'Transfer pricing issues to be taken on case to case basis
January, 29th 2015
Transfer pricing litigations involving Multi National Companies (MNCs) has to be looked at separately and individually and final decision on cases will be taken on merit," minister of state for finance Jayant Sinha said. "You cannot generalise in that regard because every case has to be look at separately and individually. Many cases are subjudice right now. Many cases are in arbitration. So every case has to be handled on its merits," Sinha said. Yesterday, the government had decided against challenging the Bombay High Court decision favouring Vodafone in the Rs 3,200 crore tax case.
The minister was responding to a query on whether the government will extend similar concessions to other MNCs which are facing transfer pricing litigations. The Cabinet had decided to accept the Bombay High Court order of October 10, 2014, in the case of Vodafone India Services Pvt Ltd. It had also decided "to accept orders of Courts/ITAT/DRP in cases of other taxpayers where similar transfer pricing (TP) adjustments have been made and the Courts/ ITAT/ DRP have decided/decide in favour of the taxpayer". However, experts believe that yesterday's decision may also have positive implications for MNCs especially Dutch oil major Shell which had got a favourable ruling in the transfer pricing case from the Bombay High Court.
Transfer pricing is the practice of arm's length pricing for transactions between group companies based in different countries to ensure a fair price, one that would have been charged to an unrelated party is levied. In reply to another query, Sinha expressed hope that the government will meet the fiscal deficit target of 4.1 percent for the current fiscal year. "We are working through all the numbers right now the honourable finance minister has said that we are following prudent fiscal policy, and we will meet our fiscal deficit target this year.
I don't anticipate any challenge," he said. Sinha also said that the divestment plan will proceed as per the Cabinet decision. Sinha noted that pension liabilities will become main concern for the government in the next 20-30 years. He urged private sector to participate in National Pension System(NPS). NPS was introduced in 2004 by the previous NDA government. "We have to get more people to participate in NPS", he said adding there was also a need to get Indian private sector and people who are in the informal sector to participate in the scheme. Sinha also asked Pension Fund Regulatory and Development Authority (PFRDA) to introduce more products.