Budget 2014: CBDT committee to be set up to decide on fresh tax disputes on transfer pricing
July, 12th 2014
In a move to clear ambiguities related to retrospective amendments on transfer od asset pricing, the Finance Minister Arun Jaitley has proposed to set up high level Central Board of Direct Tax (CBDT) committee to decide on fresh cases arising out of the 2012 amendment of Income Tax (I-T) Act.
Clearing the air that the government will not bring any change retrospectively which creates a fresh liability, the finance minister said that the sovereign right of the government to undertake retrospective legislation in unquestionable. "However, this power has to be exercised through extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate," said Jaitley in his speech.
"As a policy measure, the announcement to not levy taxes on retrospective basis for indirect transfer of Indian assets is positive," said Sanjay Sanghvi, Tax Partner, Khaitan & Co. "The general expectation from the Government was that it will 'withdraw' the controversial retrospective amendment made to income tax law in 2012. While that does not seem to be happening, as a second best option, the Government will set up CBDT Committee that will look into tax disputes arising out of retrospective amendment and provide necessary guidance to tax officers."
According to Finance Minister, the consequent upon the retrospective amendment of the I-T Act, 1961, undertaken by Finance Bill of 2012, a few cases have come up in various courts and legal fora.
"These cases are at various stages and will naturally reach their logical conclusion," said the finance minister said and added that the BJP-led NDA government is committed to providing a stable and predictable taxable regime which would be investor friendly.
However, on a different note, tax experts also said that the crucial aspect here will be the 'parameters/principles' that will be applied by the CBDT in guiding the tax officers.