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: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: empanelment :: VAT Audit :: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: list of goods taxed at 4% :: ACCOUNTING STANDARDS :: VAT RATES :: cpt
 
 
News Headlines »
 Deadline for filing revised or belated income tax return for past two assessment years is March 31
 Quarterly GST returns filing may be extended to all companies
 How many times one can revise tax returns?
 Income tax exemption for FY19
 How will the new provisions really work?
 How to save income tax? Best tips for young earners
 Forgot to verify your income tax return? Here's help
 Notification of Government e-Marketplace (GeM) under section 138 of the Income-tax Act
 Income tax returns can be filed even if you missed deadline
 What is the difference between a tax return and a tax refund?
 Improving tax compliance in India

No transfer pricing norms if no tax liability
April, 07th 2007

If a foreign company does not have a liability to pay tax, the income-tax department cannot apply transfer pricing provisions on it. Giving relief to the Netherlands-based Vanenburg Group BV, Authority for Advance Rulings (AAR) has ruled that transfer pricing provisions will not apply in its case as it was not liable to pay tax in India.

Vanenburg Group, which had transferred the entire shareholding of its Indian subsidiary Cordys R&D (India) Pvt Ltd to its Cordys Holdings BV (Netherlands), had sought a ruling from the AAR on whether the transfer would attract capital gains tax and the transfer pricing provisions under Sections 92-92F of the Income-Tax Act, 1961.

The AAR, in its ruling, said capital gains arising out of Cordys (India)s holding to Cordys (Netherlands) would not attract tax under Article 13(5) of the India-Netherlands double taxation avoidance agreement. The authority held that the provisions under Section 92-92F of the Income-Tax Act, 1961, are machinery provisions and will not apply where there was absence of liability to pay tax. The provisions are aimed at preventing avoidance of tax by devices such as arms length pricing and computation of income in certain cases in relation to international transactions.

This is the first ruling on an important question whether transfer pricing rules will apply in a situation where underlying transaction is exempt from taxation under the relevant treaty. The ruling gives an important guidance of the fact that transfer pricing provisions, being machinery provisions, would not be applicable where substantively there is no tax liability under basic principle, BSR & Co partner Sudhir Kapadia said.

The issue of applicability of transfer pricing provisions has always been a matter of debate and there had been no precedents on the issue. The ruling lays down the principle that transfer pricing provisions will not apply in absence of tax liability. While the ruling will not be binding in other cases, it is likely to have a persuasive value. Also, the AAR has termed the provisions as machinery provisions to ascertain the arms length nature of international transactions and it can be inferred that these are not charging provisions. 

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Experience

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