Section 92CA(3) of the Income Tax Act
The decision most relied on for Section 92CA(3) is Apollo Tyres Ltd. v. CIT (255 ITR 273), cited in 650 of the 356 judgments on BharatTax that turn on this section.
Leading authorities on Section 92CA(3)
For the purpose of computing book profits under Section 115J, arrears of depreciation, including those arising from assets working extra shifts, are a necessary charge on profits if debited to the profit and loss account and are allowable as such.
0.5% is determined as the Arm's Length Price (ALP) for corporate guarantee commission provided to Associated Enterprises for A.Y. 2011-12, using the Comparable Uncontrolled Price (CUP) method under Section 92C of the Income Tax Act. Subsequent cases note this rate is specific to its facts and assessment year, requiring contemporaneous data for other periods.
No substantial question of law arises regarding a subsidy granted for setting up a new industrial unit in a backward area for employment generation, as held by the Bombay High Court. This decision was subsequently set aside by the Supreme Court.
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.
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.
The currency in which an amount is to be repaid determines the applicable rate of interest for international transactions. For notional interest on loans granted to Associated Enterprises, the arm's length rate is restricted to LIBOR, and no mark-up on the LIBOR rate is warranted.
This case determines the Arm's Length Price (ALP) for intra-group services and reimbursements, clarifying when charges constitute services warranting a mark-up versus mere pass-through costs. It provides guidance on the circumstances under which an ALP adjustment, including an ALP of 'nil', is appropriate for such transactions.
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.
Section 6 of the General Clauses Act, which preserves rights and liabilities under repealed statutes, does not automatically apply to a mere omission of a statutory provision unless the omitting enactment specifically provides for it, thereby affecting the continuation of pending proceedings.
Judgments on Section 92CA(3)
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