Safe Harbour Rules under Section 92CB of IT Act Finalized

Safe Harbour Rules Finalized after Considering Comments of Various Stake Holders ; Rules to be Applicable for 5 Assessment Years Beginning from Assessment Year 2013-14  Section 92CB of the Income-tax Act provides for framing of safe harbour rules. The determination of arms length price u/s 92C or 92CA of the Act is subject to these… Read More

Tags: Business process outsourcingKPONational Football League DraftOrder of AustraliaPress ReleaseTaxTaxation in IndiaTPO

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

Profit Level Indicator – All Related transactions cannot be considered for determining ALP

CLR Editorial Notes: In this particular case, the assessee™s parent company, Digital Microwave Corporation USA, had supplied an equipment to its Indian customers for which the assessee received a decided commission. The equipment was covered by warranty and the service relating to its installation and  annual maintenance was provided by the assessee in India. It is annual… Read More

Tags: Australian Labor PartyCITCommonwealth Law ReportsComparablesIndiaTPOtransfer pricingUnited States

Turnover filter & comparisons – Important principles explained

CLR Editorial Notes: The Tribunal had to consider the following important transfer pricing issues: (i) whether a one-time and extraordinary item of expenditure (ESOP cost) debited to the assessee™s P&L A/c has to be excluded while comparing the margins, (ii) whether for the purpose of comparison of margins, the consolidated results of comparables having profit… Read More

Tags: American ExpressComparablesInfosysOECDPuneTPOtransfer pricing

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

The TPO can select any method to determine actual income

Ratio of the Case: In order to determine the true income of an Assessee in a transaction concerned with its Parent in another country, the Transfer Pricing Officer can select methods other then the ones used by Assessee to determine the actual income. CLR Editorial Notes: The assessee is a wholly owned subsidiary of a… Read More

Tags: Commonwealth Law ReportsMorgan StanleyPunjab and Haryana High CourtSupreme CourtThe HonourableTNMMTPOtransfer pricing

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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