Mumbai Tribunal Voids Transfer Pricing References Initiated Following Section 92BA(i) Omission

The Mumbai bench of the Income Tax Appellate Tribunal reviewed transfer pricing adjustments arising from references made by tax authorities after the legislative removal of a specific clause under the domestic transfer pricing provisions. The tribunal established that any administrative action or adjustment stemming from a legal provision that has been omitted becomes legally untenable and must be set aside. Domestic transfer pricing regulations require specific transactions to be examined by a Transfer Pricing Officer (TPO) to determine arm's length pricing based on statutory definitions.

Under the previous tax framework, certain domestic transactions were subject to mandatory scrutiny, but subsequent legislative amendments omitted specific clauses, rendering ongoing or subsequent references to the TPO invalid for those categories of transactions. Tax professionals managing corporate tax litigation must audit all pending transfer pricing cases to identify references initiated after the omission date of Section 92BA(i). Practitioners should incorporate this legal ground in submissions before appellate authorities to contest arbitrary adjustments.

Bottom line: Check the timeline of every transfer pricing reference against legislative amendments to protect corporate clients from unauthorized tax demands.