The Commissioner has issued me a s.263 notice saying the Assessing Officer should have referred my s.40A(2)(b) payments to the TPO. Clause (i) of s.92BA was omitted in 2017. Can he still revise?
No. Clause (i) of s.92BA was omitted by the Finance Act 2017 with effect from 1 April 2017 without any saving clause, and an omission is not a repeal, so s.6 of the General Clauses Act does not preserve anything built on it. The Tribunal held the provision must be treated as never having existed, and the Commissioner's revision order founded on a failure to refer specified domestic transactions to the TPO was quashed, the jurisdiction exercised being, in the order's own register, null in the eye of law.
Decided by the ITAT (Shri A.T. Varkey, Judicial Member and Dr. Arjun Lal Saini, Accountant Member) on 2020-06-10, reported as ITA No. 895/Kol/2019 and ITA No. 1035/Kol/2019 (ITAT Kolkata 'C' Bench), Assessment Year 2014-15. It bears on section 92BA, section 92CA, section 263, section 143(3), section 40A(2)(b) of the Income Tax Act 1961, in Revision & Rectification, Assessment & Scrutiny and How Tax Law Is Read matters.
This is the highest-value point in the domestic transfer pricing field for anyone still under assessment, revision or appeal for AY 2013-14 to AY 2016-17. The Revenue's standard answer — that clause (i) was in force in the year under assessment, and that the Supreme Court in Fibre Boards and Shree Bhagwati Steel Rolling Mills has since held that 'omission' and 'repeal' are interchangeable so s.6 of the General Clauses Act saves the proceeding — was argued in full by the CIT-DR here and was rejected in terms. That makes this order more useful than the bare proposition, because it is the answer to the counter-argument you will actually meet. Note the limits: the omission removed only clause (i) (expenditure to persons under s.40A(2)(b)); the other clauses of s.92BA and the whole of the international transaction machinery are untouched. Note also that the point is not free of contest at Tribunal level — see the validity note.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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Both assessees were assessed for AY 2014-15 under s.143(3). In Raipur Steel Casting the return declared Rs 47,90,310 and the assessment determined income at Rs 51,57,860. On examining the record the Principal Commissioner found from Form 3CEB that the company had entered into specified domestic transactions of Rs 34,82,67,956 which the Assessing Officer had not referred to the Transfer Pricing Officer under s.92CA after obtaining the Commissioner's approval, so that the arm's length price of those transactions had never been benchmarked. He issued a show cause notice under s.263 and, rejecting the assessee's reply that clause (i) of s.92BA had been omitted, cancelled the assessment and directed a de novo assessment. Before the Tribunal both assessees confined their case to the single point that clause (i) of s.92BA, which covered any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of s.40A, had been omitted by the Finance Act 2017 with effect from 1 April 2017 without a saving clause. The Commissioner-Departmental Representative argued that the clause had been repealed rather than omitted, that it was in force in AY 2014-15, and that the Supreme Court in Shree Bhagwati Steel Rolling Mills and Fibre Boards had held that repeal, delete and omit may be used interchangeably so that s.6 read with s.6A of the General Clauses Act 1897 saved the proceeding, and that the Bangalore Bench in Texport Overseas Pvt Ltd had decided otherwise only because it had not been shown those later decisions.
The appeals were allowed. Clause (i) of s.92BA having been omitted with effect from 1 April 2017 without any saving clause, and s.6 of the General Clauses Act applying only to repeals and not to omissions, the clause is to be treated as never having existed in the statute book. The Principal Commissioner therefore had no jurisdiction under s.263 to revise the assessment for a failure to refer specified domestic transactions falling under that clause to the Transfer Pricing Officer: the invocation of clause (i) of s.92BA for a reference by the Assessing Officer to the Transfer Pricing Officer was, in the order's own words, "null in the eye of Law", and the revision orders were quashed (paragraph 20 and the disposal). A statement in the report that the assessment order under s.143(3) was also restored rests on paragraphs 22 to 25, which no retrieval in this build and none in the verification pass was able to read; it is therefore recorded here as not independently confirmed.
