INCOME TAX OFFICER , 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 certain domestic transactions with Associate Enterprises (AEs) were referred to the Transfer Pricing Officer (TPO). The TPO proposed an upward adjustment under Section 92BA(1) of the Income Tax Act, which the Assessing Officer added to the total income. The CIT(A) deleted this addition, holding that Section 92BA(1) was omitted from the statute and thus not applicable.

Held

The Tribunal held that the omission of Section 92BA(1) of the Income Tax Act, 1961, by the Finance Act, 2017, without any saving clause, rendered the provision non-existent from its inception. Consequently, any action taken or proceedings initiated under this provision for assessment year 2013-14 were invalid. The appeal by the Revenue was dismissed, and the order of the CIT(A) was upheld.

Key Issues

Whether the provisions of Section 92BA(1) of the Income Tax Act, 1961, as omitted by the Finance Act, 2017, were applicable for the assessment year 2013-14, and consequently, whether the transfer pricing adjustment and penalty levied were valid.