Busy Professionals need access to important case laws at their finger-tips. So, if you are a busy professional practicing Transfer Pricing Law, you will find our new feature very useful. We have collated all the important judgements on transfer pricing and arranged them date wise. You can access them by either selecting All Judgements (arranged date-wise) or by selecting Supreme Court Judgements, High Court Judgements, Tribunal Judgements, AAR Judgements or Foreign Court Judgements.

You can also use the Search Box to help you find what you are looking for.

Of course, this is still “work-in-progress”, so do bear with us. If you have any comments or suggestions, use the comment box. We love to hear from you. If you think we have missed out on any important judgement, or if you have an important judgement that you would like to share, do mail us at editor (at) itatonline.org. All contributions will be acknowledged.

As Advance Pricing Arrangements are shortly going to be introduced in the Indian Transfer Pricing Legislation, it is a good idea to get acquainted with similar legislation in other parts of the World as well.

The Inland Revenue Department, Hong Kong, has released a comprehensive “Departmental Interpretation and Practice Note No. 48 on the Advance Pricing Arrangement“. The salient features of this Note are as follows:

Transfer pricing and APAs

This Departmental Interpretation and Practice Note (DIPN) is intended to provide guidance for enterprises seeking an Advance Pricing Arrangement (APA). It explains the APA process and the terms and conditions of the APA process prescribed by the Commissioner.

2. The Commissioner agrees that the arm’s length principle is the international transfer pricing standard that should be used for tax purposes and the behaviour of independent enterprises should be used as a benchmark to determine the arm’s length consideration or profits in relation to controlled transactions.

3. In the comprehensive double taxation agreements (DTAs) concluded by Hong Kong, the Associated Enterprises Article has incorporated provisions which mandate the adoption of the arm’s length principle for pricing controlled transactions. When administering the provisions of the Inland Revenue Ordinance (IRO), the Commissioner will ensure that enterprises operating in Hong Kong declare a level of profit from controlled transactions that is commensurate with the functions carried out, the assets used, and the risks assumed in Hong Kong.

4. The APA process, which is voluntary, will supplement the objection, appeal and other DTA mechanisms for resolving transfer pricing issues. Its scope is flexible and it may cover all or part of the transfer pricing issues of an enterprise. The discussion of complex transfer pricing issues in a non-adversarial environment can stimulate the free flow of information and promote mutual understanding among all parties concerned. The Commissioner does not charge any fee on enterprises during the APA process but enterprises need to be aware that some overseas tax administrations may do so.

The Times of India reported that the international taxation wing of the Gujarat income tax department has issued notices to several multinational companies and Gujarat-based private companies over transfer pricing leading to revenue adjustments of around Rs 1,300 crore.

The report said that most of the notices had been sent to companies who route their exports through tax havens which the department suspected has been done to evade tax. The orders were issued last month for the assessment year 2008-09. Transfer pricing is about the price at which goods or services are transferred between one country and another within the same organization. Transfer pricing regulations were introduced in 2001-02 to ensure that the country doesn’t lose revenue from companies that undertake cross-border transactions between related parties. Sources said that these adjustments will translate into a tax collection of Rs 400 to Rs 450 crore.
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The entire law of “Transfer Pricing” in India has been summed up by the Chennai Bench of the Tribunal in Iljin Automotive Private Ltd vs. ACIT. That summary reads as follows:

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