Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Transfer Pricing »
Open DEMAT Account in 24 hrs
 I T department keeps tolerance range for transfer pricing unchanged
 India retains transfer pricing tolerance range for 2019 20
 PCIT rightly directed the Bank of India s case to Transfer Pricing Officer for determining ALP ITAT
 Key Highlights Of The 2nd Edition Of KSA Transfer Pricing Guidelines
 ITAT deletes Penalty since Assessee applied Transfer Pricing Provisions with Good faith and Due Diligence
 Change in transfer pricing regulations to help MNCs
 National High Speed Rail Corporation Limited, New Delhi, Delhi
 Deals of the day-Mergers and acquisitions September 3, 2019
 Transfer pricing documentation due by year-end
 Transfer pricing amendments – a step towards certainty
 key international tax and transfer pricing developments

Indian advance pricing agreement uses customs value as arm’s length price
April, 03rd 2018

India’s Central Board of Direct Taxes (CBDT) has recently entered into an advance pricing agreement (APA) where the price determined by the Indian Customs authorities was accepted as arm’s length price for import transactions for transfer pricing purposes.

Generally, the Indian tax authorities and customs authorities have different purposes for valuing an import transaction. The customs authorities have a motive to increase the price so that they can charge higher import duty on the purchase price. The tax authorities, on the other hand, have a motive to slash the purchase price so that they can lower the expenditure of the taxpayer and charge tax accordingly.

The use of customs data to establish arm’s length pricing for transfer pricing purposes has been the subject matter of litigation in India.

Customs data is prepared and maintained by the Indian customs authorities in relation to any items, goods, products. etc. imported into India. For transfer pricing purposes, Indian taxpayers who have undertaken import transactions have been benchmarking the said transactions using customs data to arrive at the arm’s length price.

However, such an approach has not received judicial approval. In Serdia Pharmaceuticals (India) Private Limited the Mumbai Income Tax Appellate Tribunal (ITAT) rejected the assessee’s reliance on customs data.

The ITAT held that merely because the customs authorities consider the price at arm’s length does not relieve the taxpayer’s burden of establishing that the price is at arm’s length for purposes of transfer pricing requirements under the Income Tax Act.

Further, the Delhi ITAT, in the case of Panasonic India (P.) Ltd, held that “purposes of customs valuations and Transfer Pricing provisions were different and where specific rules of law existed in the statute on a particular subject, then they would hold the field.”

However, there are few ITAT rulings wherein the customs data have been accepted by the ITAT to benchmark import transactions. In Coastal Energy Pvt Ltd the assessee had imports from associated enterprises. The transfer pricing officer applied comparable uncontrolled price data obtained from customs authorities to arrive at the arm’s length price.

The ITAT, while accepting the custom data, held that “the valuation made by the Customs authorities was not arbitrary, as it was based on large volumes of international data, classified according to internationally accepted protocol.”

Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting