ALP Not Concerned With Commercial Expediency Of International Transaction, Assessee Reporting Loss Not Grounds To Deem ALP Nil: Delhi HC
1 month, 1 week 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 determinative of whether any international transaction of availing of services, is on arm's length basis and at ALP.” In the case at hand, the assessee had made international transactions for payment of royalty to an Associated Enterprise for information technology support services. So far as reimbursement of expenses to AEs is concerned, the TPO had proceeded to conduct an inquiry whether the Assessee had derived any additional profit on account of hiring the expatriate employees and had concluded that since the Assessee had incurred a loss, the ALP was required to be determined at Nil. Court said, “Plainly, price of resources employed to carry on business cannot be treated as nil if the assessee makes a loss.

Loss Nil Transaction Assessee Tpo Alp Commercial Expediency International Transaction  delhi  mr  tpo  reporting  employees  expediency  arms  grounds  transactions  loss  alp  assessee  length  transaction  nil  international  hc

History of this topic

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

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

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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, …

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, 1 week 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

Live Law  

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 …

Indian-Subsidiary Which Is Compensated At Arm's Length Can't Be Construed As Dependent Agent PE: Delhi High Court
6 months, 2 weeks ago

Indian-Subsidiary Which Is Compensated At Arm's Length Can't Be Construed As Dependent Agent PE: Delhi High Court

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Finding that subsidiary company is only undertaking marketing enterprise, whereas contracts are finalized and signed by the assessee outside India, the Delhi High Court held that KIPL cannot be said to be habitually securing and concluding order on behalf of assessee, and hence it is not Dependent Agent PE of Assessee. The Division Bench comprising Justice Yashwant Varma and Justice …

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 …

ALP Of The ESOP Expenses Cannot Be Taken As ‘Nil’: ITAT
1 year, 5 months ago

ALP Of The ESOP Expenses Cannot Be Taken As ‘Nil’: ITAT

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The Mumbai Bench of Income Tax Appellate Tribunal has held that the arm's-length price of the employee stock option plan expenses cannot be taken as ‘Nil’.The bench of Rahul Chaudhary and S. Rifaur Rahman has observed that the transfer pricing addition of INR 26,53,078 is, therefore, set aside, and the TPO/Assessing Officer is. The Mumbai Bench of Income Tax Appellate …

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

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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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