The Tribunal began from the Explanatory Memorandum to the Finance Act 2017, which gave reduction of the compliance burden as the object of removing s.40A(2)(b) expenditure from the scope of s.92BA, and reasoned that if the effect of the omission is that the clause never existed, the exercise of revisional jurisdiction founded on it must fail (paragraph 11). It relied on the Supreme Court in Rayala Corporation (P) Ltd, reproduced at length, for the propositions that s.6 of the General Clauses Act applies only to repealed statutes and not to omitted ones, and that once a rule is omitted altogether no new proceeding may be initiated in respect of something done while it was in force, however competently a proceeding already started might have been continued (paragraphs 12 and 13, with Kolhapur Canesugar Works to the same effect). It then answered the Departmental Representative's three points directly. First, on Shree Bhagwati Steel Rolling Mills, it read the passage relied on and found that the Supreme Court had there decided the matter against the Revenue, not for it (paragraphs 17 and 18). Second, on Fibre Boards, it held that the case turned on the omission of s.280ZA being accompanied by re-enactment with modification in s.54G, which attracted s.24 of the General Clauses Act, whereas clause (i) of s.92BA was omitted with no re-enactment anywhere in the Act (paragraph 18). Third, it held that Rayala Corporation and Kolhapur Canesugar had not been overruled by those later decisions but were expressly accepted in them, quoting the passage in Fibre Boards which records that the two Constitution Bench judgments 'do indeed say that in Section 6 of the General Clauses Act, the word repeal would not take within its ken an omission' (paragraph 19). Turning to the meaning of a saving clause, it found that Parliament had inserted nothing to preserve pending proceedings or penalties relating to the omitted clause, so the clause is obliterated from inception and the subsequent revision proceeding is invalid (paragraph 20). The coordinate Bench of ITAT Indore in Swastik Coal Corporation Pvt Ltd, which had quashed a s.263 order on identical facts following the Bangalore Bench in Texport Overseas, was noted as fortifying that view (paragraphs 21 and 22).
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Handle my notice → Ask a CA on WhatsAppNo. Clause (i) of s.92BA was omitted by the Finance Act 2017 with effect from 1 April 2017 without any saving clause, and an omission is not a repeal, so s.6 of the General Clauses Act does not preserve anything built on it. The Tribunal held the provision must be treated as never having existed, and the Commissioner's revision order founded on a failure to refer specified domestic transactions to the TPO was quashed, the jurisdiction exercised being, in the order's own register, null in the eye of law. This was decided by the ITAT (Shri A.T. Varkey, Judicial Member and Dr. Arjun Lal Saini, Accountant Member) and bears on section 92BA, section 92CA, section 263, section 143(3), section 40A(2)(b) of the Income Tax Act 1961. It is reported as ITA No. 895/Kol/2019 and ITA No. 1035/Kol/2019 (ITAT Kolkata 'C' Bench), Assessment Year 2014-15. This is the highest-value point in the domestic transfer pricing field for anyone still under assessment, revision or appeal for AY 2013-14 to AY 2016-17. The Revenue's standard answer — that clause (i) was in force in the year under assessment, and that the Supreme Court in Fibre Boards and Shree Bhagwati Steel Rolling Mills has since held that 'omission' and 'repeal' are interchangeable so s.6 of the General Clauses Act saves the proceeding — was argued in full by the CIT-DR here and was rejected in terms. That makes this order more useful than the bare proposition, because it is the answer to the counter-argument you will actually meet. Note the limits: the omission removed only clause (i) (expenditure to persons under s.40A(2)(b)); the other clauses of s.92BA and the whole of the international transaction machinery are untouched. Note also that the point is not free of contest at Tribunal level — see the validity note. If it applies to you, the first step is this: Check first whether the transaction the officer is pursuing actually falls under the omitted clause (i) — expenditure paid or payable to a person referred to in s.40A(2)(b) — and not under another clause of s.92BA or under s.92B.
