“international transaction”

Transfer PricingSection 92BSection 92B3,408 judgments

The decision most relied on for international transaction is Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT (374 ITR 118), cited in 499 judgments on BharatTax.

Leading authorities on international transaction

Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT

374 ITR 118 · 2015 · High Court

499

citing judgments

The existence of an international transaction for Advertising and Marketing Promotion (AMP) expenditure requires the revenue to discharge the burden of proof. An explanation inserted under Section 92B does not automatically make AMP expenditure an international transaction.

CIT v. EKL Appliances Ltd.

345 ITR 241 · 2012 · High Court

422

citing judgments

Transfer pricing adjustments for outstanding receivables are permissible only if the Tax Officer establishes, through analysis over a period, a pattern indicating an international transaction intended to benefit an associated enterprise. The Tax Officer cannot question purely business decisions like royalty payments or exceed jurisdiction by applying cost-benefit analysis to determine the arm's length price of services.

India Vs. Azadi Bachao Andolan 263 ITR 706 (SC); and Vodafone International Holdings B.V v. Union of India

341 ITR 1 · 2012 · Supreme Court

295

citing judgments

Legitimate tax planning is permissible, allowing taxpayers to arrange their affairs to minimize tax liabilities while respecting the "look at test" for transaction genuineness and the separate entity principle in corporate taxation. The source of funds for treaty-beneficial structures does not automatically invalidate the transaction.

Maruti Suzuki India Ltd. v. CIT

381 ITR 117 · 2016 · High Court

220

citing judgments

The Bright Line Test (BLT) is not a recognized method under the Income-tax Act and Rules for benchmarking advertising, marketing, and promotion (AMP) expenses or for determining the existence of an international transaction or its Arm's Length Price. The Revenue must first establish the existence and price of an international transaction before seeking an ALP adjustment.

Vodafone India Services (P.) Ltd. v. Union of India

368 ITR 1 · 2014 · High Court

172

citing judgments

The issue of shares and share premium is a capital account transaction, not an income-generating event, therefore Chapter X (Transfer Pricing) provisions are not attracted to deem notional or hypothetical income from such transactions.

Sir Kikabhai Premchand v. CIT

24 ITR 506 · 1953 · Supreme Court

156

citing judgments

One cannot make a taxable profit or loss from transactions with oneself, as profit only arises from dealings with external third parties, even when transferring assets between different accounts or divisions of the same entity.

PCIT v. Redington (India) Ltd.

430 ITR 298 · 2021 · High Court

132

citing judgments

A corporate guarantee issued to Associated Enterprises (AEs) is an international transaction under Section 92B, requiring adjustments for guarantee commission due to inherent risk. The reasonable arm's length rate for benchmarking such corporate guarantees can be determined using internal or external comparable uncontrolled prices.

Bausch & Lomb Eye Care (India) Pvt. Ltd. v. Additional CIT

381 ITR 227 · 2016 · High Court

127

citing judgments

The existence of an international transaction must be established before its arm's length price can be determined. An alleged 'excessive' AMP expenditure cannot unilaterally expand the scope of an international transaction if its existence is contested.

Judgments citing international transaction

M/S. Ig Infotech (India) Private Limited, Bengaluru vs. Assistant Commissioner of Income-Tax, Circle-3(1)(1), Bengaluru

In the result, the appeal of the assessee is allowed

ITA 204/BANG/2022[2017-18]Status: DisposedITAT Bangalore01 Nov 2022AY 2017-18

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Nageswar Rao, A.RFor Respondent: Shri Praveen Karanth, D.R

Section 143(3)Section 144BSection 144C(13)Section 92C

MATTERS 1. The learned AO/TPO/DRP have erred in making an addition of INR 5.30.28.523 to the total income of the appellant in respect of international transaction pertaining to provision of software development services by the appellant to its associated enterprise ('`AE") (hereinafter referred to as -subject transaction'). 2. The learned ... amended Rules for determining ALP vide S.O. No. 2860 (E) dated 19/10/2015. The amended regime will be applicable for computation of ALP of international transactions and specified domestic transactions undertaken on or after 1/04/2014 i.e. on and after PY 2014-15. The amended rules allow for introduction of a "range

