Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: empanelment :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: ACCOUNTING STANDARD :: TDS :: list of goods taxed at 4% :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: due date for vat payment :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
« News Headlines »
 Deadline to file returns extended to 28 August for biz with transitional
 GST input tax credit form
  How to rectify income tax returns
 Govt extends tax exemption for industry in North East, hilly states
 Should you file revised Income Tax returns; find out here
 Tax Deducted at Source (TDS) in Goods & Services Tax (GST)
 10 companies that blamed GST for soft June quarter
 How will GST impact the Indian economy
 10 days left to file your first GST return. This is how you do it
 What is property tax and how is it calculated…
 File income tax returns in time to carry forward losses

ITAT clears the air over transfer pricing
October, 10th 2008

The method adopted by a company to arrive at a transfer price is valid unless the tax officer can prove that the company had manipulated the price to shift profits outside India, the Income-Tax Appellate Tribunal (ITAT) has ruled. The tribunal has also observed that the transfer pricing officer (TPO) should have sufficient ground to suspect the shift in profits before invoking the transfer pricing rules.

Transfer pricing rules are meant to prevent a loss in revenues arising from related party transactions. Since more than 60% of the global transactions are between related parties, most developed countries have laid down stringent transfer pricing rules. India incorporated transfer pricing rules in the Income-tax Act in 2001. While putting the onus of proving the companys wrongdoing on the transfer pricing officer, ITAT quashed an order issued against Philips Software Centre, a captive software development company, on the ground that the order did not conform with the law. The tribunal also held that the primary objective of transfer pricing rules is to prevent profits from being shifted outside India.

According to ITAT, the tax officer should not have applied the transfer pricing rules to Philips Software as the company claimed exemption under Section 10-A of the Income-Tax Act. Under the section, companies can claim tax benefits on their software exports. Moreover, the transfer pricing officer did not explain to the company the reasons for invoking provisions of transfer pricing rules and hence the action cannot be construed as valid.

ITAT said the transfer pricing officer has to explain the reasons for rejecting a companys transfer pricing study and method. It concluded that the officer cannot reject the route used for arriving at the arms-length price, an income-tax jargon for market price, unless it is proved insufficient or invalid.

Philips Software Centre, which renders services to its overseas associated enterprises, had conducted a study to substantiate the arms-length price of its international transactions for assessment year 2003-04 by using the cost plus method (CPM) and supplementing it with the transactional net margin method (TNMM).

The TPO had rejected the transfer pricing study conducted by Philips and the method that was used in carrying out the research and replaced them with the TNMM method. The tax official, however, did not give any reason for rejecting the study. ITAT observed that the companys method for arriving at arms length price conformed to the transfer pricing rules.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions