Section 92B of the Income Tax Act

Income-tax Act, 2025: s.163

Section 92B of the Income-tax Act, 1961 corresponds to section 163 (Meaning of international transaction) of the Income-tax Act, 2025.

Read section 163 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 92B is CIT v. B.C. Srinivasa Setty (128 ITR 294), cited in 628 of the 1,158 judgments on BharatTax that turn on this section.

Leading authorities on Section 92B

CIT v. B.C. Srinivasa Setty
128 ITR 294 · 1981 · Supreme Court
628
citing judgments

When the cost of acquisition of a capital asset cannot be determined, the computation mechanism for capital gains fails, and thus no capital gains can be charged. This establishes a broader principle that a charging section cannot operate in the absence of specific machinery provisions for computation.

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. Everest Kento Cylinders Ltd.
378 ITR 57 · 2015 · High Court
304
citing judgments

Corporate guarantee fees are subject to transfer pricing rules, and adjustments may be needed to account for differences between corporate guarantees and more liquid bank guarantees when determining arm's length price.

CIT v. Cotton Naturals (I) (P.) Ltd.
55 Taxmann.com 523 · 2015 · High Court
273
citing judgments

The interest rate for benchmarking foreign currency loans advanced to Associated Enterprises should be the market-determined rate applicable to the currency of the loan, such as LIBOR for US Dollar loans, rather than a domestic lending rate like the Indian PLR.

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.

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.

Whirlpool of India Ltd. v. DCIT
381 ITR 154 · 2016 · High Court
119
citing judgments

Advertisement, Marketing, and Promotion (AMP) expenditure incurred by an Indian entity directly benefits its own business and cannot be automatically treated as an international transaction for global brand building by associated enterprises without specific statutory provisions or proper analysis.

CIT v. Tata Autocomp Systems Ltd.
56 Taxmann.com 206 · 2015 · High Court
119
citing judgments

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.

LG Electronics India Pvt. Ltd. v. ACIT
140 ITD 41 · 2013 · ITAT
107
citing judgments

The Assessing Officer or Transfer Pricing Officer can benchmark Advertisement, Marketing, and Promotion (AMP) expenses as an international transaction if it creates or is intended to create economic or commercial benefit for an associated enterprise. The 'bright line' method can be used for this purpose.

Judgments on Section 92B

Eih Limited, Kolkata vs. DCIT, Cir-8(1)Kol., Kolkata

In the result, assessee’s appeal stands partly allowed for statistical purpose

ITA 117/KOL/2017[2012-13]Status: DisposedITAT Kolkata16 May 2018AY 2012-13

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2012-13 Eih Ltd V/S. Dcit, Circle-8(1), 4, Mangoe Lane, Aayakar Bhawan, P-7, Kolkata-700 001 Chowringhee Square, [Pan No.Aaace 6898 B] Kolkata-69 .. अपीलाथ" /Appellant ""यथ"/Respondent Shri Ravi Sharma, Ar अपीलाथ" क" ओर से/By Appellant Shri P.K. Srihari, Cit-Dr ""यथ" क" ओर से/By Respondent 27-02-2018 सुनवाई क" तार"ख/Date Of Hearing 16-05-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Appeal By The Assessee Is Directed Against The Order Of Dispute Resolution Panel-2, (Drp For Short) Dated 17.10.2016. Assessment Was Framed By Dcit, Circle-8(1), Kolkata U/S 144C(13)/143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Vide His Order Dated 29.11.2016 For Assessment Year 2012-13 & Grounds Raised By Assessee Read As Under:- “1.0 Determination Of Arm'S Length Price For Corporate Guarantee Fees 1.1 On The Facts & In The Circumstances Of The Case & In Law, The Learned Transfer Pricing Officer (Hereinafter Referred To As "Ld, Tpo") & Accordingly Learned Assessing Officer (Hereinafter Referred To As "Ld. Ao") Erred In Treating The Corporate Guarantee Extended By The Appellant To Its Associated Enterprise (Ae) As International Transaction & Dispute Resolution Panel (Hereinafter Referred To As "Ld, Panel") Erred In Confirming The Same As An International Transaction Without Appreciating The Fact That It Does Not Fall Within The Ambit Of "International Transaction" U/S 92B Of The Act. 1.2 The Ld.Ao/Tpo & The Ld. Panel Failed To Appreciate The Fact That Corporate Guarantee Has Been Advanced By The Appellant As A Matter Of Commercial Prudence To Protect The Business Interest Of The Group By Fulfilling

Section 14Section 144C(13)Section 14ASection 14A(2)Section 92B