Howden Solyvent (India) Pvt. Ltd., Chennai vs. DCIT, Chennai

Appeal stands partly allowed in terms of our above order

ITA 732/CHNY/2015[2010-11]Status: DisposedITAT Chennai31 Oct 2022AY 2010-11

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Shri Darpan Kripalani (Advocate) &For Respondent: Dr. S. Palani Kumar- CIT-DR

Section 143(3)Section 144C(5)Section 234BSection 43B

directions of Learned Dispute Resolution Panel, Chennai (DRP) u/s. 144C(5) of the Act dated 19-11-2014. The assessee carried out certain international transactions with its Associated Enterprises (AE) which were subjected to determination of Arm’s Length Price (ALP) before Ld. Transfer Pricing Officer-IV, Chennai (TPO) vide ... case the Ld AO and the Hon’ble Dispute Resolution Panel (Honble DRP) erred in not confirming the arms length nature of the international transaction of payment of management service fee without considering the fact that the information as provided in earlier years has also been shared for the year

Dhl Logistics Pvt.Ltd, Mumbai vs. Addl/Jt/Dy/ACIT/ITO/NFAC, Delhi

In the result, appeal of the assessee is partly allowed for statistical purpose

ITA 553/MUM/2022[2017-18]Status: DisposedITAT Mumbai31 Oct 2022AY 2017-18

Bench: Kuldip Singh () & Shri Om Prakash Kant ()

Section 234Section 234BSection 271ASection 27oSection 920

confirming the addition of INR 16, 83, 26,4267- to the income of the 2 ITA 553/Mum/2022 Appellant by holding that its international transactions pertaining to its freight forwarding segment do not satisfy the arm's length principle envisaged under the Income Tax Act, 1961 ('the Act'). 2. In doing ... Logistics Limited which is a functionally incomparable company in the final set of comparable companies. The Appellant prays that the book value of the international transactions pertaining to the freight forwarding segment of the Appellant should be held to be the arm's length price of the said transactions

ACIT CC 3(4) Cen RG 3, Mumbai vs. Patel Engineering Ltd, Mumbai

In the result, cross objection filed by the assessee is partly allowed

ITA 2758/MUM/2017[2009-10]Status: DisposedITAT Mumbai31 Oct 2022AY 2009-10

Bench: Shri Vikas Awasthy, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

Section 14ASection 199(2)Section 801A(4)Section 80I

held that the issue of shares at a premium by the assessee to its holding company does not gives rise to any income from international transactions. Vide press release dated 28.01.2015, the Union Cabinet of India concluded that it would not file an SLP against the said order ... further, as Legislature has made no such distinction while providing for determination of any income on adjustments to arrive at ALP arising from an international transaction. 31. Further, it was submitted that the Hon'ble Court in the case of PMP Auto (Supra) held that the definition of Income

ACIT CC 3(4) Cen RG 3, Mumbai vs. Patel Engineering Ltd, Mumbai

In the result, cross objection filed by the assessee is partly allowed

ITA 2757/MUM/2017[2008-09]Status: DisposedITAT Mumbai31 Oct 2022AY 2008-09

Bench: Shri Vikas Awasthy, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

Section 14ASection 199(2)Section 801A(4)Section 80I

Aker Powergas P. Ltd, Mumbai vs. DCIT RG 15(1)(1), Mumbai

ITA 2213/MUM/2017[2012-13]Status: DisposedITAT Mumbai31 Oct 2022AY 2012-13

Bench: Shri Kuldip Singh & Shri Gagan Goyalassessment Year: 2012-13

For Appellant: Shri Ketan Ved, A.RFor Respondent: Ms. Samruddhi Dhananjay Hande, D.R

