Friday, June 7, 2013

[aaykarbhavan] Fw: {Amresh's CA's} Snippet of recent Transfer Pricing ruling




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From: Rupesh Srivastava <ropsrivastava@yahoo.co.in>
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Sent: Thursday, 6 June 2013 2:11 AM
Subject: {Amresh's CA's} Snippet of recent Transfer Pricing ruling

 

Snippet of recent Transfer Pricing ruling


DOJ: 4th June 2013

Income Tax Section 92CA, 10B - ITAT uphold transfer pricing adjustment for excess AMP expense. The artificial split attempted by the lower authorities on the marketing intangible in the nature of brand building was unwarranted. Allow TP adjustment of 'market promotion fee' @ 1% of sales.
 
DOJ: 5th June 2013

LIBOR upheld to be an arm's length rate for funds loaned in US Dollar to associated enterprise

ITAT upholds LIBOR as arm's length rate for funds loaned in US Dollar by the Indian taxpayer to its associated enterprise and confirms that domestic Prime Lending Rate is not appropriate for benchmarking such foreign currency loan transaction.

 
DOJ: 30th April 2013

Income Tax Section 92C- ALP on value accepted by the Insurance Company for the ship can be taken as reasonable value to arrive at ALP rather than going by the estimation on the basis of the quoted figures in a monthly magazine.

ITAT did not approve the value adopted of the ld. CIT(A) on the basis of average prices of different category of ships adopted, as he has relied on prices quoted in a magazine and adopted an average method which is not prescribed.

 

DOJ: 31st May 2013

Income Tax Section 92B, 263 - Transfer pricing provisions do not apply (i) to an investment in share capital of overseas companies & (ii) to transactions where no "income" has arisen

The assessee invested Rs. 21 crores in the share capital of its overseas subsidiaries. The AO completed the assessment without making any transfer pricing adjustment. The CIT revised the assessment u/s 263 on the ground that the transaction was an "international transaction" u/s 92B and that the AO ought to have referred the matter to the TPO to determine whether the investments were made at arm's length. The assessee filed an appeal before the Tribunal in which it argued (i) that an investment in the share capital of another company was not an "international transaction" u/s 92B and (ii) as there was no "income", the transfer pricing provisions did not apply. HELD by the Tribunal upholding the plea:

An amount paid for investment in share capital of subsidiaries outside India is not in the nature of an "international transaction" as defined in s. 92-B. Transfer pricing provisions are not applicable to transactions where there is no income

Referred: (2009) TaxCorp (INTL) 2599 (AAR) , (2010) TaxCorp (INTL) 3146 (AAR) and Circular No. 14, dated 22/11/2011.

Also Read: On the point that transfer pricing provisions do not apply where there is no 'income' see the contrary view in reported in (2009) TaxCorp (TP) 3108 (ITAT-DELHI)

 

DOJ: 2nd May 2013

Manufacturer's List price only indicative of arm's length, List price available on manufacturer's website is only an "indicative price" cannot be used under CUP method.
 

DOJ: 18th Jan 2013
Referral fees received by the taxpayer were not FTS u/s. 9(1)(vii)
 

Dated: 31st May 2013
Income Tax Section 9(1)(i), 115A - Taxability of income u/s 9(1)(i) vis-à-vis relevant articles of the DTAA between India and Singapore
 

Income Tax Section 92C
TNMM/CUP Method - Payment at rate of 1% of net profit of royalty to its AE for using its trade name, TNMM method should have been adopted for computing ALP


Income Tax Section 195, 40(a)(ia)

NO Tax required to be deducted on reimbursement of salary costs of the employees of the foreign company deputed to work for the assessee company in India.
Also Read: (2009) TaxCorp (INTL) 2797 (ITAT-BANGALORE) and (2013) TaxCorp (INTL) 5104 (ITAT-Bangalore) held that held that the assessee was not liable to deduct tax under Section 195 of the Act, from the amount paid to a foreign company, representing reimbursement of the salary to the seconded employee on which tax has been withheld under Section 192 of the Act.
 
     DOJ: 25th April 2013

TP: Compensation received for closure of business units not 'operating cost'


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Rupesh Srivastava
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