Sec. 92 :An amendment is proposed to the
transfer pricing provisions which would extend the purview of the
provisons to include within its scope not only international
transactions but certain specified domestic transactions. The
proposed amendment is to take effect from 1st day of April,
International Transactions: Sec. 92B
The Finance Bill by way of proposed amendment has clarified that
the definition of International Transaction w.e.f 1st April, 2002
shall include the following:
purchase, sale, transfer, lease or use of tangible property and
capital financing, borrowing, lending or guarantee
provision of services
transaction with an associated enterprise for business
restructuring or reorganization
It is further clarified that the definition of international
transaction would include a transaction of intangibles in various
categories. Some of the categories included, relate to
marketing‟, technology, art, engineering, goodwill, etc.
Sec. 92BA:This proposed Sec. includes
"specified domestic transactions" between related parties
when the aggregate of such transactions in the previous year
exceeds a sum of five crore rupees. The following are the
transactions sought to be included within this Sec.:
payment of expenditure to an associated party as referred to in
any transaction referred to in Sec. 80A;
transfer of goods or services in Sec. 80-IA(b) (deductions for
industrial undertaking or enterprises engaged in infrastructure
any business transacted between the assessee and other person
as referred to in Sec. 80-IA(10)
transaction, referred to in Chapter VI-A or Sec. 10AA
Computation of Arm's length price: Sec. 92C
The present Sec. as it stands provides that if there is a
variation of more than 5% between the price of the international
transaction and the determined arm‟s length price then in
such case the actual price is deemed to be the arm‟s length
price. However w.e.f. 1st April, 2013 this has been proposed to be
amended to provide a maximum tolerable variation of 3% for
determining the arm‟s length price.
Section 92C(2B) & 92C(2C): Further with a
proposed amendment the Sec. has brought within the scope of the
Transfer Pricing Officers powers, the power to determine the
arm‟s length price in an international transaction since 1st
June, 2002 during proceedings before him even if such transaction
was not referred to him by the AO. However, the Transfer Pricing
Officer may only initiate proceedings to determine the arm‟s
length price if a report was not filed in respect of the
transaction as required under Sec. 92E.
This section does not empower an AO to assess or reassess
proceedings completed before 1st day of July, 2012
Penalties: Sec.s 271AA & 271G imposing
penalties have been proposed to be amended to include
"specified domestic transactions" within their scope.
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