Both assessees were assessed for AY 2014-15 under s.143(3). In Raipur Steel Casting the return declared Rs 47,90,310 and the assessment determined income at Rs 51,57,860. On examining the record the Principal Commissioner found from Form 3CEB that the company had entered into specified domestic transactions of Rs 34,82,67,956 which the Assessing Officer had not referred to the Transfer Pricing Officer under s.92CA after obtaining the Commissioner's approval, so that the arm's length price of those transactions had never been benchmarked. He issued a show cause notice under s.263 and, rejecting the assessee's reply that clause (i) of s.92BA had been omitted, cancelled the assessment and directed a de novo assessment. Before the Tribunal both assessees confined their case to the single point that clause (i) of s.92BA, which covered any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of s.40A, had been omitted by the Finance Act 2017 with effect from 1 April 2017 without a saving clause. The Commissioner-Departmental Representative argued that the clause had been repealed rather than omitted, that it was in force in AY 2014-15, and that the Supreme Court in Shree Bhagwati Steel Rolling Mills and Fibre Boards had held that repeal, delete and omit may be used interchangeably so that s.6 read with s.6A of the General Clauses Act 1897 saved the proceeding, and that the Bangalore Bench in Texport Overseas Pvt Ltd had decided otherwise only because it had not been shown those later decisions. The matter was decided on 2020-06-10 by the ITAT (Shri A.T. Varkey, Judicial Member and Dr. Arjun Lal Saini, Accountant Member). On those facts the ITAT held as follows. The appeals were allowed. Clause (i) of s.92BA having been omitted with effect from 1 April 2017 without any saving clause, and s.6 of the General Clauses Act applying only to repeals and not to omissions, the clause is to be treated as never having existed in the statute book. The Principal Commissioner therefore had no jurisdiction under s.263 to revise the assessment for a failure to refer specified domestic transactions falling under that clause to the Transfer Pricing Officer: the invocation of clause (i) of s.92BA for a reference by the Assessing Officer to the Transfer Pricing Officer was, in the order's own words, "null in the eye of Law", and the revision orders were quashed (paragraph 20 and the disposal). A statement in the report that the assessment order under s.143(3) was also restored rests on paragraphs 22 to 25, which no retrieval in this build and none in the verification pass was able to read; it is therefore recorded here as not independently confirmed.
The Tribunal began from the Explanatory Memorandum to the Finance Act 2017, which gave reduction of the compliance burden as the object of removing s.40A(2)(b) expenditure from the scope of s.92BA, and reasoned that if the effect of the omission is that the clause never existed, the exercise of revisional jurisdiction founded on it must fail (paragraph 11). It relied on the Supreme Court in Rayala Corporation (P) Ltd, reproduced at length, for the propositions that s.6 of the General Clauses Act applies only to repealed statutes and not to omitted ones, and that once a rule is omitted altogether no new proceeding may be initiated in respect of something done while it was in force, however competently a proceeding already started might have been continued (paragraphs 12 and 13, with Kolhapur Canesugar Works to the same effect). It then answered the Departmental Representative's three points directly. First, on Shree Bhagwati Steel Rolling Mills, it read the passage relied on and found that the Supreme Court had there decided the matter against the Revenue, not for it (paragraphs 17 and 18). Second, on Fibre Boards, it held that the case turned on the omission of s.280ZA being accompanied by re-enactment with modification in s.54G, which attracted s.24 of the General Clauses Act, whereas clause (i) of s.92BA was omitted with no re-enactment anywhere in the Act (paragraph 18). Third, it held that Rayala Corporation and Kolhapur Canesugar had not been overruled by those later decisions but were expressly accepted in them, quoting the passage in Fibre Boards which records that the two Constitution Bench judgments 'do indeed say that in Section 6 of the General Clauses Act, the word repeal would not take within its ken an omission' (paragraph 19). Turning to the meaning of a saving clause, it found that Parliament had inserted nothing to preserve pending proceedings or penalties relating to the omitted clause, so the clause is obliterated from inception and the subsequent revision proceeding is invalid (paragraph 20). The coordinate Bench of ITAT Indore in Swastik Coal Corporation Pvt Ltd, which had quashed a s.263 order on identical facts following the Bangalore Bench in Texport Overseas, was noted as fortifying that view (paragraphs 21 and 22). The decision followed or applied Rayala Corporation (P) Ltd. v. Director of Enforcement (1969) 2 SCC 412 — relied on and reproduced at length; Kolhapur Canesugar Works Ltd. v. Union of India (2000) 2 SCC 536 — relied on; General Finance Co. v. Asst. CIT (2002) 257 ITR 338 (SC) — relied on by the assessees; Texport Overseas Pvt. Ltd. v. DCIT, IT(TP)A No. 1722/Bang/2017 — approved through the Indore Bench; Swastik Coal Corporation Pvt. Ltd., ITA No. 486/Ind/2018 (ITAT Indore) — followed; M/s. Fibre Boards, 62 taxmann.com 135 (SC) — distinguished; M/s. Shree Bhagwati Steel Rolling Mills v. C.C.E. 2015 (326) ELT 209 (SC) — distinguished.
