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: ALP, Commonwealth Law Reports, India, OECD, Organisation for Economic Co-operation and Development, TPO
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: ALP, Arms Length Pricing, foreign direct investment, Income tax, India, money laundering, Reserve Bank of India, Royalties
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: ALP, Business, DRP, Finance Act, TPO, transfer 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: ALP, Arm's length principle, ITAT, Organisation for Economic Co-operation and Development, TPO, Tribunal
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: ALP, Arm's length principle, India, Profit margin, rbi, Royalties, Taxation in India, transfer 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: ALP, Arm's length principle, Arms Length Pricing, Commonwealth Law Reports, FDI, foreign direct investment, I T Act, India, Ministry of Commerce & Industry, rbi
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: ALP, Arm's length principle, Commonwealth Law Reports, TPO, Transactional Net Margin Method, transfer 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: ALP, Arm's length principle, CitiBank, Commonwealth Law Reports, India, LIBOR, Prime Lending Rate, TPO, transfer pricing, United States
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