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!
« Top Headlines »
Open DEMAT Account in 24 hrs
 March 31 deadline is getting near. How to save income tax with tax loss harvesting?
 45-day MSME payment rule: Impact and details of Section 43B(h) explained
 Small savings schemes that offer tax benefits of up to Rs 1.5 lakh under section 80C
 RE-OPENING OF CORRECTION WINDOW FOR MAY 2024 CA EXAMINATIONS
 Powerful Upgrades, Tally 12+1 months renewal Plan and Connected Services for your growing Business - March 2024
 How innovative solutions can help fix the Sec 43B conundrum for MSMEs
 Income Tax dept asks many individuals to explain high value transactions of FY20-21 as Updated ITR deadline nears
 Release Notes for TallyPrime and TallyPrime Edit Log Release 4.1 | What s New!
 Deadline to file updated ITR FY20-21 ends on March 31: Details on additional tax
 4 tax-planning mistakes to avoid this season
 ITR 2024: Here are 8 ways by which senior citizens can save on taxes this year

Transfer pricing regime to cover all Rs 5 cr-plus deals
July, 13th 2007
All cross-border transactions worth Rs 5 crore or more will come under the scrutiny of the transfer pricing regime, even if there is no prima facie reason to suspect tax evasion /avoidance.

This ruling by a specially formed five-member bench of the Income-Tax Appellate Tribunal (ITAT) is critical to Indias fledgling transfer pricing regime. Any other decision would have rendered all transfer pricing orders given out until now completely invalid.

Normally, all cross-border transactions of Rs 5 crore or more were referred to the transfer pricing officer (TP). The issue of prima facie evidence as a prerequisite for referring the case to a TP officer arose when a Bangalore-based software company Aztec Software & Technology challenged the practice of referring such transactions mandatorily to the TP officer. The company insisted the assessing officer had no reason to refer the matter to TP officer as the assessing officer could not provide any evidence of a possible tax evasion by Aztec.

The Commissioner (Appeal) upheld this and gave reasons to support his stand including the intention of the legislature. According to the commissioner an element of tax avoidance is a prerequisite for bringing the cross-border taxation under the scrutiny of the transfer pricing regime.

But ITAT has now ruled that the threshold limit of Rs 5 crore fixed by the Central Board of Direct Taxes (CBDT) should hold for referring all cases to the TP officer. In its order the ITAT also held that TP assessments can be made even in cases of tax exempt units.

It also said the industry average is not sufficient to arrive at the arms length price. The arms length price should be arrived at in more convincing ways. The ITAT also underscored that the TP officer must record all the facts and reasons of his decision in the TP order.

This is for the benefit of the adjudicating authorities. The path-breaking order that paved way for the continuation of the existing mode of transfer pricing assessment was made by the bench comprising Pramod Kumar, KC Singhal, Vimal Gandhi (President ITAT) NL Kalra and Sudhakar Reddy. TP Ostwal, member of the Transfer Pricing Committee that drafted Indias TP Rules, said: The order stands for continuity.

The tax authorities embarked upon the rare exercise of setting up a five-member Special Bench of ITAT after the Commissioner (Appeal), made a decision, which not only questioned the prevailing practise, but also the spirit of the CBDT circular, which instructed officers to refer all cross-border transactions above Rs 5 crore to the TP officer.
Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting