Rahee Jhajharia E to E (JV) Vs ACIT (ITAT Kolkata)
The assessee appealed against the order of the Commissioner of Income Tax (Appeals)-22, Kolkata dated 26.03.2021 for A.Y. 2015-16. Eleven grounds were raised. Grounds No. 6 to 9, Ground No. 10 concerning interest under section 234B of Rs.81,27,990/-, and the general Ground No. 11 were not pressed or did not require specific findings.
The substantive dispute concerned whether a domestic transaction between the assessee and its Associated Enterprise, falling within section 40A(2)(b) of the Income Tax Act, could be subjected to an Arm’s Length Price adjustment under section 92BA(i). The assessee relied upon the Tribunal’s order for A.Y. 2014-15, where a similar issue had been decided in its favour following the omission of clause (i) of section 92BA by the Finance Act, 2017 with effect from 01.04.2017.
The Tribunal noted that, according to its earlier decision, the omission meant that clause (i) of section 92BA was to be treated as never having been on the statute book, in the absence of a saving provision concerning proceedings already initiated under the omitted clause. Consequently, the reference to the Transfer Pricing Officer under section 92CA and the consequential transfer pricing proceedings could not sustain the adjustment under section 40A(2)(b).