Section 143(3)Section 144BSection 144C(3)Section 92C

upholding an adjustment of Rs. 45,600,001 in law and on facts, by determining the arm's length price ('ALP’) of the international transaction pertaining to payment of management charges ("Area Management Cost / Corporate Management Cost") made to the associated enterprise ("AE") at NIL. 1.2 The learned DCIT ... DCIT / DRP has failed to appreciate the fact the in subsequent year i.e. in FY 2012-13, the transfer pricing officer has accepted the international transaction of management charge at ALP. 1.6 The learned DCIT / DRP has erred in considering comparable uncontrolled price ("CUP") method as most appropriate method without

ACIT 10(2)(1), Mumbai vs. Jacob Engineering India P.Ltd, Mumbai

ITA 3700/MUM/2016[2010-11]Status: DisposedITAT Mumbai31 Oct 2022AY 2010-11

Bench: Shri Kuldip Singh & Shri Om Prakash Kantassessment Year: 2010-11 Acit-10(2)(1), M/S. Worley India Pvt. R.No.216-A, Ltd. (Formerly Known As Aayakar Bhavan, Jacobs Engineering India M.K. Road, Pvt. Ltd.), Vs. Mumbai - 400020 Ramkrishna Mandir Road, Kondivita, Andheri (East), Mumbai – 400 059 Pan: Aaach0456J (Appellant) (Respondent)

For Appellant: Shri Niraj Sheth, A.R. &For Respondent: Dr. Yogesh Kamat, D.R

Section 143(3)Section 144BSection 144C(3)Section 92C

disregarding the comparability analysis of the Assessee presented in its transfer pricing documentation, wherein a detailed economic analysis has been undertaken to benchmark impugned international transaction. 7. erred in rejecting the Internal Transactional Net Margin (Internal TNMM') of 14.29% earned by the Assessee in the AE segment ... segment by providing said services, and adopting the External TNMM method as the most appropriate method, for benchmarking the international transaction undertaken by the Assessee. Without prejudice to the above, on the facts and in the circumstances of the case as well as in law, the learned AO/ TPO: Rejection

Addl CIT 3(1), Mumbai vs. Ambuja Cements Ltd ( Formerly Gujarat Ambuja Cements Ltd), Mumbai

In the result, the appeal of the revenue is dismissed

ITA 5927/MUM/2012[2005-06]Status: DisposedITAT Mumbai31 Oct 2022AY 2005-06

Section 143(3)

follows. During the course of proceedings before the Transfer Pricing Officer, to whom the ascertainment of arm’s length price of the international transactions entered into by the assessee with its AEs was referred, it was noticed that the assessee made payment of US$ 1,93,800 towards instalment payments

Ambuja Cements Ltd ( Formelry Known As Gujarat Ambuja Cements Ltd), Mumbai vs. Addl CIT RG 3(1), Mumbai

In the result, the appeal of the revenue is dismissed

ITA 5883/MUM/2012[2005-06]Status: DisposedITAT Mumbai31 Oct 2022AY 2005-06

Section 143(3)

M/S. Biesse Manufacturing Company Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-1(1)(1), Bengaluru

In the result, the appeal of the assessee is partly allowed

ITA 338/BANG/2021[2016-17]Status: DisposedITAT Bangalore31 Oct 2022AY 2016-17

Bench: Shri George George K. & Ms. Padmavathy S

For Appellant: Shri, Tata Krishna, AdvocateFor Respondent: Shri Sankar K. Ganeshan, CIT(DR)(ITAT), Bengaluru

