Section 271AA of the Income Tax Act

An assessee is not estopped or precluded from seeking the exclusion of a company from its Transfer Pricing study comparables, even if initially selected, if it can demonstrate valid reasons for non-comparability.

When determining the arm's length price for interest on a foreign currency loan advanced to an Associated Enterprise, the Indian Prime Lending Rate is not applicable. Instead, the interest rate should be benchmarked based on the prevailing foreign currency rate, such as EURIBOR, or the rate in the country where the loan is received/consumed.

An assessee is not estopped from claiming a legally permissible deduction merely due to their prior accounting treatment or initial stance taken in the return. The correct legal position regarding an assessee's entitlement to a deduction always prevails, as there can be no estoppel against a statute or settled law.

The burden of proving the existence of a Permanent Establishment (PE) under a Double Taxation Avoidance Agreement (DTAA) rests squarely on the Income Tax Department.

Notional interest on delayed payments received from an Associated Enterprise (AE) cannot be treated as part of the income for tax purposes, thereby no question of law arises regarding such adjustments by the TPO/AO.

Whether an assessee has shown 'reasonable cause' under Section 273B, particularly in the context of penalties under Section 271D for violations of Section 269SS, is a question of law involving a legal inference from primary facts. Penalties under Section 271D are not leviable if reasonable cause is established, even for journal entries, provided transactions are genuine and bona fide.

The Arm's Length Price (ALP) for loans advanced to Associate Enterprises is determined by the rate of interest charged in the country where the loan is received or consumed. The revenue has not appealed this decision in subsequent cases.

Profits derived from manufacturing and sale activities should be apportioned based on well-established accountancy principles, attributing a greater portion to the manufacturing activity at the place of manufacture.

Penalty under Section 271G cannot be imposed for mere technical lapses or non-compliance with transfer pricing documentation requirements if substantial compliance is demonstrated and the Assessing Officer (AO) or Transfer Pricing Officer (TPO) did not issue a specific requisition for particulars under Section 92D(3).

The explanation to Section 92B of the Income Tax Act, introduced by the Finance Act, 2012, makes it determinable that any delay in realizing credit from the sale of goods or services rendered is liable for transfer pricing adjustment on account of interest income that was short or uncharged.