMPARABLE WAS NOT T AKEN THOUGH THIS COMPANY WAS APPEARING THE SEARCH PROCESS OF THE ASS ESSEE. THE LD DRP DIRECTED TO INCLUDE THIS COMPARABLE ON THE GROUND T HAT THE ACTIVITIES OF THIS COMPARABLE IS SIMILAR TO THE ASSESSEE. WE HAVE SEEN THAT THE LD DRP HAS CONSIDERED THE IMPORT CONTENTS OF THIS COMPARAB LES AS WELL AS SYNTHITE INDUSTRIES AND INCLUDED SOLELY ON THE BASIS OF ACTI VITIES. THE LD DR FOR THE FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 24 REVENUE HAVE NOT BROUGHT ANY FACT TO OUR NOTICE TO DIFFERENTIATE THE SIMILARITIES IN FUNCTION, THUS, WE UPHELD THE INCLU SION OF THIS COMPARABLE BY LD DRP. IN THE RESULT THE GROUND NO. 3 OF THE A PPEAL BY REVENUE IS REJECTED. 29. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSE D. 30. FURTHER CONSIDERING THE DETAILS FURNISHED BY THE AS SESSEE IN SUPPORT F GROUND NO. 1.2 TO 1.4 THAT IN CASE THE EXCLUSION OF IFF AND INCLUSION OF UIL IS AFFIRMED THE AVERAGE MEAN MARGINS OF FINAL S ET OF COMPARABLE AS PER THE DIRECTION OF DRP WOULD BE WITHIN THE TOLE RANCE RANGE OF +/- 5%, WITH THE MARGIN OF ASSESSEE. THEREFORE, THE DISCUSS IONS OF THE EXCLUSION OR INCLUSION OF OTHER COMPARABLE OR OTHER GROUNDS OF A PPEAL RAISED BY ASSESSEE HAVE BECOME ACADEMIC. 31. GROUND NO. 2 RELATES TO DISALLOWANCE OF BAD DEBTS. THE LD. AR FOR THE ASSESSEE SUBMITS THAT DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE WRITTEN OFF BED DEBTS OF RS. 14.36 LAKHS IN THE PRO FIT AND LOSS ACCOUNTS. SUCH BAD DEBTS WERE SHOWN IN THE INVOICES RAISED ON CUSTOMERS IN THE PREVIOUS YEAR AND WAS CREDITED TO THE ACCOUNTS. THE ASSESSEE DURING THE YEAR CONSIDERING THE FACTS THAT THE AMOUNTS ARE NOT RECOVERABLE HAS WRITTEN OFF DURING THE YEAR. THE LD. AR FOR THE ASSESSEE SU BMITS THAT THE DETAILS OF THE BAD DEBTS ARE FILED ON RECORD AND THE SAME WERE FILED BEFORE THE LOWER AUTHORITIES. IN SUPPORT OF HIS SUBMISSIONS THE LD A R FOR THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN TRF VS CIT (323 ITR 397 FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 25 SC), CIT VS ESSAR TECHNOLOGY LTD [2015] 228 TAXMAN 309 (BOMBAY) AND CBDT CIRCULAR DATED 30.05.2016. 32. PER CONTRA THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 33. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND ALS O DELIBERATED ON THE VARIOUS CASE LAWS CITED BY THE LD. AR FOR THE ASSES SEE. THE LD. AR FOR THE ASSESSEE VEHEMENTLY SUBMITTED BEFORE US THAT DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE WRITTEN OFF BED DEBTS OF RS. 14.3 6 LAKHS IN THE PROFIT AND LOSS ACCOUNTS. SUCH BAD DEBTS WERE SHOWN IN THE INV OICES RAISED ON CUSTOMERS IN THE PREVIOUS YEAR AND WAS CREDITED TO THE ACCOUNTS. THE ASSESSEE DURING THE YEAR CONSIDERING THE FACTS THAT THE AMOUNTS ARE NOT RECOVERABLE HAS WRITTEN OFF DURING THE YEAR. WE HAV E VERIFIED THE AMOUNTS OF BAD DEBTS, DETAILS OF WHICH ARE AVAILABLE AT PAG E NO. 50 OF PB. 34. THE HONBLE BOMBAY HIGH COURT IN CIT VS ESSAR TECHN OLOGY LTD(SUPRA) WHILE CONSIDERING THE QUESTION OF LAW WHETHER TRIBU NAL WAS RIGHT IN ALLOWING THE BAD DEBTS CLAIMED BY THE ASSESSEE EVEN THE SAME WERE NOT OFFERED AS INCOME IN THE EARLIER YEARS AS PER THE P ROVISIONS OF SECTION 36(2)(1). THE HONBLE COURT HELD THAT THE TRIBUNAL DID NOT COMMIT ANY ERROR IN RECORDING A FACTUAL FINDING THAT IN THE PR ESENT CASE THAT THE BAD DEBT CAN BE WRITTEN OFF AS IRRECOVERABLE, OTHERWISE THAT WOULD ALSO HAVE GONE CONTRARY TO THE JUDGMENT OF THE SUPREME COURT DELIVERED IN THE CASE FIREMENICH AROMATICS (INDIA) PVT LTD, (AY 2009-10) ITA NO. 348/MUM/2014 & 1732/MUM/2014 26 OF T.R.F. LTD . V. CIT [2010] 323 ITR 397/190 TAXMAN 391 (SC). IN THE RESULT THIS GROUND OF APPEAL IS ALLOWED. 35. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 /07/2020. SD/- SD/- S. RIFAUR RAHMAN PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 15.07.2020 SK/ PS COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR K BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI
