Amendments to the anti-abuse
legislations such as transfer pricing provisions can only be given prospective
effect. Therefore, Explanation to
Section 92B inserted by Finance Act, 2012, though stated to be clarificatory
and effective from 1st April 2002, has to be necessarily treated as effective
from the Assessment Year 2013-14
Issue
“Whether amendments to
transfer pricing provisions can only be prospective and not retrospective?”
The
Mumbai ITAT held as under-
1)
Transfer pricing provision is in the nature
of a SAAR (specific anti-abuse rule), and that every anti-abuse legislation,
whether SAAR (specific anti abuse rule) or GAAR (general anti-abuse rule), is a
legislation seeking the taxpayers to organize their affairs in a manner
compliant with the norms set out in such anti-abuse legislation.
2)
An anti-abuse legislation does not trigger
the levy of taxes; it only tells you what behaviour is acceptable or what is
not acceptable.
3) What triggers levy of taxes is
non-compliance with the manner in which the anti-abuse regulations require the
taxpayers to conduct their affairs. In that sense, all anti-abuse legislations
seek a certain degree of compliance with the norms set out therein. It is,
therefore, only elementary that amendments to the anti-abuse legislations can
only be prospective.
4)
It does not make sense that someone tells
you today as to how you should have behaved yesterday, and then goes on to levy
a tax because you did not behave in that manner yesterday.
5) Therefore, Explanation to Section 92B inserted by Finance Act, 2012, though
stated to be clarificatory and effective from 1st April 2002, has to be
necessarily treated as effective from the Assessment Year 2013-14- [2016] 68 taxmann.com
141 (Mumbai - Trib.)
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