Transfer Pricing of Marketing Intangibles: An Analysis in light of LG Electronics India Pvt Ltd Case
I. Introduction The taxation of income from intangibles is perhaps the most important large case issue in the inter-company transfer pricing world today.[1] An increasing number of multinational enterprises (hereinafter MNE™s) have been tapping the Indian market by offering their products through local affiliates. Due to strong market competition, they have substantially increased their advertising expenditure.… Read More
Tags: Arm's length principle, Delhi High Court, Income tax, Income Tax Act 1961, India, Maruti Suzuki, Suzuki, transfer pricing
Clarifications regarding Circulars on Application of Profit Split Method
Clarification issued with Regard to Circulars on Application of Profit Split Method and on Conditions Relevant to Identify Development Centres Engaged in Contract R&D Services with Insignificant Risk; Circulars Were issued Earlier based on First Report of N Rangachary Committee on Taxation of Development Centres and IT Sector Chapter X of the Income-tax Act, 1961… Read More
Tags: Arm's length principle, CBDT, Income Tax Act, India, Tax, Taxation in India, Transactional Net Margin Method, transfer pricing
Transfer pricing provisions do not apply to investments in overseas share capital
CLR Editorial Notes: The assessee company M/s Vijay Electricals Ltd. is engaged in the business of manufacture and sale of distribution and power transformers and rural electrification projects on turn key basis. The assessee filed its return of income for the assessment year 2007-08 declaring a total income of Rs. 20 Crore. The scrutiny assessment was completed u/s… Read More
Tags: Appeal, Arm's length principle, CIT, Educational assessment, India, transfer pricing
Foreign Associate Enterprise cannot be the tested party & Transfer pricing can exceed overall group profits
CLR Editorial Notes: The Tribunal had to consider the following important transfer pricing issues in this case: (i) whether the foreign Associated Enterprise can be taken as as the tested party & if the sale price received by the foreign AEs from the services ultimately sold to customers is equal to that charged by the… Read More
Tags: Arm's length principle, Comparables, India, transfer pricing
“Comparability” & “tolerance band” adjustments u/s 92C – Important Principles Explained
CLR Editorial Notes: The Tribunal had to consider the following transfer pricing issues: (i) whether the use of multi-year data for determining ALP is permissible? (ii) Whether +/-5% adjustment is a standard deduction? (iii) Whether companies with minor differences can be treated as non-comparable? (iv) Whether a company with turnover 20 times that of the assessee can be said to be comparable?… Read More
Tags: Arm's length principle, India, 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
Subscribe to the Daily Journal
India’s Leading Compliance Software
Corporate Law Referencer
