PCIT Vs TT Steel Service India Pvt. Ltd. (Karnataka High Court)
The Karnataka High Court recently addressed a pivotal tax dispute involving question of jurisdiction in PCIT v. TT Steel Service India Pvt. Ltd. (ITA No. 665 of 2023), involving the validity of a reference made to the Transfer Pricing Officer (TPO) for examining a Specified Domestic Transaction(SDT) under Section 92BA(i) of the Income Tax Act, when such clause (i) stood omitted effective from April 1, 2017. The appeal, filed by the Income Tax Department, contested the ITAT’s ruling invalidating the reference and deleting the resulting addition for AY 2016-17. The court upheld ITAT’s decision, citing established precedents, and clarified that the omitted provision must be treated as non-existent from its inception, reaffirming the limited scope of transfer pricing adjustments under Chapter X of the Act.
In the present case, the income Tax department filed an appeal against the order of ITAT invalidating the reference made to the TPO for the determination of a Specified Domestic Transaction (SDT) mentioned u/s 92BA(i) of the Income Tax Act in respect to transactions for A.Y. 2016-17. The core issue arose from a reference made to the Transfer Pricing Officer (TPO) regarding specified domestic transactions under clause (i) of Section 92BA of the Income Tax Act. This clause was omitted effective from 01.04.2017. The ITAT ruled that the reference to the TPO was invalid due to the omission of the provision, leading to the addition made by the Assessing Officer being deleted. The tribunal holds that omission of section 92BA(1) of the Act w.e.f. 1/4/2017 would amount to the nonexistence of the section from the date of insertion.
