INCOME TAX ACT, 1961

Section 263 Section 92BA Section 92A and 92C

Revision under section 263 - Jurisdiction of CIT - AO failed to refer specified domestic transaction to TPO for ALP - Effect of omission of clause (i) of section 92A

Pr.CIT issued a notice under section 263 on 3-12-2018 proposing to set aside the assessment order under section 143(3), dated 28-10-2016 on the ground that the said order was erroneous and prejudicial to the interest of revenue as the AO had failed to refer to the Transfer Pricing Officer (TPO) under section 92CA related party transactions which was falling within the meaning of specified domestic transactions' under section 92BA(i) was to arrive at the Arm's Length Price (ALP) under section 92C as required in terms of CBDT Instruction No. 3/2016, dated 10-3-2016. Assessee contended that after the omission of clause (i) in the defintion of specified domestic transactions by the Finance Act, 2017 the said provisions do not apply to transactions of the above nature. However, Pr. CIT rejected the contention of the assessee and held that the assessment order passed under section 143(3), dated 28-10-2016 was erroneous and prejudicial to the interest of revenue therefore, he set aside the assessment order and the AO was directed to refer the transactions to TPO for determination of arm's length price. Held: At the time of hearing the solitary grievance of the assessee had been confined to the issue that since clause (i) of section 92BA has been omitted by Finance Act, 2017, with effect from 1-4-2017 and the effect of such omission without any saving clause of General Clauses Act, means that the above provisions was not in existence or never existed in the statute, therefore, the jurisdiction exercised by the Pr.CIT under section 263 was void and as a result the order passed by the AO under section 143(3) was neither erroneous nor prejudicial to the interest of the revenue. Based on the judgments of the Coordinate Benches,(in the case of Swastik Coal Corporation (P) Ltd. and in the case of M/s. Raipur Steel Casting India (P) Ltd. Since clause (i) section 92BA was omitted with effect from 1-4-2017 and the effect of such omission was that the said clause (i) was never existed in the statute. Hence, Pr. CIT could not exercise the jurisdiction under section 263.

Followed:Swastik Coal Corporation (P) Ltd., in ITA No. 486/Ind/2018 : 2019 TaxPub(DT) 5019 (Ind-Trib) for the assessment year 2014-15 and M/s. Raipur Steel Casting India (P) Ltd., in ITA No. 895/Kol/2019, for assessment year 2014-15, Order, dated 10-6-2020.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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