TPO's Role Is To Determine ALP Of International Transactions, Can't Act As AO To Probe Legitimacy Of Such Transactions: Delhi High Court
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1 month ago

TPO's Role Is To Determine ALP Of International Transactions, Can't Act As AO To Probe Legitimacy Of Such Transactions: Delhi High Court

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The Delhi High Court has made it clear that the role of a Transfer Pricing Officer is to conduct a transfer pricing analysis and determine the arm's length price of an assessee's international transaction and the TPO cannot act as an Assessing Officer to probe the legitimacy of such transactions. The question whether any expenditure has been incurred by the Assessee for earning revenue is a matter, which is required to be determined by the AO.” In the case at hand, the assessee had furnished its transfer pricing report stating that during the relevant financial year, certain employees of foreign Associated Enterprises were seconded to it to assist it in its day-to-day activities of production and sale of readymade garments under the brand name “Benetton”. Ltd. where the High Court had held that the authority of TPO is to conduct a transfer pricing analysis to determine the arm's length price and not to determine whether there is a service or not from which the assessee benefits. The said decision falls within the scope of commercial expediency and the TPO cannot supplant its opinion in place of the Assessee in regard to need for such services,” the Court thus held and rejected Revenue's appeal.

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History of this topic

Transfer Pricing | Existence Of International Transaction Must Be Determined Before Benchmarking Analysis Is Commenced: Delhi HC
1 week, 5 days ago

Transfer Pricing | Existence Of International Transaction Must Be Determined Before Benchmarking Analysis Is Commenced: Delhi HC

Live Law  

The Delhi High Court has held that before the Income Tax Department commences transfer pricing benchmarking analysis of an assessee's international transactions, the very existence of such 'international transaction' must be determined. A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar, while dealing with the case of an Indian entity producing liquor for brands like Jim Beam, observed, …

ALP Not Concerned With Commercial Expediency Of International Transaction, Assessee Reporting Loss Not Grounds To Deem ALP Nil: Delhi HC
1 month ago

ALP Not Concerned With Commercial Expediency Of International Transaction, Assessee Reporting Loss Not Grounds To Deem ALP Nil: Delhi HC

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The Delhi High Court has held that a Transfer Pricing Officer cannot compute the arm's length price of an assessee's international transactions as nil, merely because despite the services availed from such transactions, the assessee incurred a loss in business. It held, “The question whether the activities conducted by the Assessee ultimately resulted in a profit or loss, is not …

Assessing Officer Not Required To Examine Commercial Expediency Of Transaction When Evaluating Assessee's Explanation U/S 68 Of IT Act: Delhi HC
3 months, 3 weeks ago

Assessing Officer Not Required To Examine Commercial Expediency Of Transaction When Evaluating Assessee's Explanation U/S 68 Of IT Act: Delhi HC

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The Delhi High Court has made it clear that once an assessee offers explanation about nature and source of a credit transaction standing in its books, the burden of proof to show that such explanation is unsatisfactory shifts on the Assessing Officer.A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma further held that in evaluating the transaction so …

Transfer Pricing-Assessee's Objections On 'Functional Dissimilarity' Not Adjudicated: Delhi HC Asks TPO To Determine Comparable Entity Afresh
3 months, 3 weeks ago

Transfer Pricing-Assessee's Objections On 'Functional Dissimilarity' Not Adjudicated: Delhi HC Asks TPO To Determine Comparable Entity Afresh

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The Delhi High Court recently directed a Transfer Pricing Officer to determine afresh the inclusion of a comparable entity with respect to an assessee, this time taking into consideration the latter's objections on 'functional dissimilarity' of the two. A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma ruled, “Assessee's contention that E4e Healthcare is functionally dissimilar to the …

Direct Tax Weekly Round-Up: 21 To 27 July 2024
7 months, 2 weeks ago

Direct Tax Weekly Round-Up: 21 To 27 July 2024

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Supreme Court State Not Liable To Collect Tax At Source While Giving Contractors Permit To Vend Liquor At Fixed Retail Price : Supreme Court Case Details : THE EXCISE COMMISSIONER KARNATAKA & ANR. Services Provided Outside To Indian Customers In Connection With Right To Use Of Process Can't Be Taxed : Delhi High Court Case Title: The Commissioner Of Income …

Once Issue Of Arm's Length Remuneration Settled By TPO, Question Of Ascertaining Existence Of PE Is Academic; Delhi High Court Quashes Reassessment Proceedings
9 months, 2 weeks ago

Once Issue Of Arm's Length Remuneration Settled By TPO, Question Of Ascertaining Existence Of PE Is Academic; Delhi High Court Quashes Reassessment Proceedings

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The Delhi High Court, while quashing the reassessment proceedings initiated by the income tax department against the Caterpillar Group, held that once the issue of arm's length remuneration was settled by the Transfer Pricing Officer, the question of ascertaining the existence of a permanent establishment was academic.The bench of Justice Yashwant Varma and Justice Purushaindra. The Delhi High Court, while …

AO Is Not Clothed With Powers To Ascertain ALP Of Any International Transaction: Delhi High Court
11 months, 1 week ago

AO Is Not Clothed With Powers To Ascertain ALP Of Any International Transaction: Delhi High Court

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The Delhi High Court has held that AO is not clothed with the powers to ascertain the Arm's Length Price of any international transaction.The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that the AO is not clothed with the powers to ascertain the ALP of any international transaction that is selected based on the transfer …

Comparable Need Selection As Per Correct Market Segment: Delhi ITAT Remits Matter Following Earlier Order
1 year, 1 month ago

Comparable Need Selection As Per Correct Market Segment: Delhi ITAT Remits Matter Following Earlier Order

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Relying on Co-ordinate bench ruling in assessee's own case for AY 2004-05 wherein assessee's additional evidences were admitted and matter was remanded back to TPO for fresh adjudication, the Delhi ITAT admitted the assessee's additional evidence application qua comparables selection for AY 2005-06 and 2006-07. The ITAT Coram comprising Shamim Yahya and Anubhav Sharma observed that “either both TPO and …

Assessing Officer Cannot Apply Wrong Method In Absence Of Audited Financials Of AE: Delhi ITAT
2 years, 10 months ago

Assessing Officer Cannot Apply Wrong Method In Absence Of Audited Financials Of AE: Delhi ITAT

Live Law  

The Delhi Bench of the Income Tax Appellate Tribunal consisting of Yogesh Kumar and Dr. B.R.R. Subsequently, a draft assessment order under section 143 read with section 144C of the Income Tax Act was passed, proposing Transfer Pricing Adjustment on the basis of TPO's order. An assessment order was passed under section 143 read with section 144C of the Income …

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