Transfer Pricing Laws applicable to ITES/ BPO Sector explained by ITAT

CLR Editorial Notes:  The assessee, in this Transfer Pricing related case, had raised three contentious issues in support of the  contention that its charges were at Arms Length: (i) that the assessee was engaged in the low end activity of voice based call centre and that the comparables chosen by the Tranfer Pricing Officer in… Read More

Tags: ALPCommonwealth Law ReportsIndiaOECDOrganisation for Economic Co-operation and DevelopmentTPO

Applicability of RBI Guidelines to Income Tax

Introduction We are aware that foreign exchange regulations are governed by Reserve Bank of India (˜RBI™) and income tax regulations by the Central Government. Yet, is it possible to conclude that limits laid down by RBI can be considered as  Arm™s Length Price (˜ALP™) for the purposes of transfer pricing under the under Income tax… Read More

Tags: ALPArms Length Pricingforeign direct investmentIncome taxIndiamoney launderingReserve Bank of IndiaRoyalties

Proof of Tangible/direct benefits from international transactions needed for determination of ALP

CLR Editorial Notes: This case bears reference to an appeal filed by the concerned assessee against an order passed by the Assessing officer. The assessee-company is engaged in the business of manufacturing, designing, engineering and supply of cooling towers, spares and providing engineering services. The assessee entered into several international transactions with its Associated Enterprises… Read More

Tags: ALPBusinessDRPFinance ActTPOtransfer pricing

ALP has to be the Arithmetic mean of all prices arrived through various methods

Ratio of the Case: If more than one price is determined by the most appropriate method, the ALP has to be the arithmetical mean of such prices CLR Editorial Notes: The assessee was engaged in providing software development support services by which it developed software upon the instructions of its parent associated enterprise (IKOS Systems Inc).… Read More

Tags: ALPArm's length principleITATOrganisation for Economic Co-operation and DevelopmentTPOTribunal

Transfer Pricing: Automatic RBI approval means transaction is at Arms Length Price

CLR Editorial Notes: The IT Appellate Tribunal had to consider two legal issues in the context of transfer pricing in this case. (i) whether a royalty agreement falls within the ˜automatic approval scheme™ and is approved or deemed to be approved by the RBI, and if so, whether the royalty can be treated to be at arms™… Read More

Tags: ALPArm's length principleIndiaProfit marginrbiRoyaltiesTaxation in Indiatransfer pricing

Arms Length Pricing – RBI Approvals are deemed irrelevant

Ratio of the Case: A Press note issued in relation to an FDI policy thus allowing payment of royalty amounting to a certain percentage of sales under automatic route, cannot be viewed as being done at Arms Length. The FDI policy which permits payment of a percentage of royalty is meant only for remittance of the royalty… Read More

Tags: ALPArm's length principleArms Length PricingCommonwealth Law ReportsFDIforeign direct investmentI T ActIndiaMinistry of Commerce & Industryrbi

Arms Length Pricing – Adjustment cannot be made to the entire entity turnover/ profits

Ratio of the Case: With relation to the Transfer Pricing regime, Arms Length Pricing should be determined on segment-wise profits & not at an entity level. In such a case, adjustments cannot be made to the entire entity turnover or profits. CLR Editorial Notes: The assessee had entered into several international transactions with its Associated… Read More

Tags: ALPArm's length principleCommonwealth Law ReportsTPOTransactional Net Margin Methodtransfer pricing

CUP & LIBOR most appropriate to determine ALP of Loan Transaction

CLR Editorial Notes: The case refers to a case of Transfer pricing on a loan transaction made by the assessee and the appellant in this case. The assessee was an Indian company which gave a loan of more than USD 1 Million to its USA based Associated Enterprise (AE) at a interest rate of 4%. The Transfer Pricing… Read More

Tags: ALPArm's length principleCitiBankCommonwealth Law ReportsIndiaLIBORPrime Lending RateTPOtransfer pricingUnited States

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