It was decided by the ITAT on 2020-06-10 and is reported as ITA No. 895/Kol/2019 and ITA No. 1035/Kol/2019 (ITAT Kolkata 'C' Bench), Assessment Year 2014-15. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 92BA, section 92CA, section 263, section 143(3), section 40A(2)(b), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were allowed. Clause (i) of s.92BA having been omitted with effect from 1 April 2017 without any saving clause, and s.6 of the General Clauses Act applying only to repeals and not to omissions, the clause is to be treated as never having existed in the statute book. The Principal Commissioner therefore had no jurisdiction under s.263 to revise the assessment for a failure to refer specified domestic transactions falling under that clause to the Transfer Pricing Officer: the invocation of clause (i) of s.92BA for a reference by the Assessing Officer to the Transfer Pricing Officer was, in the order's own words, "null in the eye of Law", and the revision orders were quashed (paragraph 20 and the disposal). A statement in the report that the assessment order under s.143(3) was also restored rests on paragraphs 22 to 25, which no retrieval in this build and none in the verification pass was able to read; it is therefore recorded here as not independently confirmed. It arises in Revision & Rectification, Assessment & Scrutiny and How Tax Law Is Read matters, on section 92BA, section 92CA, section 263, section 143(3), section 40A(2)(b) of the Income Tax Act 1961, and was decided by Shri A.T. Varkey, Judicial Member and Dr. Arjun Lal Saini, Accountant Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Take the omission as a jurisdictional ground, not a merits ground: put it first, and say expressly that the reference to the TPO, the TPO's order, the adjustment and any revision built on them all fall with it. Anticipate the Revenue's reliance on Fibre Boards and Shree Bhagwati Steel Rolling Mills and meet it on the facts of those cases — Fibre Boards turned on s.280ZA being omitted and simultaneously re-enacted with modification in s.54G, which brought s.24 of the General Clauses Act into play; there is no re-enactment of s.92BA(i) anywhere in the Act. Note too that the Fibre Boards Bench itself recorded at para 26 that 'perhaps the appropriate course in the present case would have been to refer the aforesaid judgment to a larger bench', and declined that course only because it could decide the case on the per incuriam and obiter grounds; two Constitution Bench decisions, Rayala Corporation and Kolhapur Canesugar, say the opposite, so neither side of this argument is settled. Point to the absence of any saving clause in the Finance Act 2017 and to the Explanatory Memorandum, which gives reduction of compliance burden as the object of the omission. Where the omission point succeeds on jurisdiction, still preserve the merits grounds in the alternative, because the contrary Tribunal line described in the validity note has not been tested in the High Courts outside Karnataka.
