INCOME TAX OFFICER WARD 1 JALNA, JALNA vs. VIKRAM TEA PROCESSOR PRIVATE LIMITED, JALNA

Facts

The assessee, a private limited company engaged in tea processing and power generation, filed its return. The case was selected for scrutiny, and during the assessment, domestic transactions with Associate Enterprises (AEs) were referred to the Transfer Pricing Officer (TPO). The TPO proposed an upward adjustment, which the Assessing Officer (AO) added to the total income. The CIT(A) deleted this addition.

Held

The Tribunal held that the omission of Section 92BA(i) of the Income Tax Act, 1961, by the Finance Act, 2017, without any saving clause, meant that the provision was non-existent from its inception. Therefore, the adjustment made by the AO/TPO invoking this section was invalid. Similarly, the penalty under Section 271AA was deleted as it was consequential to the deleted addition.

Key Issues

Whether the upward adjustment under Section 92BA(i) and the consequential penalty under Section 271AA are sustainable when Section 92BA(i) was omitted from the statute before the assessment year in question and without a saving clause.