Clause (i) of s.92BA repealed w.e.f. 01.04.2017; provision no longer exists, adjustments under it void ab initio

ITAT AHMEDABAD - AT held that Clause (i) of s.92BA was omitted w.e.f. 01.04.2017 and, being unconditionally repealed without a savings clause, is non est and cannot be applied to pending proceedings. Accordingly, adjustments and orders by AO/TPO and DRP invoking s.92BA(i) lacked jurisdiction, were void ab initio, and were quashed. The tribunal allowed the appeal and decided in favour of the assessee.

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Issues involved:
1. Applicability of Section 92BA(i) of the Income Tax Act, 1961 post its omission by the Finance Act, 2017.

Detailed Analysis:
1. The appeal challenged an order related to the purchase of business undertakings under the slump sale arrangement as Specified Domestic Transaction (SDT) under Section 92BA of the Act. The assessee argued that post the omission of Section 92BA(i) by the Finance Act, 2017, such transactions were not covered under SDT. The assessee contended that the transfer pricing provisions did not apply as the purchase of undertakings did not involve payments to a person under Section 40A(2)(b). The assessee cited precedents and argued that the omission of Section 92BA(i) rendered it non-existent in law, thus challenging the jurisdiction of the authorities in treating the transactions as SDT.

2. The tribunal considered the legal implications of the omission of Section 92BA(i) from the statute by the Finance Act, 2017. It noted that when a provision is repealed, it is as if it never existed, and fresh proceedings may be initiated under the new provision. Relying on the judgment of the Hon'ble Karnataka High Court and various ITAT benches, the tribunal concluded that the transactions in question, falling under the omitted Section 92BA(i), could not be subject to transfer pricing adjustments. The tribunal found the orders based on Section 92BA(i) to be without jurisdiction, invalid, and bad in law. Consequently, it quashed the impugned order, as it lacked any legal basis post the omission of the relevant section.

3. The tribunal's decision was based on the principle that the omission of Section 92BA(i) rendered it non-existent in law, and any actions taken based on it were invalid. Citing precedents and legal interpretations, the tribunal found no justification for the authorities' actions in invoking Section 92BA(i) post its omission. The tribunal allowed the appeal solely on the maintainability point, considering the impugned order as void ab initio and without jurisdiction. As a result, the tribunal quashed the order, rendering further discussion on the merits of the case unnecessary.

This detailed analysis of the judgment highlights the core issue of the applicability of Section 92BA(i) post its omission by the Finance Act, 2017, and the subsequent legal implications on the related transactions and transfer pricing adjustments.

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