ACIT Vs Orient Green Power Company Limited (ITAT Chennai)
The Revenue appealed against the order of the CIT(A), Chennai-16 dated 21 November 2024 for Assessment Year 2014-15. The dispute concerned a domestic transfer pricing adjustment of Rs.4,04,49,600 relating to management fees paid to Shriram Industrial Holdings Ltd. (SIHL).
The assessee filed its return for AY 2014-15 declaring a loss of Rs.68,20,58,141, later revised to Rs.68,12,68,141. During assessment proceedings, the Assessing Officer referred the specified domestic transaction to the Transfer Pricing Officer (TPO). The TPO passed an order under Section 92CA(3) on 30 October 2017, determining the arm’s length price of the management fee at NIL and recommending a downward adjustment of Rs.4,04,49,600.
The Assessing Officer subsequently completed assessment under Sections 143(3) read with 92CA and 144C(1), making, among other additions, the Rs.4,04,49,600 transfer pricing adjustment.
Before the CIT(A), the assessee challenged the adjustment. The CIT(A) noted that the payment fell within specified domestic transactions governed by Section 92BA and that the reference to the TPO had been made on 28 September 2016. However, clause (i) of Section 92BA, which covered payments to persons specified under Section 40A(2)(b), was omitted with effect from 1 April 2017.
The CIT(A), relying on PCIT-7 vs Texport Overseas (P.) Ltd. [2020] 114 taxmann.com 568 (Karnataka), held that the omission meant the provision had never been on the statute book. Following other Tribunal decisions, the CIT(A) directed deletion of the Rs.4,04,49,600 adjustment under Sections 92CA read with 92BA. The CIT(A) clarified that the direction was confined to determination of arm’s length price under Section 92CA and did not curtail the Assessing Officer’s powers under Section 40A(2)(b); the merits were not considered.