Section 143(2)Section 143(3)Section 234ASection 234BSection 92C

notice u/s. 143(2) was duly served on the assessee. A reference was made to the TPO for determination of ALP of the international transaction. The TPO made an adjustment in the manufacturing segment for an amount of Rs.16,14,17,954 and also interest on delayed receivables for Rs.45 ... 234A 7. Ground 8 – Levy of interest u/s. 234B & 234C. TP adjustment 5. As per the TP study, the assessee has entered into several international transactions with its AE. In the manufacturing segment, the assessee followed the TNMM as the most appropriate method and operating Profit/Operating Cost is considered

M/S Honeywell Technology Solutions Lab Private Limited, Bangalore vs. Joint Commissioner of Income Tax Special Range-3, Bangalore

ITA 2891/BANG/2018[2013-14]Status: DisposedITAT Bangalore31 Oct 2022AY 2013-14

Bench: Shri Beena Pillai & Shri Laxmi Prasad Sahuassessment Year : 2013-14

For Appellant: Smt. Shreya Loyalaka, AdvocateFor Respondent: Shri Dilip Jr. Standing Counsel for Dept. (DR)

Section 192Section 195Section 40Section 80JSection 9(1)(vii)

case was selected for scrutiny. During the course of assessment proceedings, the AO observed that the assessee has taken international transactions and accordingly with the prior approval from CIT, the case was referred to TPO. 3. Feeling aggrieved from the order of AO, the assessee filed appeal before

DCIT, New Delhi vs. M/S. Thomson Holding India Pvt. Ltd., New Delhi

In the result, the appeal of the assessee as well as revenue stands dismissed

ITA 869/DEL/2014[2009-10]Status: DisposedITAT Bangalore31 Oct 2022AY 2009-10

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahuassessment Year : 2009-10 M/S. Thomson Holding India Pvt. Ltd., C/O Robinson Air The Deputy Services Central Commissioner Of Income Warehousing Tax, Corporation, Circle – 16(1), Opp. Sbi Colony, New Delhi. Rana Pratap Bagh, Vs. G.T. Karnal Road, New Delhi – 110 033. Pan: Aacct0862G Appellant Respondent & Assessment Year : 2009-10 M/S. Technicolor India Pvt. Ltd., (Formerly Known As Thomson The Deputy Holdings India Pvt. Ltd.), Commissioner Of 306-308, 3Rd Floor, Income Tax, Bestech Chambers Circle – 16(1), Block B, Sushant Lok-I, New Delhi. Vs. Gurgaon, Haryana – 122 009. Pan: Aacct0862G Appellant Respondent : Shri Mukesh Butani, Assessee By Advocate : Shri Sunil Kumar Singh, Revenue By Cit-Dr

For Respondent: Shri Mukesh Butani

Section 920(2)

adjustments and the Dispute Resolution Panel ("DRP") further erred in upholding the adjustment to extent of INR 68,02,330 in respect of the international transactions, alleging that the same to be not at arm's length in terms of the provisions of sections ... case and in law, the AO / DRP/ TPO have erred in making an adjustment to the extent of INR 46.74,778 in respect of international transaction pertaining to marketing support services alleging that the same to be not at arm's length. 3.1 That on the facts and circumstances

M/S. Thomson Holdings India Pvt. Ltd., Gurgaon vs. DCIT, New Delhi

In the result, the appeal of the assessee as well as revenue stands dismissed

ITA 1911/DEL/2014[2009-10]Status: DisposedITAT Bangalore31 Oct 2022AY 2009-10

For Respondent: Shri Mukesh Butani

Section 920(2)

Nimbus Communications Ltd, Mumbai vs. Asst CIT RG 16(1), Mumbai

In the result, appeal is dismissed for above reasons

ITA 2218/MUM/2017[2012-13]Status: DisposedITAT Mumbai28 Oct 2022AY 2012-13

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm Nimbus Communication Ltd Nimbus Centre, Oberioa Acit Rg16(1) Complex, Mumbai Vs. Andheri(W), Mumbai - 400 053 (Appellant) (Respondent) Pan No. Aaacn3947L Assessee By : None Revenue By : Shri. Shyam Prasad. (Cit Dr) Date Of Hearing: 11.10.2022. Date Of Pronouncement : 28.10.2022. O R D E R

