Transfer Pricing Resources for India
   

 

Government Links

Ministry of Finance
 

Relevant Tax Cases 

Galileo International Inc. v. Director of Income Tax
This court ruling has determined that challenges dealing with the attribution of profits to permanent establishments in India should not be heard by the high court, and that India’s tribunals has final say on the issue. This decision is likely to have an influence on taxpayers determining whether to carry on with a tax dispute against the tax authorities since no legal matters can occur if a tribunal's conclusions on attribution of income are based upon pertinent information which cannot be challenged. 

Sony Private India Ltd. v. Delhi Income Tax Appellate
In this ruling, the Income Tax Appellate Tribunal ("ITAT") spells out that India's transfer price regulations take account of safe harbor, even though the regulations do not expressly refer to one.  The tribunal held that any taxpayer may choose the option of determining the appropriate transfer price by making adjustments within a 5 percent range of the uncontrolled price.  The tribunal relied on another case in making its decision, the Kolkata ITAT's ruling in Development Consultants Pvt. Ltd. v. DCIT, which was the first to uphold the 5 percent safe harbor. 

Philips Software v. ACIT
The Bangalore ITAT held that any monetary exchange from a related party transaction, no matter how small, requires that a comparable be rejected.  The tribunal set aside the transfer pricing assessment for 2003-2004 because the transfer pricing officer inappropriately disregarded the taxpayer's transfer pricing study and replaced it with his own because the officer did not examine the taxpayer's use of the cost plus method and the choice of database used to acquire comparables.

E-Gain Private Ltd. v. Income Tax Officer
The Pune ITAT held that the size and scope of operations, stage and business, or product cycle should be considered in determining comparability.  This is in contrast to Mentor Graphics Pvt. Ltd. v. DCIT, in which the Delhi ITAT said turnover is not a relevant criterion for comparables selection.

SET Satellite (Singapore) Private Ltd. v. DDIT
The Mumbai High Court held that an agency permanent establishment that was paid arm's length prices by its foreign principal would have no further profits attributed to it in India.  In contrast, in Rolls Royce Plc v. Dep. Director of Income Tax the Delhi ITAT attribute an extra 35 percent of sales profit to the agency PE for its marketing activities.


Other Resources

Authority for Advance Rulings Rules on Transfer Pricing Provisions  
The Authority for Advance Rulings held that transfer pricing provisions are only computational provisions and in the absence of tax charges under the Income Tax Act, 1961, transfer pricing provisions are not applicable.
November 30, 2009

Description of Documentation Requirements
 
Contributed by Dinesh Verma, Commissioner of Income Tax, Mumbai

Report of Expert Group on Transfer Pricing Guidelines
In April 2002, the Central Government constituted an Expert Group to recommend transfer pricing guidelines for companies for pricing their products in connection with the transactions with related parties and transactions between different segments of the same company.

Formulating An Intragroup Management Fee Policy:  An Analysis From A Transfer Pricing And International Tax Perspective

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