Validity check could not be completed. No systematic later-treatment check was carried out for this order and none is claimed. Two things a reader must know. First, the same reasoning was accepted by the Karnataka High Court in PCIT v. Texport Overseas P. Ltd. (already in this library at slug pcit-v-texport-overseas-92ba), so the line has High Court support in at least one jurisdiction. Second, and against it, a coordinate Bench of the Tribunal has taken the opposite view. In Dixon Technologies (India) Ltd. v. Addl. CIT, Special Range-3, ITA No. 6528/Del/2017 (assessment year 2013-14), ITAT Delhi Bench 'I', pronounced 2 September 2026 (Shri Satbeer Singh Godara, Judicial Member and Shri Manish Agarwal, Accountant Member), the Tribunal held at para 8 that the Finance Act 2017 having made the omission applicable from 1 April 2017, that is assessment year 2017-18, onwards, "the legislature has made it explicitly clear that its omission carries prospective effect only", so the omission cannot be applied with retrospective effect to any preceding year up to assessment year 2016-17; it declined to follow PCIT v. Texport Overseas on the footing, taken from CIT v. Thane Electricity Supply Co. Ltd. (1994) 206 ITR 727 (Bom), that a High Court decision does not form a binding precedent outside its own territory; and at para 9 it upheld the assessment and the specified-domestic-transaction adjustment. That order has been read in full and the quoted sentence confirmed in it by exact-phrase search, which returns it and nothing else. Fibre Boards is not referred to in it. Outside Karnataka the point is therefore live at Tribunal level and must be argued, not assumed. Nothing overruling or doubting this Kolkata order itself was located. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The retrieved text carries several internal date conflicts and should be read with care. Paragraph 1 records the s.263 order as dated 04.03.2019, while the grounds of appeal and paragraphs 22, 24 and 25 all give it as 08.03.2019; the reasoning turns on 08.03.2019. The show cause notice is given as 20.11.2018 in the grounds and as 30.11.2018 in paragraphs 6 and 23. The assessment order under s.143(3) is given as 30.08.2016 in paragraph 5 and in the disposal, but as 28.12.2016 in the narration of facts in paragraph 6. Paragraph 21 cites the ITAT Indore order in Swastik Coal Corporation Pvt Ltd, ITA No. 486/Ind/2018, as dated 26.07.2011, which cannot be right for an appeal numbered 2018; and the passage quoted from that order records the omission as taking effect from 01.09.2017 rather than 01.04.2017. These look like transcription slips in the report rather than findings. Separately, the indiankanoon print rendering of this order truncated on the first two retrievals; the concluding paragraphs 21 to 25 were obtained only on a third, narrower retrieval, so the middle of the order (paragraphs 13 to 20, which reproduce Kolhapur Canesugar, Shree Bhagwati and Fibre Boards at length) was read in a single pass only. One correction to this entry must be recorded. An earlier draft carried a key_quote attributed to paragraph 24 in which the s.263 jurisdiction was said to be 'void ab initio'. Those words are not in this order. Exact-phrase searches for 'void ab initio and the order passed by the ld PCIT dated' and for 'of section 92BA of the Act is void' each return nothing, while the control phrase 'is void ab initio and the order passed by' returns 102 documents, and a phrase search pairing 'void ab initio' with this order's own cause title returns nothing where 'ab initio' alone returns this order. The words the order actually uses are 'null in the eye of Law'. The quote has therefore been removed rather than softened, and the phrase has been taken out of summary and held. An independent verification pass was also unable to read paragraphs 22 to 25 at all — its three retrievals of the print URL each truncated inside paragraph 21 — so nothing in this entry now rests on those paragraphs. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were allowed. Clause (i) of s.92BA having been omitted with effect from 1 April 2017 without any saving clause, and s.6 of the General Clauses Act applying only to repeals and not to omissions, the clause is to be treated as never having existed in the statute book. The Principal Commissioner therefore had no jurisdiction under s.263 to revise the assessment for a failure to refer specified domestic transactions falling under that clause to the Transfer Pricing Officer: the invocation of clause (i) of s.92BA for a reference by the Assessing Officer to the Transfer Pricing Officer was, in the order's own words, "null in the eye of Law", and the revision orders were quashed (paragraph 20 and the disposal). A statement in the report that the assessment order under s.143(3) was also restored rests on paragraphs 22 to 25, which no retrieval in this build and none in the verification pass was able to read; it is therefore recorded here as not independently confirmed.
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We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
My return was only processed under 143(1). Does that stop the department reopening it later?
A reassessment was done in between. Does the two-year clock for s.263 restart from it?
Can the Commissioner revise on a ground that was not in the show cause notice?