For Appellant: NoneFor Respondent: Shri. Shyam Prasad. (CIT DR)

Section 143Section 143(3)Section 144CSection 14ASection 92Section 92ASection 92C

follow the provisions of section 92A (3) of the Act, hence, the Transfer Pricing Adjustments are bad in law and the appellant’s international transactions should be accepted at arm’s length as per Section 92 of the Act. 3.1 International License Revenue received from AE The learned Dispute Resolution

M/S. Mindtree Limited (Successor in Interest to M/S. Aztecsoft Limited), Bengaluru vs. The Joint Commissioner of Income Tax (OSD), Central Circle-1(3), Bangalore

In the result, the appeal filed by the assessee stands allowed on Ground nos

ITA 269/BANG/2021[2006-07]Status: DisposedITAT Bangalore28 Oct 2022AY 2006-07

For Respondent: Shri Tata Krishna

Section 144CSection 147Section 148Section 150(1)Section 153Section 153(5)Section 92CSection 92C(3)Section 92D

Authorities are not justified in making a separate addition on payment of marketing support fees when the Appellant's net margin after considering all international transactions including the marketing support fees is found to be at arm's length and their action is inconsistent with stand taken ... earlier assessment years (i.e., AYs 2002-03 86 2005-06) on the similar facts the Learned TPO had accepted the existence of international transaction (i.e., marketing fee paid to AE) and determined the ALP under TNMM. 5.5.8. Without prejudice to the above, if according to TPO, no services are rendered

M/S Inteva Products India Automotive Private Limited, Bangalore vs. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

ITA 3357/BANG/2018[2014-15]Status: DisposedITAT Bangalore26 Oct 2022AY 2014-15

Bench: Shri N.V. Vasudevan, Vice Preseident & Shri Padmavathy S

dated 22.08.22. In para 32 of the order, the AO has been directed to consider only the operating margin of the AE segment of international transaction of manufacturing segment while determining the ALP considering the internal TNMM analysis, instead the external TNMM analysis, which is an error. Therefore, para ... have remitted the issue back to the AO/TPO, we direct the AO to consider only the operating margin of the AE segment of international transaction of manufacturing segment while determining the ALP considering the external TNMM analysis where the AE segment is the tested party.” ( N V VASUDEVAN ) ACCOUNTANT MEMBER

Keller Ground Engineering India Private Ltd, Chennai vs. ACIT, Corporate Circle 4(2), Chennai

In the result, the appeal filed by the assessee is allowed

ITA 114/CHNY/2018[2012-13]Status: DisposedITAT Chennai21 Oct 2022AY 2012-13

Bench: Shri Mahavir Singhand Shri Manoj Kumar Aggarwal

For Appellant: Shri Sriram Seshadhri, CAFor Respondent: Shri D. Hema Bhupal, JCIT

Section 143(1)Section 143(2)Section 143(3)Section 144CSection 156Section 92C

Income Tax Act, 1961, the issue of Transfer Pricing was referred to the Transfer Pricing Officer to determine the Arms Length Price of the International transactions entered into by the assessee company with the Associated Enterprises; after obtaining the prior approval of the Commissioner of Income Tax. The Transfer Pricing ... later the jurisdiction was transferred to Corporate Circle 3(2), Chennai. In this case, the AO noticed that the assessee has entered into international transaction with its Associated Enterprises exceeding Rs.15 crores. Therefore, as per the Board’s circular / notification, the matter was referred to the Transfer Pricing Officer

