Voora Property Developers Pvt. Ltd. Vs DCIT (ITAT Chennai)
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-11, Chennai, dated 10.07.2019, for AY 2015-16. The assessee challenged the transfer pricing adjustment relating to interest on loans from Associated Enterprises and specified domestic transactions under Section 92BA of the Income Tax Act, 1961. The assessee also filed an additional legal ground concerning the omission of Section 92BA(i) by the Finance Act, 2017 with effect from 01.04.2017.
The Tribunal admitted the additional ground, holding that the issue was purely legal and could be raised at any stage, including before the Tribunal. The assessee submitted that Section 92BA(i) had been omitted and, consequently, additions made under that provision could not be sustained. The Revenue opposed the ground, submitting that the provision existed when the TPO made the adjustment and that the issue was pending before the Supreme Court in relation to M/s. Texport Overseas P Ltd vs. DCIT.
The ITAT noted that Section 92BA(i), which covered specified domestic transactions involving payments to persons referred to in Section 40A(2)(b), had been omitted by the Finance Act, 2017 with effect from 01.04.2017. Following the decisions considered by the Tribunal, including General Finance Co. v. ACIT and M/s. Rahee Jhajharia E to E (JV) v. ACIT, it held that the omission meant that the provision could not sustain the transfer pricing adjustment where no saving provision continued the action taken under it. The Tribunal therefore held that the cognizance taken under Section 92BA(i) and reference to the TPO under Section 92CA could not be sustained.
