ITAT recalls order on transfer pricing adjustment under section 92BA(v) for specified domestic transactions

The ITAT Delhi - AT recalled its earlier order after acknowledging that the transfer pricing adjustment pertained to a specified domestic transaction under section 92BA(v), which remains valid despite the omission of section 92BA(i) effective 01.04.2017. The tribunal held that the prior reliance on the omission of section 92BA(i) was incorrect, as the transaction involved transfer of finished goods between eligible and non-eligible units under section 80IC. Consequently, the tribunal allowed the revenue's miscellaneous application, set aside its previous order, and directed that the main appeal be heard on 30.09.2025.

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The revenue filed a miscellaneous application seeking recall of the tribunal's order in ITA No. 590/Del/2021 (Assessment Year 2016-17), which had disallowed transfer pricing adjustments under section 92BA of the Income Tax Act. The tribunal had relied on the Karnataka High Court decision in PCIT vs. Texport Overseas Pvt. Ltd., holding that clause (i) of section 92BA was omitted effective 01.04.2017 and thus adjustments under that clause and related references to the TPO under section 92CA were invalid. The revenue contended that the transaction in question falls under section 92BA(v), which was not omitted, involving transfer of finished goods between non-eligible and eligible units under section 80IC. The tribunal acknowledged that only clause (i) of section 92BA was omitted, and since the transfer pricing adjustment relates to clause (v), the prior order was based on an erroneous interpretation. Accordingly, the tribunal held that the revenue's application disclosed a valid mistake warranting recall of the earlier order. The tribunal recalled its prior decision and fixed the main appeal for hearing on 30.09.2025, with no fresh notice to be issued. The miscellaneous application was allowed, emphasizing that transfer pricing adjustments under section 92BA(v) remain valid despite the omission of clause (i).

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