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Landmark tribunal ruling hits tax authority
May, 23rd 2008
In a major ruling which will have widespread implications for transfer pricing inquiries in India, a tribunal has set limits on the scope of transfer pricing officers (TPOs) to demand company documentation. The Indian subsidiary of Cargill has won an appeal against a $10.1 million penalty issued by the tax authorities after they said the company had failed to provide adequate documentation. The Income Tax Appellate Tribunal also threw out the TPOs demands for more detailed documentation. It restricted which classifications of documents can be requested in particular circumstances. Advisers in India say the ruling is a victory for common sense and a step in the right direction.
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