Section 92CA(1) of the Income Tax Act
The decision most relied on for Section 92CA(1) is LG Electronics India Pvt. Ltd. v. ACIT (140 ITD 41), cited in 107 of the 111 judgments on BharatTax that turn on this section.
Leading authorities on Section 92CA(1)
AMP (Advertising, Marketing, and Promotion) expenditure incurred by a subsidiary for promoting the brand of its foreign parent company constitutes an international transaction and requires separate benchmarking under transfer pricing regulations.
Transfer pricing adjustments under Chapter X are restricted to international transactions between associated enterprises. The case is also authoritative for applying a turnover filter in comparability analysis, holding that companies with turnover between Rs. 1 crore and Rs. 200 crores are not comparable with those above Rs. 200 crores.
Transfer pricing adjustments must be restricted to international transactions with associated enterprises and cannot be made at the entity level or in respect of transactions with unrelated parties.
Failure to follow the procedure laid down in Section 144C(1) of the Income-tax Act, 1961, constitutes a breach of mandatory provisions, rendering the final assessment order void.
The Tribunal consistently follows the turnover filter and excludes companies when applying this filter in comparable selection for transfer pricing analysis.
The cost base for applying the operating profit over total cost margin in transfer pricing cannot be broadened to include costs not incurred by the assessee. Tax authorities cannot impute costs incurred by third parties or associated enterprises for computing the assessee's net profit margin.
The Transfer Pricing Officer (TPO) cannot make adjustments to the entire segment of manufacturing activity. Adjustments can only be made to the extent of international transactions and only to the extent of arm's length price.
Judgments on Section 92CA(1)
Showing 1–20 of 111 · Page 1 of 6