Integra Software Services P. Ltd., Chennai vs. DCIT, Pondicherry

The appeal stands partly allowed in terms of our above order

ITA 736/CHNY/2017[2012-13]Status: DisposedITAT Chennai21 Oct 2022AY 2012-13

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Shri N. Arjunraj (CA) for Shri. S. Sridhar (Advocate) – Ld. ARFor Respondent: Shri R. Bhoopathi (JCIT) / Shri. Kumar Ajeet Ld. CIT-DR

Section 143(3)Section 144C(5)Section 14ASection 195Section 40Section 43(5)Section 9(1)(vii)Section 92C

Bengaluru (DRP) u/s 144C(5) dated 30.12.2016. The Ld. Transfer Pricing Officer-2(1), Chennai (TPO) has determined Arm’s Length Price (ALP) of international transactions u/s 92CA(3) vide order dated 27.01.2015. The grounds raised by the assessee read as under: - 1. The order of The Deputy Commissioner

Dy CIT - 6(2)(2), Mumbai vs. M/S. Doshion Water Solution P. Ltd., Mumbai

In the result, the appeal filed by the Revenue is dismissed

ITA 1711/MUM/2020[2014-15]Status: DisposedITAT Mumbai21 Oct 2022AY 2014-15

Section 143(3)Section 250Section 271GSection 92CSection 92DSection 92D(3)

section 92D of the Act. The Authorized Officer (AO) penalty of Rs.6,73,63,930/- which is calculated as 2% of the value of international transactions and specific domestic transactions amounting to Rs.336,81,96,490/- vide order dated 27.04.2018 on the ground of failure to furnish information or documents ... provisions of section 92D as the assessee has furnished the required information and documents that were maintained by the assessee pertaining to its international transaction and specified domestic transactions as per Rule 10D. The learned CIT(A) has also held that the assessee has provided the TP study report which

DCIT 3(2)(1), Mumbai vs. Inventurus Knowledge Soltions P.Ltd, Mumbai

In the result, the appeal filed by the learned Assessing

ITA 2403/MUM/2018[2011-12]Status: DisposedITAT Mumbai21 Oct 2022AY 2011-12

Bench: Shri Prashant Maharishi, Am & Ms Kavitha Rajagopal, Jm The Dy. Commissioner Of M/S Inventurus Knowledge Income Tax Solutions Private Limited Central Circle 3(2)(1) 151, Nariman Bhavan, Room No. 357, 3 Rd Floor, Vinay Shah Marg, Vs. Aayakar Bhavan, Nariman Point, M.K. Road, Mumbai-400 021 Mumbai-400 020 (Respondent) (Appellant) Pan No. Aabci 5573 J Co No. 249/Mum/2019 (Arising In Ita No. 2403/Mum/2018 For A.Y. 2011–12) The Dy. Commissioner Of M/S Inventurus Knowledge Income Tax Solutions Private Limited Central Circle 3(2)(1) 151, Nariman Bhavan, Room No. 357, 3 Rd Floor, Vinay Shah Marg, Vs. Aayakar Bhavan, Nariman Point, M.K. Road, Mumbai-400 021 Mumbai-400 020 (Respondent) (Appellant) Assessee By : Shri Sc Tiwari/ Ms Umamagswari M, Ars Revenue By : Ms Samruddhi D Hande, Sr. Ar Date Of Hearing: 25.07.2022 Date Of Pronouncement : 21.10.2022

For Appellant: Shri SC Tiwari/For Respondent: Ms Samruddhi D Hande, Sr. AR

Section 143(3)Section 144C(3)Section 92Section 92C

adjudicating upon the Respondent-assessee's submissions against the application of special provisions of adjustments Section 92 to 92F (transfer pricing) to the international transactions of the respondent-assessee. 2. That on the facts and in the circumstances of the case and in law, ld. CIT(A) has erred ... assessee. Assessee furnished the return of income declaring total loss of ₹12,91,71,248/- on 29th November, 2011. 05. Assessee has entered the international transaction of availing of marketing sale support and customer relationship services amounting to ₹2,18,98,411/- and also provision of revenue cycle management services